The Adulteration of Fiduciary Doctrine in Corporate Law

Abstract

The conventional function of fiduciary accountability is to control opportunism in limited access arrangements. One area of the law, however, has separated itself from the general jurisprudence through an internal expansion to matters beyond the mischief of opportunism. In the corporate context, "fiduciary" responsibility ostensibly now regulates the general quality or merits of the actions of directors. That move beyond the conventional boundary was not a conscious development. It was an unschooled semantic progression into unjustified conceptual novelty. Elsewhere I have described the confusion in the modern jurisprudence. Here I explain how a large part of that confusion arose through the uninformed acceptance over time of imprecise judicial language. At no point in the past two centuries did the judges appear to appreciate how their use or acceptance of language had the effect of dissolving the conventional boundary. They did not intend to change the law. They believed on each occasion that they were only stating established principle. The law has thus been fundamentally altered inadvertently - and the control of director opportunism has been compromised immeasurably.

Keywords: fiduciary duty, duty of loyalty, director, corporate law, limited access, opportunism