Kelli Alces Williams, ‘The Fiduciary Gap’

Scholars, lawyers, judges, and parties to fiduciary relationships struggle to define when an arrangement constitutes a fiduciary relationship and what fiduciary duties are. While many believe that fiduciary relationships have foundations in expectations of morally praiseworthy behavior, the law does not impose obligations that match those aspirations. Instead, the fiduciary duties that give rise to liability are much more precise and predictably applied than broad moral proclamations about fiduciary behavior would lead us to believe. When striving to honor parties’ expectations in interpreting incomplete fiduciary contracts, courts find there are some expectations the law will not enforce.

This Article reveals the ‘fiduciary gap’ between the expectations of parties to fiduciary relationships and the duties the law will enforce. Understanding that gap leads to the conclusion that fiduciary duties are incomplete gap fillers. That is, fiduciary duties do not enforce what the parties would have agreed to if they had bargained about a particular circumstance explicitly. The fiduciary gap is responsible for expensive, unsuccessful litigation that leaves trusting parties without legal recourse for their losses at the hands of untrustworthy or underachieving fiduciaries. The gap is also responsible for much of the persistent debate among scholars about the meaning and purpose of fiduciary obligation. This Article reveals and explains the fiduciary gap to offer a more complete understanding of fiduciary relationships.

Williams, Kelli Alces, The Fiduciary Gap (March 5, 2015). The Journal of Corporation Law, Vol 40, 2015.

First posted 2016-06-09 06:00:59

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