Duty of Loyalty
/ˈduːti əv ˈlɔɪəlti/
Definitions
- (n.) A fiduciary obligation requiring an individual to act in the best interest of another party, avoiding conflicts of interest and self-dealing.
Directors have a duty of loyalty to prioritize the corporation's interests over their own.
- (n.) An ethical and legal principle restraining agents or fiduciaries from exploiting their position for personal gain at the expense of their principal.
Breach of the duty of loyalty can lead to legal liability for damages caused by undisclosed conflicts.
Related terms
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Commentary
The duty of loyalty is central in corporate and fiduciary law to ensure trust and prevent self-interest from undermining the principal's welfare.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.