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A breach of fiduciary duty can cause trouble for businesses

| Sep 1, 2020 | Business Formation |

It’s virtually impossible to run a business single-handedly. As a Texas company grows, owners often need help from employees and outside parties to handle tasks that they cannot realistically handle on a day-to-day basis. Often, owners will enter into contracts with other parties to handle important duties, and those other parties have a fiduciary duty to act in the best interests of the business owners. If a party breaches that duty, damages could result.

A business owner could create a fiduciary relationship for a variety of reasons. One important relationship is that of the owner and an accountant or another financial professional. The owner may rely on the financial professional to handle the company’s assets properly. A contract can detail the expectations and responsibilities of the parties involved and can provide important information that could later prove whether a breach of fiduciary duty occurred.

A breach can occur when a fiduciary violates the terms of the contract or otherwise acts in a manner that is not in the best interests of the company. For example, if a financial professional starts using a company’s funds for personal gain, that action breaches that duty. Often, companies can suffer serious damages when such a breach occurs, and the affected parties may be able to take legal action to address those damages.

A breach of fiduciary duty is taken seriously by the court, and if a Texas business owner believes that a trusted party violated the terms of a contract, a lawsuit may be warranted. This type of litigation could allow the company to seek compensation for damages caused by the breach. To better understand their available options, business owners may want to gain reliable information from legal professionals.