Running a business in Charleston means making smart decisions, not just for profits but for the people who rely on you, partners, shareholders, clients, and sometimes even employees. If you’re in a position of trust, South Carolina law expects you to act like it. That’s where fiduciary duty comes in.

What Is Fiduciary Duty?

A fiduciary duty is a legal responsibility to act in someone else’s best interest. In business, this duty often exists between:

• Business partners
• Officers and directors of a corporation
• Managing members of an LLC
• Trustees or agents managing another’s assets

The law says if you’re in one of these roles, you must be honest, loyal, and act with care when handling matters that affect others in the business.

Types of Fiduciary Duties

In South Carolina, the main fiduciary duties are:

1. Duty of Loyalty

This means no self-dealing. You can’t use your position to benefit yourself at the expense of the business or its owners. For example, you can’t steer contracts to your own company unless others involved give full, informed consent.

2. Duty of Care

You must act with reasonable care when making business decisions. That doesn’t mean every choice must succeed, but you need to be informed and thoughtful. Skimming over details or acting recklessly could get you in legal trouble.

3. Duty of Good Faith and Fair Dealing

This overlaps with the two above. It means acting honestly, fairly, and with integrity. You should avoid shady backroom deals or hiding information from other stakeholders.

How This Applies in Charleston

Charleston’s business scene is full of LLCs, partnerships, and small corporations. In South Carolina, especially under the South Carolina Uniform Limited Liability Company Act, managing members owe fiduciary duties to the company and sometimes to each other, unless the operating agreement says otherwise.

Business owners in Charleston often work with family or close friends. That can blur lines. But the law doesn’t care how friendly your setup is. If you’re in a position of control, fiduciary duty still applies.

Let’s say you run a real estate firm in Mount Pleasant with a business partner. You can’t buy a piece of land secretly under your name when you know the business was considering the same deal. That’s a clear breach.

What Happens When You Breach It?

If someone breaches a fiduciary duty in South Carolina, others in the business can sue. These cases often end up in civil court, and judges don’t go easy on the person who broke trust. Penalties can include:

• Paying back profits made from bad behavior
• Covering business losses caused by your actions
• Removal from your role
• In some cases, punitive damages

Charleston courts expect transparency. If you acted in your own interest and tried to hide it, the court may hit you harder.

How to Protect Yourself

If you’re in a leadership role, take your duties seriously. Here are a few ways to stay on the right side of the law:

• Be clear in your business agreements. Spell out duties in operating agreements or bylaws.
• Keep records of major decisions and why you made them.
• Disclose conflicts of interest before taking any action.
• Avoid mixing personal and business assets.
• Ask a lawyer before making deals that could look suspicious.

Business attorneys in Charleston often recommend including fiduciary duty language in operating agreements. That way, everyone knows what’s expected from day one.

Final Thought

Fiduciary duty isn’t just a legal term. It’s about running your business with trust and fairness. In Charleston, where many businesses are built on close relationships, this duty keeps partnerships strong and protects everyone involved. If you’re in a position of trust, act like it. Your business, and your reputation, depend on it.

Disclaimer: This blog is not legal advice. For guidance on your specific situation, consult a licensed South Carolina attorney