Fiduciary Concept in Company and Partnership Law

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Running Head: BUSINESS AND CORPORATION LAW 0
COMPANYLAW
7/23/2018
Student’s Name

COMPANY LAW 1
Contents
Question 1........................................................................................................................................2
Introduction 2
Discussion 2
Conclusion 5
Question 2........................................................................................................................................5
(a)Fiduciary Concept in General Law 5
(b)Fiduciary Concept in Partnership Act 1892 (NSW) 7
(c)Fiduciary Concept in The Corporations Act 2001 (Cth) 8
Bibliography..................................................................................................................................11
Cases 11
Legislations 11
Books and Journals 11
Other Sources 12

COMPANY LAW 2
Question 1
Introduction
In every form of business, two types of terms and relations exist between the parties. One is
contractual and another one is a fiduciary. As soon as a person comes into a business relationship
with another person or enters into a business transaction then in many of the cases, parties of the
transaction built a contract. In addition to this, some relations are of nature where parties thereof
own a fiduciary duty with respect to the others. It is necessary to understand the meaning of both
the terms. Contractual duty is the one that is mentioned in a contract; whereas fiduciary duties
are not stated anywhere still parties are bound to perform them due to the nature of mutual
relationships. The given discussion is focused on the fact that in a corporation, fiduciary duties
exist due to some undertakings and posts and that can be implies or expressed one. Further,
example of a lead case is also elaborated for a clear undertaking.
Discussion
As mentioned earlier that fiduciary duties exist in some of the business relations, this is
significant to mention that in which transaction, such duties will exist; does depends on the
nature of the office held by parties of the case. As the name implies, fiduciary duties exist in
fiduciary relations i.e. where the nature of relation requires a certain level of trust between the
parties1. Therefore, it would not be incorrect to mention that a fiduciary relationship is a relation
of confidence. The lead feature of fiduciary relation is that one party undertakes to behave and
act in favor of another party to whom the first person owns such duty2. Breach of a fiduciary duty
1 Tamar Frankel, Fiduciary Law (OUP USA, 2011) xvi.
2David H Denton, Fiduciary Duty – Principles (2018)
<http://www.davidhdenton.com/uploads/2/3/1/2/23125402/fiduciary_duties_-_principles.pdf>.

COMPANY LAW 3
has the same impacts as a breach of contractual duty. In order to look at that whether or
not any legal duty was broken in an exceedingly case or not, one must grasp the scope of
the undertaking. Every such duty arises out of an express or implied undertaking, taken by the
parties to the case3. This is not obligatory the all the parties own such duties, in some the
transactions or relations, only one party will be control at risk of perform the legal duty. It once
more depends on the character of the relationship.
In a corporation, so many offices are there that holds a fiduciary duty with respect to the
corporation and to each other as well. Every corporation of the country has to follow the
provision stipulated under the corporate law. While discussing the fiduciary duties, facts and
decision of the case Hospital Products Ltd v United States Surgical Corporation4, is highly
essential to know. In the cited case, United States Surgical Corporation (USSC) has decided to
appoint and authorize a person named Alan Richard Blackman as USSC’s exclusive and only
Australian distributor for the distribution of USSC’s products in the country. Later on, Blackman
has entered into an agreement with his corporation named Hospital Products International Pty.
Ltd. (HPI), due to this agreement Blackman has substituted with HPI, and HPI becomes the new
exclusive distributor of USSC5. Afterward, HPI started selling the products of USSC by it is own
name. When USSC bring an action in against of here the high court has given the decision that in
this case, there was no fiduciary relationship existed between USSC and HPI. High court further
held that the duties, which HPI breached, were of a contractual nature. Court mentioned that in
3 James Edelman, The Importance Of The Fiduciary Undertaking (22 March 2013) <
https://www.supremecourt.wa.gov.au/_files/UNSW%20Conference%20of%20Fiduciary%20Law%2022%20Mar
%202013%20Edelman%20J.pdf>.
4 [1984] HCA 64
5 Jade, High Court of Australia (2018) <https://jade.io/article/67147>.