X

Legal Memorandum: Third Party's Fiduciary Duty to an Attorney-in-Fact

Issue: Does a third-party owe an attorney-in-fact a fiduciary duty by virtue of a principal-agent relationship?

Area of Law: Litigation & Procedure
Keywords: Fiduciary duty; Principal-agent relationship; An attorney-in-fact or agent
Jurisdiction: New Jersey
Cited Cases: 398 F. Supp. 1159; 704 A.2d 38
Cited Statutes: None
Date: 03/01/2009

No case or statutory law stating that a third party owes an attorney-in-fact or agent a fiduciary duty by virtue of the principal-agent relationship was located,*FN1 but it is clear that a fiduciary duty or a duty to disclose can arise by circumstance.  In United Jersey Bank v. Kensey, 704 A.2d 38 (N.J. Super. Ct. App. Div. 1997), the court after reviewing the categories of transactions in which a duty to disclose arises, “recognize[d] the growing trend to impose a duty to disclose in many circumstances.”  Id. at 45.  Such situations include “[t]hose in which one of the parties ‘expressly reposes trust or confidence in the other’ or because of the circumstances, ‘such a trust or confidence is . . . necessarily implied.'”  Id. (citations omitted).  For example, a bank may be liable to its customer for gross misconduct or deceit when the bank knows or has reason to know the customer placed his or her trust and confidence in the bank.   Id. 


FOOTNOTES


*FN1 Conversely, the agent can be liable to the principal for the acts of a sub-agent if the harm to the principal was proximately caused by the agent’s negligent employment of the sub-agent.  Tormo v. Yormark, 398 F. Supp. 1159, 1169-70 (D.N.J. 1975). 

[…]

Subscribe to Litigation Pathfinder

To get the full-text of this Legal Memorandum ... and more!

(Month-to-month and annual subscriptions available)