The short answer
People who manage a business, and sometimes its owners, owe fiduciary duties: a duty of loyalty to put the company’s interests ahead of their own, and a duty of care in how they make decisions. The scope depends on the type of entity and its governing documents.
Why it matters
Fiduciary duty claims are often the main remedy when an insider diverts money, opportunities, or customers. They can also expose managers who believed they were simply running the business.
Where it fits in your case
When an owner or manager engages in self-dealing, takes a business opportunity, pays related parties, or makes decisions that harm the company.
What to expect
Loyalty. Conflicts of interest, self-dealing, and competing with the company are the most common loyalty issues.
Care. For Illinois LLCs, the duty of care generally reaches grossly negligent, reckless, or intentional conduct rather than ordinary mistakes.
The governing documents. Operating agreements can shape these duties within limits set by statute.
Corporations. Directors’ decisions are often protected by the business judgment rule, unless there is a conflict or bad faith.
Remedies. Courts can award damages, order the return of profits, or grant other equitable relief.
What to do now
Identify the specific transactions or decisions at issue.
Request the company’s books and records.
Preserve emails, financial records, and approvals.
Check the governing documents for approval procedures and limitations.
What we need from you
Governing documents, financial records, records of the transactions at issue, and relevant communications.
Common misconceptions
“A bad business decision is a breach of fiduciary duty.” Usually not without a conflict, bad faith, or gross negligence.
“As majority owner, I can do what I want.” Majority control does not eliminate fiduciary duties.