Understanding the nature of a business relationship can be difficult. Partners, company officers, directors, trustees, agents and other business associates frequently owe others a fiduciary duty, which the law of virtually every state describes as the highest legal duty one can have. It is typically defined as a “duty of loyalty and utmost good faith.”
The burden of proof can even sometimes be shifted to the defendant to show they complied with their duty. While fiduciary duties cannot be wholly eliminated contractually in some instances, they can be limited in significant ways, even for partners and company officers.
If a fiduciary duty is found to exist, it is a powerful tool against a defendant because he may have to show that everything was fair, honest and done with the utmost scrupulousness. That’s a heavy burden. It can also mean that the fiduciary has to give back whatever he received from the transaction involved.