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Fiduciary Duty
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Below is one of our free research papers on Fiduciary Duty. If the term paper below is not exactly what you're looking for, you can search our essay database for other topics.
A fiduciary relationship is defined as a relationship in which one person is under a duty to act for the benefit of another on matters within the scope of the relationship. A fiduciary is defined as a person who is required to act for the benefit of another person on all matters within the scope of their relationship.
In the seminal case Garrett v. Bankwest, Inc., the Supreme Court of South Dakota held that a fiduciary relationship exists between a lender and a borrower only if, (1) the borrower reposes faith, confidence, and trust in the lender, (2) the borrower is in a position of inequality, dependence, weakness, or lack of knowledge, and (3) the lender exercises dominion, control, or influence over the borrower’s affairs. All three of the elements must exist in order to establish a fiduciary duty between a lender and a borrower. The court also held that the relationship between a lender and borrower is generally viewed as a debtor-creditor relationship which imposes no special or fiduciary duties on a bank. The courts have generally ruled that when a fiduciary duty does exist, it is because the relationship between the lender and the borrower goes beyond typical contractual agreements. The majority of cases in Alabama show that the courts hold that lenders do not owe a borrower a fiduciary duty out of a basic creditor-debtor relationship. In Lee v. United Fed. Sav. & Loan Ass’n, the purchasers of a house brought action against a savings and loan association cl...
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