Conflict of Interest

What is Conflict of Interest in Tort Law?

Quick Definition

Conflict of interest arises where a person in a fiduciary position has competing personal or professional interests that may interfere with their duty to act in another party’s best interests. It is not about actual wrongdoing, but the risk that loyalty or judgement may be compromised. Equity treats this strictly to preserve trust and integrity in fiduciary relationships.

In Context

A conflict of interest typically occurs where a fiduciary, such as a trustee, solicitor, or company director, stands to gain personally from a decision affecting the person they owe duties to. For example, a trustee selling trust property to themselves or a related party creates an obvious conflict, even if the price appears fair. Courts take a strict approach: in Boardman v Phipps (1967), liability arose even though the fiduciary acted honestly and the trust benefited, because the possibility of divided loyalty was enough. The principle is preventative rather than reactive, meaning liability can arise without proof of actual loss or bad faith. Directors face similar scrutiny under company law principles, where personal interests must be declared and managed. The underlying concern is maintaining undivided loyalty and avoiding situations where decision-making could be influenced by self-interest, even subtly.

See Also

• Fiduciary Duty

• Breach of Trust

• Duty of Loyalty

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