Fiduciary Duty In Common Law

In the beginning there was only common law, which is a legal system based on rigid rules that dealt with many areas. Equity was established two or three hundred years after the birth of the common law to evade injustice of rigid rules of common law and to introduce fairness into the legal system. However, it is very hard to define equity as there are no rules and laws at all. But we can describe equity in general using purpose and effect.

Trust is the most significant of the equitable constructs. Equity created new rights by accepting Trusts. However, common law did not regard the trustees as owners. A trust occurs if one party gives his or her property to trustees, to hold for the use of beneficiaries. Equity also gives beneficiaries rights

In the United Kingdom, the Judicature Act 1873 combined the courts of equity and the courts of common law. As a result, the concept of fiduciary duty also became applicable in common law courts. A fiduciary is a person or institution that has the power to act on behalf of another person in situations that require absolute trust, honesty and loyalty. A fiduciary holds legal as well as ethical responsibilities of a trust with one or more parties. A fiduciary duty requires the highest standard of care at either law or equity. A fiduciary is expected to be enormously loyal to the person to whom he owes the duty (the ‘principal’). According to academics writing, the courts have not yet given a comprehensive definition of a fiduciary. Instead, judicial flexibility has resulted in the courts working on the ground that the central defining features of a fiduciary relationship is where one party is acting in the best interests of the other party and therefore is required to owe a duty of loyalty to the other. Judicial pronouncements of these features can be found in a number of English law cases. In the case of White v Jones Lord Browne-Wilkinson commented that ‘the paradigm of the circumstances in which equity will find a fiduciary relationship is where one party has assumed to act in relation to the property or affairs of another’ .Bristol and West Building Society v Mothew is a significant English fiduciary law and professional negligence case, concerning a solicitor's skill, duty of care and the nature of fiduciary duties. This case is globally recognized for the definition of a fiduciary and the circumstances in which a fiduciary relationship