Fiduciary Duties in Company Law and Partnership Business

Running head: COMPANY LAW
Company Law
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1COMPANY LAW
From the very beginning, the implications arising out of influential views regarding
fiduciary duties can be both express and implied into voluntary undertakings. In this regard, it is
worth mentioning that, the express and implied fiduciary duties can be excluded from the
purview of a voluntary undertaking. Such an implication is considered to be unjustified in
evaluation of the circumstances of the fiduciary duties depicted under the provisions of the
formation of a company. It is evident that, the directors owe contractual duties of loyalty and
good faith towards the organization in which they are working. The concept of fiduciary duties
on the part of the directors can be explained in regard to the formation of a company in Australia.
It is noteworthy to mention here that, fiduciary duties are contractual in nature however; in some
case these duties are imposed by the law and the courts. In this regard, the question may arise
about the nature of the relation between the parties involved. In such cases, the courts are at the
authority to further investigate into the matter in order to establish the fact that whether the
fiduciary duties are consensual or restricted to express or implied contractual terms of the parties.
During the formation of a company certain contractual procedure are associated with it.
The nature of the fiduciary duties on the part of the directors are such that, it arises as a result of
contract between two or more parties. In this context, it is worth noting that, the general purpose
of the fiduciary duties of the directors is to comply with the terms of the fiduciary agreement.
The obligations of fiduciary duties involve acting in accordance to the implied terms. In such
cases, the Courts are at the authority to comply with the contractual gaps by agreeing to the
negotiated terms of the contract signed during the formation of the company. Emphasis can be
laid on the part that, the fiduciary duty is a duty of loyalty which is considered as a generic rule
against the concept of conflict of interests and unauthorized profits. As a result of it, the fiduciary
duties are portrayed as standard terms in an agreement that has been derived and enforced in a

2COMPANY LAW
way in which other contractual undertakings has taken place. In the formation of contracts, there
must be an existence of fiduciary duties within the limitations of good faith and undue influence.
It is worth mentioning that, fiduciary duties in contract must be associated with trust and
confidence. This can only be possible when there is a vulnerability and dependency of one of the
parties in contract to another. Therefore, mention can be made regarding the fact that, both
fiduciary duties and contractual obligations are distinct from each other with difference in
purpose.
The decision in the case Hospital Products Ltd v United States Surgical Corporation
[1984] HCA 64, has established clear arguments regarding the nature of the fiduciary duties in
relation to the implied terms of contract. The contractual nature of the fiduciary obligations was
rejected by the Judge however; the existing objectives of these contractual and fiduciary
obligations serve an important structure of the fiduciary relationship between the parties. A
company comes into existence after being incorporated with the required documents and
agreements. The incorporation of a company is associated the preparation of wide range of
documents and other legal formalities. Prior to the incorporation of a company, certain fiduciary
duties are owed by the promoters towards the organization. These fiduciary duties are associated
with high morals and honesty. The purpose is to ensure that the interest of the organization is
above all. Another implication associated with the application of the fiduciary duties that, the
promoters must dedicate their interests for the best interest of the corporation and for the purpose
of enhancing corporate funds in the greatest extent possible. The corporate funds under the
tutelage of the promoters must not go beyond the best interests of the corporation.
A fiduciary is the one acting on the behalf of a corporation both legally and in accordance
to the best possible interests. In this regard, it can be rightly stated that, the promoters, directors