Business Organization

TOPIC: AGENCY: Agent's Fiduciary duty of Loyalty to the principal

The duties that parties owe to each other are of utmost importance in corporate law. One of the most famous articulations of those duties is Justice Cardozo's (after whom this law school is named) in the Meinhard opinion.

Take a careful look at this so-called "punctilio" paragraph.

"Joint venturers, like co-partners, owe to one another, while the enterprise continues, the duty of the finest loyalty. Many forms of conduct permissible in a workaday world for those acting at arm's length, are forbidden to those bound by fiduciary ties. A trustee is held to something stricter than the morals of the marketplace.Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior.As to this there has developed a tradition that is unbending and inveterate. Uncompromising rigidity has been the attitude of courts of equity when petitioned to undermine the rule of undivided loyalty by the 'disintegrating erosion' of particular exceptions . . . Only thus has the level of conduct for fiduciaries been kept at a level higher than that trodden by the crowd. It will not consciously be lowered by any judgment of this court."

Once you have reviewed the paragraph, here's what to do:

1. What do you think is Justice Cardozo's view of the duty of loyalty owed?

2. Do you agree with Justice Cardozo? Why or why not?