In today's competitive business environment, it is essential to have trust and confidence in the people you work with. This is particularly true for business owners, partners, shareholders, and others who rely on executives and employees to act in the best interests of a company. Unfortunately, breaches of fiduciary duty can occur, and they can result in severe financial and reputational damage to companies. In these situations, it is important for a company's stakeholders to understand how breaches of fiduciary duty may be addressed through commercial litigation.

Understanding Fiduciary Duty

It is essential for a business's stakeholders to understand what fiduciary duties are and when these duties apply to different parties. A fiduciary relationship exists when one party (the fiduciary) has a legal obligation to act in the best interests of another party (the beneficiary). In the context of a commercial business, a company's executives, directors, and officers owe multiple types of fiduciary duties to the company and its shareholders, including the duty of loyalty, duty of care, duty of confidentiality, and duty of disclosure. These duties require fiduciaries to act with honesty, integrity, and prudence while making informed decisions, protecting confidential information, and disclosing material facts when required.

If a fiduciary breaches their duties, they may be subject to a lawsuit seeking to address these issues. A breach of fiduciary duty occurs when a fiduciary fails to act in the best interests of their beneficiaries, acts with self-interest or conflicts of interest, deceives or misleads beneficiaries, or breaches a duty of confidentiality or disclosure. Breach of fiduciary duty claims can arise from a variety of situations, such as misappropriation of company assets, self-dealing transactions, insider trading, or disclosure of confidential information.

Surety bonds are an important part of the insurance landscape. These bonds are a form of financial guarantee that serve to protect a party from the financial losses associated with another party's breach of contract. They provide a level of protection for both insurers and policyholders when disputes arise. As such, it is important for insurers to understand how surety bond claims work in order to protect their interests and those of their customers.

What Is a Surety Bond?

A surety bond is an agreement between three parties: the principal (the person or business seeking the bond), the obligee (the person or business receiving the protection of the bond), and the company providing the bond. The agreement stipulates that if there is a breach of contract by either party, then the bonding company will be responsible for covering any damages or costs incurred as a result.

How Do Surety Bonds Affect Insurers?

For insurers, any breach of contract related to a surety bond could result in significant financial losses. That said, insurers must also understand how to properly assess these risks and ensure that they are adequately covered. By having a thorough knowledge of how to correctly value and manage these types of claims, insurers can better protect themselves from potential losses related to surety bonds.

It is important for business owners to understand the legal issues that they may need to address when entering into contracts or enforcing the terms of contractual agreements. In some cases, a business may need to address tortious interference. When another party attempts to interfere with a company's contractual agreements or commercial relationships, these issues may be addressed through commercial litigation. By understanding the principle of tortious interference, business owners can determine the actions they can take to protect themselves from potentially damaging situations.

What Is Tortious Interference? 

Tortious interference occurs when someone intentionally interferes with an existing contract or a relationship between two parties. This type of interference may stem from false statements made about the other party; the use of threats, coercion, or intimidation; or even using bribery in an effort to manipulate a party into breaching their contract. A party who commits tortious interference could attempt to induce a breach of contract, seek to have someone commit a breach of their fiduciary duty, or obstruct the formation of a contract or relationship. In many cases, tortious interference will lead to significant financial losses for the affected parties. To successfully pursue litigation against someone for tortious interference, a business owner must prove that there was malicious intent on the part of the interfering party.

When Can Commercial Litigation Address Tortious Interference? 

Commercial litigation may be used to resolve disputes between businesses related to contracts and other agreements, as well as actions by a party that have caused a business to suffer financial losses. Generally speaking, if one party believes they have suffered damages due to tortious interference by another party, they may be able to pursue compensation for those damages through commercial litigation. Depending on the particulars of a case, damages may include lost revenues or profits, attorney's fees, and other costs associated with addressing this kind of wrongdoing. In addition, if successful in court, the plaintiff may also be awarded injunctive relief, which will prevent the other party from engaging in activity that could be considered tortious interference. Punitive damages may also be awarded in cases where a person wilfully violated the law or maliciously attempted to cause harm to a business.

There are numerous situations where creditors or other companies may need to address a breach of contract through commercial litigation. A breach of contract occurs when one party fails to fulfill a contractual obligation, resulting in financial losses or other damages for the other party. If a contract has been breached, the non-breaching party may pursue litigation and seek compensation or other remedies from the breaching party. Creditors who need to address issues related to breach of contract will need to understand the remedies that may be available so that they can recoup the losses they have experienced due to the breach. The remedies available for a breach of contract may include:

Compensatory Damages 

Compensatory damages are awarded to reimburse the non-breaching party for any losses incurred as a result of the breach. These losses may include lost profits, lost wages, and other monetary losses. Compensatory damages may also cover expenses related to mitigating or avoiding further losses due to the breach, such as the costs of hiring a new contractor or purchasing new materials. Compensatory damages are intended to put the non-breaching party in the position they would have been if the breach had not occurred. 

Punitive Damages  

Punitive damages are intended to punish and deter intentional wrongdoers from repeating their behavior in the future. To be eligible for punitive damages, it must be proven that the breaching party acted with malicious intent or gross negligence or otherwise engaged in fraudulent behavior. Punitive damage awards tend to be higher than compensatory damage awards because they are intended to act as a deterrent for parties engaging in similar behavior. However, punitive damage awards are not commonly granted in breach of contract cases, since it can be difficult to prove that the breaching party intentionally disregarded their contractual obligations.