No advisory or fiduciary responsibility: Overview, definition, and example
What is no advisory or fiduciary responsibility?
The "no advisory or fiduciary responsibility" clause in a contract or agreement explicitly states that one party does not owe the other party any advisory or fiduciary duties. A fiduciary responsibility involves acting in the best interest of another party, with a high level of loyalty, trust, and care. Advisory duties refer to providing guidance or advice on decisions or actions. When a contract includes a "no advisory or fiduciary responsibility" clause, it makes it clear that one party is not obligated to act in a manner that prioritizes the other party’s interests, nor is it required to provide ongoing advice or guidance.
Why is no advisory or fiduciary responsibility important?
This clause is important because it helps define the scope of the relationship between the parties. It clarifies that the parties are not entering into a relationship where one is legally bound to prioritize the other’s interests, as is the case with fiduciary duties. By including this clause, both parties can better understand their roles and avoid potential legal liabilities or misunderstandings. It can also help prevent one party from assuming they are entitled to ongoing guidance, advice, or loyalty that would typically be expected in fiduciary relationships.
Understanding no advisory or fiduciary responsibility through an example
Imagine a business enters into a contract with a consultant to provide specific services for a fixed fee. The contract includes a "no advisory or fiduciary responsibility" clause to make it clear that the consultant is not acting as a trusted advisor or fiduciary for the business. This ensures that the consultant is not expected to act in the business’s best interest at all times, and their role is limited to providing specific, agreed-upon services without ongoing loyalty obligations.
In another example, a company signs a partnership agreement with a vendor for a one-time transaction, such as purchasing equipment. The contract includes a "no advisory or fiduciary responsibility" clause to ensure that the vendor is not expected to provide ongoing advice or guidance regarding the company's operations, nor are they expected to act in the company's best interest beyond the terms of the contract.
An example of a no advisory or fiduciary responsibility clause
Here’s how a no advisory or fiduciary responsibility clause might look in a contract:
“The Parties agree that neither Party shall have any advisory or fiduciary responsibility toward the other, and no Party shall be required to act in the best interest of the other. This Agreement is solely for the provision of [specific service or product], and no ongoing advice or loyalty is implied or expected.”
Conclusion
The "no advisory or fiduciary responsibility" clause is important for clearly defining the roles and obligations of each party in a contract, ensuring that neither party is held to a higher standard of care or loyalty than what is specified in the agreement. This helps prevent unnecessary legal exposure, misunderstandings, and assumptions about ongoing advice or support. It provides a clear boundary for the relationship, allowing both parties to understand their respective duties and limits within the contract.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.