The Redundant Fiduciary Duty to Avoid Actual Conflicts

Orthodoxy suggests that fiduciary duties are proscriptive rather than prescriptive. Whilst great debates ensue over whether some duties owed by fiduciaries are properly described as fiduciary duties or not, there is no doubt that the duties both to avoid conflicts between interest and duty and to avoid conflicts between duties owed to two or more different principals are quintessentially fiduciary. Both conflict rules, though this is more often said of the latter than the former, comprise twofold functions. The more commonly encountered function describes the rules in terms of possibilities or potentialities – i.e. a duty to avoid possible or potential conflicts between interest and duty and a duty to avoid possible or potential conflicts between duties owed to multiple principals. The less commonly encountered function describes them in terms of actualities – i.e. the duty to avoid actual conflicts between interest and duty and a duty to avoid actual conflicts between duties owed to multiple principals. However, reflection reveals that the latter form of these rules, expressed in terms of actualities, are entirely redundant in that they merely reflect an aspect of the principal prescriptive duty (often described as non-fiduciary in nature) undertaken by fiduciaries, albeit expressed in proscriptive terms. So understood, these rules – if they are properly regarded as fiduciary in their actualities form – require us to reconsider our understanding that fiduciary duties are exclusively proscriptive.