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Frequently Asked Questions

What factors are considered by a court when determining a breach of fiduciary duty?

When determining a breach of fiduciary duty, courts consider several factors. These include the condition of the business, the character of the corporation, how the corporation is usually managed, and other relevant facts. The fiduciary duties of an institution, whether it's an educational institution, a corporation, or a non-profit organization, are typically categorized into three main duties: care, loyalty, and obedience. The duty of care requires board members to make decisions in good faith that align with the best interests of the institution. This involves performing their responsibilities with the diligence and skill of an ordinarily prudent person in a similar situation. The duty of loyalty mandates that board members and officers act in good faith, prioritizing the interests of the institution over personal interests or those of another person or organization. The duty of obedience requires board members to ensure that the institution operates in a manner that furthers its stated purpose and complies with all statutes and regulations. In the context of a corporation, the board of directors also has a fiduciary duty to exercise due care in managing the corporation's affairs. This means that directors and officers must handle their powers for the collective benefit of the corporation and its stockholders.
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