What are Fiduciary Duties in a Small Business Context?

Fiduciary duty concept written on a paper.

A fiduciary duty is a duty or responsibility to act in someone else’s best interest. Similarly, in a business context, fiduciary duties are obligations a person or entity owes to its business, clients, or employees. In small businesses or partnerships, the only fiduciary duties owed are duties of loyalty and care. Fiduciary duties are typically created by statutory or judge-made law.

What are the two main fiduciary duties?

As it was mentioned, in small businesses or partnerships, the only fiduciary duties owed are duties of loyalty and care.

The duty of loyalty is the duty to primarily consider the business in making decisions that would essentially benefit the company. Examples of breaching or failing the duty of loyalty include competing with the partnership or business, taking a personal business opportunity from which the partnership or business may have benefitted or may have needed, using the business or partnership for personal gain, or engaging in a conflict of interest. Simply put, the duty of loyalty is to put the business and its interests first.

Duty of care is the duty to avoid grossly negligent, intentional, or reckless conduct. In other words, if the business owners, employees, or partners knowingly violate the law in connection with the partnership or business, they would be breaching the duty of care. For example, say there is a small delivery business that employs three drivers. If one of the drivers acts negligently or recklessly (taking red lights, drinking and driving, etc.) while on the job, they would be breaching the fiduciary duty of care.

When forming a business or partnership, State laws specify that operating agreements are not allowed to eliminate the duty of loyalty and cannot eliminate or unreasonably reduce the duty of care. However, the fiduciary duty of care and loyalty may be modified or even entirely limited in an LLC’s (Limited Liability Company). Even so, the LLC may not eliminate the implied covenant of good faith and fair dealing.

In small businesses, the main fiduciary duty is the duty to refrain from taking personal advantage of corporate opportunities that belong to the company or business. A breach in either one of these duties by business owners can result in a lengthy lawsuit.

EPGD Business Law is located in beautiful Coral Gables. Call us at (786) 837-6787, or contact us through the website to schedule a consultation.

*Disclaimer: this blog post is not intended to be legal advice. We highly recommend speaking to an attorney if you have any legal concerns. Contacting us through our website does not establish an attorney-client relationship.*

Share this post

Eric Gros-Dubois

Founding partner Eric Gros-Dubois established EPGD Business Law in 2013. With over a decade of experience expanding the firm and leading it to its current success, Eric now primarily manages the corporate division of EPGD. Given Eric’s educational background, holding both a JD and MBA, combined with his own unique experience of starting a business from scratch and growing it to a multi-million dollar firm, he brings a specialized and invaluable perspective to those seeking legal assistance for themselves and their businesses. Having now instilled his same values in our team of skilled corporate associates, Eric leads a firm that is always ready, willing, and equipped to handle any and every legal matter that a business owner may have.


*The following comments are not intended to be treated as legal advice. The answer to your question is limited to the basic facts presented. Additional details may heavily alter our assessment and change the answer provided. For a more thorough review of your question please contact our office for a consultation.



The Entrepreneurs Handbook

This is a quick legal reference guide covering 16 topics that every business owner needs to have to start a business


The Entrepreneur's Handbook

This is a quick legal reference guide covering 16 topics that every business owner needs to have to start a business.


El Manual del Empresarios

Esta es una guía rápida de referencia jurídica que cubre 16 temas que cada empresario necesita saber para empezar un negocio.