UK Supreme Court limits when a commercial party owes fiduciary duties

When does one commercial party owe fiduciary duties to another? The UK Supreme Court addressed this question last week in a decision concerning undisclosed commissions paid to motor vehicle dealers: Hopcraft v Close Bros [2025] UKSC 33.

The decision is lengthy and addresses a wide range of issues, but of most interest (to me, at least) was the Court’s consideration of when a fiduciary duty arises, over and above any contractual or other duty. It’s an important question, because a fiduciary duty requires a party to put aside their own interests and act altruistically in the interests of another.

A fiduciary relationship has been described as “a relationship of trust and confidence”, and the courts have sometimes relied on the “trust and confidence” that one party places in another to find a fiduciary relationship. Likewise, a fiduciary relationship is sometimes said to arise when one party is “vulnerable” to (or dependent on) the actions of another.

The UK Supreme Court rejected these formulations as sufficient to give rise to a fiduciary duty. It explained that “the relationship of trust and confidence is the consequence, and not the cause, of a fiduciary duty”. It observed that “an element of trust and confidence is a widespread feature of many types of commercial transactions, far removed from any fiduciary content.”

Likewise, “the vulnerability which is the typical characteristic of a person to whom a fiduciary duty is owed, is a consequence and not a cause of a fiduciary relationship.”

Instead, the Court said, a fiduciary relationship will only arise if a party has undertaken (or is treated as having undertaken) to act with single-minded loyalty and altruism towards the other party, to the exclusion of his or her own interests.

The Court also explained that the courts’ assessment must be undertaken on an objective basis: “one person’s subjective trust and confidence in ... the other’s performance of a contractual obligation” is not sufficient.

The Court concluded that, outside well-established fiduciary relationships (such as trustee, company director, partner, or agent), “in a commercial context it is normally inappropriate to expect a commercial party to subordinate its own interests to those of another commercial party”.

The Supreme Court overturned the Court of Appeal, and ruled that motor vehicle dealers obtaining finance for customers did not owe fiduciary duties to their customers. Dealers were therefore entitled to receive undisclosed commissions from finance companies. (The Court also found that one relationship was “unfair” under the UK Consumer Credit Act.)

The Supreme Court’s comments limiting the circumstances in which fiduciary duties arise in a commercial context will be welcome news to commercial parties concerned to ensure that they are entitled to act in their own interests, and not in the interests of others.