This term is borrowed from the civil law. The Roman laws called a fiduciary heir, the person who was instituted heir and who was charged to deliver the succession to a person designated by the testament. But some say that it properly signifies the person to whom a testator has sold his inheritance, under the condition that he should sell it to another. Fiduciary may be defined to be in trust, in confidence.
A fiduciary contract is defined to be an agreement by which a person delivers a thing to another on the condition that he will restore it to him.
An obligation to act in the best interest of another party. For instance, a corporation's board member has a fiduciary duty to the shareholders, a trustee has a fiduciary duty to the trust's beneficiaries, and an attorney has a fiduciary duty to a client.
A fiduciary obligation exists whenever one person, the client, places special trust and confidence in another person and relies upon that person, the fiduciary, to exercise his discretion or expertise in acting for the client; and the fiduciary knowingly accepts that trust and confidence and thereafter undertakes to act in behalf of the client by exercising his, the fiduciary's, own discretion and expertise.
Of course, the mere fact that a business relationship comes into being between two persons does not mean that either owes a fiduciary obligation to the other. If one person engages or employs another and thereafter directs or supervises or approves his actions, the person so employed is not a fiduciary. Rather, as previously stated, it is only when one party reposes, and the other accepts, a special trust and confidence involving the exercise of professional expertise and discretion that a fiduciary relationship comes into being.
When one person does undertake to act for another in a fiduciary relationship, the law forbids the fiduciary from acting in any manner adverse or contrary to the interests of the client, or from acting for his own benefit in relation to the subject matter. The client is entitled to the best efforts of the fiduciary on his behalf and the fiduciary must exercise all of the skill, care and diligence at his disposal when acting on behalf of the client.
A person acting in a fiduciary capacity is required to make truthful and complete disclosures to those placing trust in him, and he is forbidden to obtain an unreasonable advantage at the latter's expense.