Grappling with Fiduciary Duties in Enforcing Contracts

Publication Source: New York Law Journal

Warning to lawyers tasked with drafting contracts in which fiduciary duties are lurking: Fasten your seatbelts, you're in for a wild ride!

New York case law has been moving fast and furiously as to the enforceability of contracts involving fiduciaries where it is claimed that the contract was induced by a breach of the fiduciary's duties. From 2002, when the earth-shattering decision in Blue Chip Emerald LLC v. Allied Partners Inc., 299 A.D.2d 278, 279, 750 N.Y.S.2d 291, 294 (1st Dept. 2002), was handed down by the First Department, the cases have been on a whirlwind of twists and turns. The Court of Appeals recently jumped into the fray,1 only to see the First Department quickly get back onto center stage.2

Oftentimes, in this age of increasingly specialized legal representation, lawyers who write contracts do not also handle the disputes that arise over the meaning or enforceability of those contracts. Thus, those who write the contracts do not typically benefit from how the courts interpret those contracts.

Given the fast-moving case law interpreting contracts involving fiduciaries, those preparing the contracts should understand the evolving law and address the important issues. As discussed below, the Court of Appeals has now indicated that a fiduciary can in fact be relieved of its stringent and unbending duties by virtue of contractual disclaimers and/or releases, but the language used will be carefully scrutinized. Ignoring the latest law could have disastrous results.

Read the full article in the attached PDF.

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Kevin Schlosser is a Shareholder at Meyer, Suozzi, English & Klein, P.C., where he is Chair of the Litigation and Alternative Dispute Resolution Department which has a full roster of available private judges from virtually all disciplines of law. Mr. Schlosser also authors the popular blog, “New York Fraud Claims,” which analyzes the latest developments concerning civil fraud claims under New York law.

Reprinted with permission from the New York Law Journal.