Fiduciary Duty

A legal and ethical relationship of trust where one party (the fiduciary) is obligated to act solely in the best interest of another party (the principal), putting the principal’s interests above their own.

Example: Members of a city council have a fiduciary duty to the taxpayers to manage public funds responsibly and avoid conflicts of interest when voting on municipal contracts.

Common misconception: Fiduciary duty only applies to financial advisors or corporate boards. Government officials, trustees, and even certain non-profit directors also owe strict fiduciary duties to the public or the organizations they serve.