USA – FLORIDA Trends and Developments Contributed by: Diego R. Figueroa Rodríguez and Maria Ojeda, DLA Piper
benefits beyond the agreed-upon fee. Transpar - ency is vital for fostering trust and ensuring all decisions are made with complete and accurate information. • Confidentiality: Advisors must keep all personal, financial and private information of the client secure and not use it for personal advantage. • Accounting: Advisor must provide accurate records of all money, property, or assets managed. The agency relationship In Florida, agency relationships are fiduciary relation - ships established by law when a principal authorises an agent to act on their behalf, subject to the prin - cipal’s direction and control. This legal framework applies across business, legal and personal contexts. It may arise from express agreements, either written or oral or be implied through conduct and circum - stances. • Fiduciary duty: As previously outlined, advisors owe clients a strict duty of loyalty, obedience, rea - sonable care and diligence, full disclosure, confi - dentiality and accounting. • Control: The advisor operates under the client’s authority. In the context of art advising, this means that ultimate decision-making power resides with the client, not the advisor. • Actions on behalf of the client: Agents are required to act in the client’s interests; they initiate actions, make decisions and negotiate terms only with the client’s guidance and consent. Art advisors must ensure that the client is informed of, understands and agrees to all significant steps. Advisors may not act unilaterally; this applies to communication, negotiation, purchases and any utilisation of client funds or property. Breaches and consequences Common fiduciary breaches include receiving com - pensation from both the buyer and seller, utilising cli - ent funds or property without proper authorisation, failing to disclose conflicting interests, such as direct - ing clients to sellers with whom there is a financial relationship and failing to act in the client’s best inter - est by recommending fraudulent or overpriced pur - chases due to a lack of proper due diligence.
A breach of fiduciary duty can result in severe penal - ties, including restitution of benefits received, full dis - gorgement of fees and profits, even if no client loss is proven and personal liability for losses caused by mis - use of client funds. Courts may also require advisors to cover the client’s legal costs if found liable. Beyond legal consequences, breaches can significantly dam - age reputation and limit professional opportunities. Art advising contracts: key terms A carefully constructed contract serves as the primary tool for both the client and the art advisor to govern their relationship and mitigate risks. It should include the elements outlined below. • Scope of engagement: It is essential to outline all services provided by the advisor, such as nego - tiation, acquisition or deaccession and research, along with any restrictions on authority. • Compensation and fee structure: The contract should specify the payment schedule and method for the advisor, disclose any commissions or third- party benefits and ensure that dual compensation is permitted only with written consent. • Conflict of interest and disclosure: Advisors must promptly disclose in writing any significant con - nections to parties involved in transactions and guarantee not to represent both buyer and seller without informed written consent. • Confidentiality: Comprehensive clauses should protect the client’s identity, collection details, trans - action history and pricing information. • Indemnification and limitation of liability: Risks must be allocated appropriately, with narrow limita - tions that exclude fraud, self-dealing or breaches of fiduciary duty. • Non-circumvention: The agreement should pre - vent clients from circumventing the advisor to deal directly with sources introduced by the advisor. • Term, termination and dispute resolution: Clearly define the contract length, termination rights, ongoing obligations after termination and proce - dures for resolving disputes. While contracts cannot circumvent fiduciary duties, a thorough written agreement helps manage associ - ated risks. Without such a contract, courts typically
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