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Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International

Document Type


Publication Date

Winter 1995




University of Oregon School of Law




This Article consists of four parts. Part I draws a profile of fiduciary relationships. It also explains the different responses of fiduciary and contract rules to the different problems that the relationships pose regarding: (1) the right of one party to rely on the other and the specific duties of loyalty and care, which mirror these rights; and (2) the events that trigger the application of fiduciary rules. Finally, it compares contract with fiduciary rules. The reasons for the existence of fiduciary rules suggest that, when in conflict, they trump the rules governing other parallel relationships, including contracts.

Part II describes the characteristics and boundaries of fiduciary rules as default rules and demonstrates the required process for waiver of fiduciary duties. Part III discusses limitations on entrustors' waivers of their rights under fiduciary law relating to specific transactions, and waivers of their rights under fiduciary law generally. Part IV distinguishes between private fiduciary relationships, discussed in the former three parts of this Article, and public fiduciary relationships, i.e., mass-produced relationships with numerous entrustors such as shareholders of corporations. From these distinctions I conclude that public fiduciaries possess more power than private fiduciaries, and that the self protection afforded to numerous entrustors is less effective than that afforded to private entrustors. I also question the effectiveness of public entrustors' consent to conflict of interest transactions and other bargaining around fiduciaries' duties. I believe such consents are often imaginary and empty.

I then examine three possible solutions to public entrustors' protection. One is the proposed contractarian view which would eliminate fiduciary law and lead to the creation of property rights for corporate management in its office. The second solution is to impose all or most fiduciary rules as mandatory rules and ignore so-called consents by public entrustors. The third is to establish a government office as surrogate for consent by public entrustors, along the scheme established in the Investment Company Act of 1940.16 There are, no doubt, other solutions as well. I conclude that private and public fiduciaries should be subject to a separate body of rules and reject the contractarian view.

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