Fiduciary Law in the Twenty-first Century

INTRODUCTION ............................................................................................. 1289 I. THE NATURE AND COMPONENTS OF FIDUCIARY RELATIONSHIPS AND THE RISKS THE RELATIONSHIPS POSE TO BOTH PARTIES .......... 1293 A. Components of Fiduciary Relationships .................................... 1293 B. While Fiduciaries’ Services Provide Benefits to Entrustors, the Services Involve Risks as Well .......................... 1293 C. Fiduciary Relationships Pose Risks to Fiduciaries as Well ...... 1294 D. Fiduciary Relationships Involve Combined Entrustment and Entitlement for the Fiduciaries ........................................... 1294 II. HOW ARE THE ENTRUSTORS’ RISKS FROM FIDUCIARY RELATIONSHIPS REDUCED OR ELIMINATED? .................................... 1295 A. Entrustors’ Verification and Self-Help ...................................... 1295 B. Specifying the Fiduciary’s Services and Performance Often Does Not Reduce Risk ...................................................... 1296 C. Controlling Fiduciaries’ Performance by Demanding Guarantees Is Costly to Fiduciaries .......................................... 1296 D. Imposing Contractual Remedies on Fiduciaries ....................... 1296 III. MEASURING THE LAW’S INTERVENTION BY COST ............................ 1297 IV. CALIBRATING THE LAW BY THE MEASURE OF TEMPTATIONS ........... 1298 CONCLUSION ................................................................................................. 1299