"The Structure of Fiduciary Duties As Approached Through Law & Economics"(in Japanese)

Takayasu Kamiya and Yoshitsugu Kanemoto
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Takayasu Kamiya: Faculty of Law, Hosei University

No CIRJE-J-98, CIRJE J-Series from CIRJE, Faculty of Economics, University of Tokyo

Abstract: We examine two issues on duciary duty.First,what is the essential structure of duciary duty?Second,does duciary duty have elements of a mandatory rule? Concerning the rst question,the formation of a duciary relationship involves the di culty of writing a contract on the acts that the duciary has to do,and the outcomes of the acts.Especially,duciary duty is used when writing a contract on outcomes is so di cult that an outcome-based contract cannot attract an agent.We interpret duciary duty as an attempt at coping with this di culty by (1) a defensive incentive structure that prohibits the misappropriation of the principal's 'asset' by the agent and (2) the court's ex-post supervision on veri able acts of misappropriation. For duciary duty to have elements of a mandatory rule,(1) the rule itself should be clear and speci c and (2) the extent that the rule applies should be also clear.Furthermore,they must pass the cost-bene t test of Kanda and Fujita:"The value of bene ts,which accrues to the society from setting a rule as a mandatory rule, should exceed the cost of sacri ce,which accrues to the society from compelling the parties to obey the arrangements of the mandatory rule." (Hideki Kanda and Tomotaka Fujita)(1998)

Pages: 35 pages
Date: 2003-10
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Persistent link: https://EconPapers.repec.org/RePEc:tky:jseres:2003cj98

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