fiduciary relationship
A fiduciary relationship exists when one party owes another a duty of loyalty, care, and good faith, requiring the fiduciary to act primarily in the interests of the other. Such a relationship may arise by operation of law from the nature of the parties’ interactions, regardless of their intent to create it. Under the Restatement (Third) of Agency § 8.01, “the relationship between a principal and an agent is a fiduciary relationship.” The creation of an agency relationship does not depend on the parties’ expressed intent, but on their conduct demonstrating mutual consent that one act on behalf of the other and subject to their control.
In A. Gay Jenson Farms Co. v. Cargill, Inc., 309 N.W.2d 285 (Minn. 1981), the Court stated that “agency is the fiduciary relationship that results from the manifestation of consent… an agreement may result in the creation of an agency relationship although the parties did not call it an agency and did not intend the legal consequences… existence of the agency may be proved by a course of dealing between the two parties.”
A fiduciary relationship between a principal and agent dissolves when the parties no longer intend to maintain it, whether by formal termination or by conduct inconsistent with continuation. The end of the relationship terminates the agent’s actual authority, but apparent authority may persist until third parties have notice that the agency has ended.
[Last reviewed in November of 2025 by the Wex Definitions Team]
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