Post by Andrew Gold
Some of the more interesting puzzles in private law involve the boundaries between subfields. Here is a recent example that implicates contract law and fiduciary law. In 2013, the Delaware Supreme Court expressly recognized a contractually created fiduciary duty of good faith. See Gerber v. Enterprise Products Holdings, LLC, 67 A.3d 400, 418 (Del. 2013). From different perspectives, several theorists have recently argued that there are qualitative differences between contractual and fiduciary duties. See Daniel Markovits, Sharing Ex Ante and Sharing Ex Post: The Non-Contractual Basis of Fiduciary Relations, in Philosophical Foundations of Fiduciary Law 209 (Gold & Miller, eds.) (2014); Stephen R. Galoob & Ethan J. Leib, Intentions, Compliance, and Fiduciary Obligations, 20 Legal Theory 106 (2014). See also D. Gordon Smith, Contractually Adopted Fiduciary Duty, 2014 U. Ill. L. Rev. 1783, 1792 (arguing that a duty arising from the language of a contract should be considered a contractual duty). Which view is right?
The idea that fiduciary duties are contractual is not new. See, e.g., Frank H. Easterbrook & Daniel R. Fischel, Contract and Fiduciary Duty, 36 J.L. & Econ. 425 (1993). Nor is the controversy over this idea. Although critics emphasize differences between contract duties and loyalty duties, however, they are often concerned to show that fiduciary relationships are not necessarily contractual in origin. Cf. Paul B. Miller, Justifying Fiduciary Duties, 58 McGill L.J. 969, 986 (2013) (discussing parent-child relationships as an example of a non-consent-based fiduciary relationship). The question of origins is somewhat different from the present issue. In theory, one could hold the view that fiduciary relationships are not contractual (and that the duties that attach based on the existence of those relationships are not contractual), while allowing for a contract-based fiduciary duty.
The recent dispute focuses attention more fully on the characteristics of loyalty duties, rather than the origins of fiduciary relationships. Is it even possible to have a contract-based fiduciary duty of loyalty? The answer, I take it, requires a view on both the nature of contracts and the nature of fiduciary loyalty. I would be curious to hear what readers think.