What does a fiduciary relationship entail?

A fiduciary relationship consists of a duty where one party places trust and confidence in another to act in their best interest. This relationship is built on a foundation of mutual respect and trust, often arising in situations such as those between a real estate agent and their client, a lawyer and their client, or a trustee and the trust’s beneficiaries. The fiduciary has a legal and ethical obligation to prioritize the interests of the person they represent, even above their own interests. This trust-based dynamic is what differentiates a fiduciary relationship from other types of contractual or business relationships, where the focus may primarily be on legal obligations or profit-sharing.

The concept of a fiduciary relationship is not merely restricted to legal obligations or formal contracts; rather, it emphasizes the importance of trust, loyalty, and ethical conduct in professional interactions, which is why it is essential in roles that require a degree of reliance on the expertise and judgments of the fiduciary.