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University of California Berkeley School of Law




In the business realm, the fiduciary duties of partners, corporate directors, and officers originated with the formation of partnerships and corporations, but majority shareholders were not subjected to fiduciary duties until this century. ... As in a status relation, one party to a fiduciary relation (the entrustor) is dependent on the other (the fiduciary). ... For example, a trust is defined as a fiduciary relation in which property is transferred to the trustee. ... A trustee is chosen by the trustor, and must be able to manage the trust assets independently of the beneficiary's control. ... It further shows that the protective mechanisms outside of fiduciary law cannot adequately eliminate this risk to the entrustor. ... Therefore, the entrustor-shareholder in a fiduciary relation with a corporate director is much more vulnerable to abuse of power than is the entrustor-employer in his relation with the employee. ... The previous Part identified the potential for abuse of power that exists in every fiduciary relation, and showed that alternatives to fiduciary law may be inadequate to protect the entrustor against the abuse. ... Because it is costly to find a fiduciary whose interests are identical with those of the entrustor, much of fiduciary law is designed to prevent the fiduciary from using delegated power to further interests other than those of the entrustor. .

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