fiduciary (fĭdōˈshēĕˌrē) [key], in law, a person who is obliged to discharge faithfully a responsibility of trust toward another. Among the common fiduciary relationships are guardian to ward, parent to child, lawyer to client, corporate director to corporation, trustee to trust, and business partner to business partner. In discharging a trust, the fiduciary must be absolutely open and fair. Certain business methods that would be acceptable between independent parties dealing with one another "at arm's length" may expose a fiduciary to liability for having abused a position of trust. Thus, in an ordinary business transaction the prospective purchaser of land need not inform the seller of an imminent rise in realty values, but one buying land from a partner must disclose such information. In many cases courts will treat an unexplained profit derived from a fiduciary relationship as an instance of constructive fraud.
The Columbia Electronic Encyclopedia, 6th ed. Copyright © 2012, Columbia University Press. All rights reserved.