To Whom It May Concern: Fiduciary Duties and Business Associations
Paula J. Dalley
Managers of business associations, whether they are partners, corporate directors, or member-managers of limited liability companies, are charged with fiduciary duties. The beneficiaries of those duties, however, are not well defined If a fiduciary is required to act in the best interests of her beneficiary, she must understand not only who the beneficiary is, but also what the beneficiary’s interests are. This fundamental problem permeates fiduciary law and yet remains unaddressed in any systematic way. In this article, Professor Dailey develops a theory regarding business associations that identifies such associations as purposive groups. Drawing on the literature of philosophy, sociology and social psychology, Professor Dailey argues that business associations are created and identified by the common purpose for which they were constituted, and that a manager’s role is to advance such purpose. This understanding of business associations explains the existing laws of fiduciary duties and provides guidance to managers and to courts for assessing the managers’ acts.
[T]o say that a man is a fiduciary only begins [the] analysis; it gives direction to further inquiry. To whom is he a fiduciary? What obligations does he owe as afiduciary? In what respect has he failed to discharge these obligations?