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Towards a Unifying Theory of Fiduciary Relationships : Between Ethics and Law

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  • Iwai, Katsuhito

Abstract

This article presents a unified theory of fiduciary relationships on the basis of the fundamental legal axiom that one may not make a contract with oneself. It characterizes fiduciary law as a law that imposes on whoever places oneself as a fiduciary to another the duty of loyalty -- the duty to act solely for the other's interests -- as a legal duty enforced by courts. It then shows how fiduciary law practically solves its apparent mix-up between ethics and law by placing the entire burden of disproof on the accused fiduciary, and justifies its disgorgement remedy by the open-ended nature of the duty of loyalty. The article also argues that the primary role of fiduciary law is not to replace but to complement ethics with law.

Suggested Citation

  • Iwai, Katsuhito, 2016. "Towards a Unifying Theory of Fiduciary Relationships : Between Ethics and Law," Economic Review, Hitotsubashi University, vol. 67(2), pages 107-124, April.
    • Handle: RePEc:hit:ecorev:v:67:y:2016:i:2:p:107-124
    DOI: 10.15057/27905
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    More about this item

    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • D6 - Microeconomics - - Welfare Economics
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • K1 - Law and Economics - - Basic Areas of Law

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