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Toward A Horizontal Fiduciary Duty In Corporate Law, Asaf Eckstein, Gideon Parchomovsky

Cornell Law Review

Fiduciary duty is arguably the single most important aspect of our corporate law system. It consists of two distinct subduties-a duty of care and a duty of loyalty-and it applies to all directors and corporate officers. Yet, under extant law, the duty only applies vertically, in the relationship between directors and corporate officers and the firm. At present, there exists no horizontal fiduciary duty: directors and corporate officers owe no fiduciary duty to each other. Consequently, if one of them falls her peers, they cannot seek direct legal recourse against her even when they stand to suffer significant reputational and …