Fiduciary duty is one of the duties that corporate directors and officers have towards a corporation, as well as the duties that partners have to a partnership and trustees have to a trust.
Broadly speaking, fiduciary duties can be grouped into three categories:
- Duty of Loyalty. A fiduciary must act in accordance with the interests of the beneficiary, and not his own interests.
- Duty of Candor. A fiduciary must not withhold information from the beneficiary, particularly with respect to the fiduciary's dealings with the beneficiary.
- Duty of Care. A fiduciary must act with some degree of care with respect to the beneficiary. This is usually formulated as a duty to take the care that an ordinarily prudent person would in similar circumstances.
Also related is the Business Judgement Rule which provides that the decisions of a corporation's board of directors will not be second-guessed unless a decision is self-interested (a violation of the duty of loyalty) or (more rarely) the board acted in an imprudent manner (a violation of the duty of care).