The Lender as Unconventional Fiduciary

This Article examines one kind of fiduciary relationship—one that develops from an ordinary, arms-length commercial relationship between a lender and a borrower. Although this prototype relationship exists in the broader context of “lender liability,” to which academic commentators and the practicing bar have paid a good deal of attention in recent years, the suggested analysis has as much to do with fiduciary relationships generally as it does with issues of lender liability. The unconventional fiduciary relationship examined here differs in several respects from the conventional fiduciary relationship, for example that of trustee-beneficiary. Perhaps the most obvious difference is that the parties to an unconventional fiduciary relationship begin their relationship with a different set of goals and expectations than do the parties to a conventional fiduciary relationship. The differences between conventional and unconventional fiduciary relationships have not been evaluated for their impact on the goals of fiduciary law, the process of determining whether a relationship is fiduciary, or whether fiduciary duties have been breached. This Article reveals that the distinction between conventional and unconventional fiduciaries is important in at least two respects. First, imprecision serves no useful purpose in the analysis of unconventional fiduciary cases; in fact, in such cases, imprecision hinders the achievement of the goals of fiduciary law. Second, it is both possible and useful to clarify fiduciary principles as they are applied to unconventional fiduciaries