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It was said in Lappas v. Barker, 375 S.W.2d 248 (Ky.1964), that a fiduciary relationship exists when the parties are "`under a duty to act for or give advice for the benefit of another upon matters within the scope of the relation'. Restatement, Torts, Section 874. It exists where a special confidence is reposed in another who in equity and good conscience is bound to act in good faith and with due regard to the interests of the one reposing confidence." Id. at 251.
When persons enter into fiduciary relations each consents, as a matter of law, to have his conduct towards the other measured by the standards of the finer loyalties exacted by courts of equity. That is a sound rule and should not be whittled down by exceptions.
Id. 120 S.W.2d at 788.
A fiduciary is one who acts legally on behalf and in the best interests of another. Members of a manager-managed LLC have no fiduciary duty to the company or to the other members solely by reason of being members, but they may agree to impose fiduciary duties on the members.
The members of a member-managed LLC owe fiduciary duties of loyalty and care to the company and its other members. Members in a member-managed LLC may restrict or even eliminate fiduciary duties as long as any such restriction or elimination is not unreasonable.
The managers of a manager-managed LLC, like members of a member-managed LLC, owe fiduciary duties of loyalty and care to the company and its other members.
The duty of loyalty includes the obligations to account to the company, to refrain from dealing with the company in a manner that is adverse to it and to refrain from competing with the company before the dissolution of the LLC.
The duty of care is an obligation to act with the care that a person in a like position would reasonably exercise under similar circumstances and in a manner reasonably believed to be in the best interests of the company. Members and managers are not liable when they reasonably rely in good faith on the opinions and advice of competent professionals and other reliable sources.
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