Fiduciary Duties-Special Relationships

Most relationships under the law are considered operating at arms length by rational dealings of competent adults.  But there are special relationships where higher standards of loyalty and care are required.  Responsibilities vary greatly and yet the existence of a fiduciary relationship can be unclear. 

Loyalty to an Employer 

Certainly, an former employee may have duties to not compete or to take her former employer’s customers if there is a contract on those points.  And an employer can require full attention to the job by employees and forbid “moonlighting” on pain of firing.  But can the employer sue the fired employee for lack of loyalty by the employee having pursued her own business on company time? 

Much may depend on whether the person is simply an employee or something more, such as a manager or officer that acts as the company’s agent in some capacity.  The latter may have higher duties as an agent of the company and have fiduciary duties to put the employer’s business first.  Such a fiduciary cannot take the employer’s business for himself, nor a corporate opportunity that is fairly the employer’s. 

On the other hand, courts have held that in a franchise agreement with a noncompete contract during the franchise term is to be strictly construed and only allowed if limited in terms, as the relationship is arms length and not a fiduciary relationship requiring a higher standard of “loyalty”. 

Courts have also held that a drug test of an employee does make the employee a “patient” of the employer so as to raise enhanced fiduciary duties and strict confidentiality requirements as the test results.

Family fiduciaries

Family members often provide powers of attorney to their kin to handle their affairs, and this establishes a fiduciary relationship of loyalty and care to carry out the principle’s interest, not the agent’s own.  Thus, one with a power of attorney generally could not give himself a gift of his principle’s property, but courts have permitted such gift where it was plainly shown to be specifically directed and approved by the principle.   

Husbands and wives are fiduciaries to each other in a confidential relationship with a number of separate legal duties of loyalty such as barring a spouse to testify against the other in criminal cases, and to require the exercise great care to each other’s affairs.  Georgia Courts have ruled there is no confidential relationship between affianced couples as they enter prenuptial agreements.

Generally, there is no fiduciary duties among other adult family members.  In a recent Georgia case, siblings sued their brother who had received a deed to the father’s farm, which they said all had agreed he would run and some day they would all share in the inheritance.  However, the court found the limited grounds did not exist to support a constructive trust, and the written and filed deed to the brother stood. 

The information provided in this summary is general and for information only and

does not constitute legal advice for any particular situation of facts and circumstances.

If you have need of legal advice, please consult an attorney for your specific questions.