Home / Summaries / England and Wales / duty-investment-breach

England and Wales

48 important questions on England and Wales

When can a preliminary statement be classified as a primary or collateral term?

When it amounts to a particular and specific assurance about a verifiable and reasonably certain fact or fact pattern, and it is clear to the manager that the investor is relying on that assurance to enter into the investment agreement and that the reliance is reasonable, statements that are made as part of general informational communication.

Which principal duty will arise under an asset management agreement?

The duty to invest and reinvest the portfolio in accordance with the investor's investment objective. This investment duty may be best described as a duty to use professional care and skill in an effort to invest the investor's capital in a mix of assets in accordance with the terms of the asset management agreement with a view to obtaining a certain specified return.

What is quite common for an asset management agreement drafted under English law?

No warrant is given in relation to the performance of the portfolio

Waht is the essence of the service of an asset manager?

The asset manager's duty to apply its professional judgement and skill in a discretionary manner to arrive at and implement investment decisions.

What will typically be subject to specified investment constraints?

The exercise of discretion along with the manager's general duty to perform the investment duty with the requisite level of skill and care.

What is the concept of construction?

determingin the common intention of parties from the express terms of the contract.

How can terms be implied into a contract?

By law, by fact or based on custom and usage, even though the parties did not express themselves

What is the main source of implied duties of the manager?

The law of agency

When breaches the agent its investment duty?

If he exceeds the agency authority, or fails to use it

What is the benchmark in the context of th supply of asset management services?

The skill, care, and diligence that may be expected of a hypothetical investment manager who possesses an ordinary level of professinal competence, taking into account the special skill that the manager professes to possess and who is acting in like circumstances.

Which general duty has the agent as well?

To accept and implement all lawful and reasonable instructions of his principal in relation to the manner in which the agent carries out his duties.

How is a discretionary authority to use agency powers characterized and what does that mean?

As a fiduciary responsibility and therefore the exercise of agencyp owers is subject to the priciples that apply to the exercise of fiduciary responsibilities.

What is the rationale for the imposition of fiduciary duties?

In these relationships one party ought to be able to rely on the other party to be subject to duties that have a broader scope than duties that would ordinarily arise in an arm's length relationship.

In which four categories is the body of fiduciary duties divided?

1. A fiduciary must not put himself in a position where his intersts and his duty to the beneficiary conflict

2. must nog make a profit from his position other than his agreed remuneration.

3. Must not place himself in a position where a duty to one beneficiary conflicts wit a duty to another

4. must nog use information obtained in confidence rom one benefiary for any purpose other than the benefit of that beneficiary.

Where does the operational range of fiduciary duties depend on?

the degree of discretion of the fiduciary.

Where can freedom of contract lead to?

To protracted negotiation of contracts that seek to document the same scope of services.

What was teh consequence?

Substantial initiatives in various branches of the financial services industry to invest in standard form or model agreements.

Which provisions form the principle terms of the mandate?

the investor's appointment of the manager to manage a portfolio of investments and the investor's undertaking to pay a management fee, and the provisions concerning the manager's undertaking to use professional care, judgement, knowledge, and skill.

When can a institutional investor have the benefit of the protective statutory provision in the FSMA?

The exception concern rules that prohibit an authorized person from seeking to exclude a liability or duty arising under the regulatory regime, the market abuse rules, or circumstances in which a fiduciary or representative brings the suit on behalf of a private person exclusively for the benefit of that private person, and that suit could not be brought by the private person, directly.

When will the asset manager will be liable for a breach of a contractual duty?

If the manager, without a lawful excuse, fails or refuses to render the performance that is due pursuant to the relevant duty or incapacitates himself from rendering the performance.

What will definitely cause a breach?

Failure to deliver a report when due or failure to deliver an accurate and complete report in accordance with the contractual stipulations will constitute a breach regardles whether the manager was at fault or not.

What requires liability for breach of the manager's investment duty?

proof of a failure to comply with the applicable standard of care. The standard of care informs the manner in which the manager is expected to perform the investment duty.

How does the performance of the investment manager must be judged?

On the conduct of the manager in light of the purpose of the mandate.

What did the lord conclude in the Nestle v. National Westminster Bank?

Although the investment processes of the trustee were far from exemplary, given the general duty of a trustee to act fairly and impartially in balancing the life interests and the remainder interests, tehre was no loss arising from a breach of duty for which the trustee ought to compensate the trustfund.

What is not proof of a failure to fulfil a duty of care?

The fact that the trust fund significantly underperformed one benchmark or another

What is not a form of delegation?

The selection and appointment of a broker who acts as agent for the client. The appointment of the broker is arranged by the manager, who brings about a contract for services between the client and the broker using its authority to act for the client ---> privity of contract between the client and the broker.

What is the result of the client's consent tot delegate responsibilities and authority?

It will not absolve the manager of its contractual responsibilities and liabilities.

What is the type of loss that an investor will incur?

Its typically of monetary nature.

In what form will an investor seek for compensation?

in the form of an award for compensatory damages.

When will the asset manager be liable in the event of a breach?

If it can be established that the loss wouldn't have been suffered but for the breach, provided that the losses are not otherwise considered too remote.

When will it not be problematic to establish that the breach caused the portfolio loss?

If it can be established that the maanger failed to manage the portfolio in accordanc with the terms of the mandate and that failure constitutes a breach because all matters pertaining to the management of the portfolio are normally within the manager's exclusive control

What is a difficult question of causation?

If the investor seeks to base a claim for damages on the proposition that the mandate, as agreed, was and is not right and appropriate for the investor, or is otherwise not what the investor might reasonable have expected it would be, and that the manager is responsible for that fact.

On what grounds can a certain claim be based?

On breach of warranty, misrepresentation, or an assumption of responsibility within the meaning of HEdly Byrne.

When is the causation requirement satisfied in case of breach?

If the plaintiff can prove that the defendant's statement was fales.

When is the causation requirement satisfied in case of misrepresentation?

Proof that the statement was prepared negligently, that the plaintiff relied on it, that he would have acted differently had he not been gien incorrect advice.

When is the causation requirement satisfied in case on failure to disclose certain features of the mandate?

proof on the balance of probabilities, of what the plaintiff's course of action would have been had he been informed that the investment strategy was not suitable, ie how he would have acted had he been given correct advice.

Which two steps does the establishment of the claim require?

1. the elements in the investment strategy, which cause it to be unsuitable in light of the investor's purpose and situation, need to be identified.

2. The investment strategy will need to be stripped of those elements and the portfolio reconstructed based on what would, on the balance of probabilities, have been the most likely outcome if that investment strategy had been used.

What is the traditional account of the test for remoteness of damages in contract?

The plaintiff may recover for losses of a type that arises in the usual course of things and that were not unlikely unless the loss was of a type that should have been avoided by taking reasonable steps.

When are special losses recoverable?

If the defendant can be said to have ahd sufficiently detailed knowledge of the special circumstances and that there was a reasonable probability that the special kind of loss would occur in event of a breach.

What is the second remoteness test?

Whether the loss in question falls whitin the scope of the contract.

Where will contractual liability depend on?

Whether a given type of loss is one for which a party assumed contractual responsibility involves the interpretation of the contract as a whole against its commercial background, and this, like all questions of interpretation, is a question of law.

Thwat is the most foreseeable and likely loss that will occur in the event of a breach?

A loss to the protfolio of investments that is the subject matter of the asset management agreement.

What is the very purpose of the asset management service?

To manage the portfolio of investments carefully with a view to obtaining the risk and return objectives by ensuring, subject to the investment constraints, that the investor is exposed to the chosen asset class in accordance with those objectives and subject to those constraints.

What is the general rule in contract for the assessment of damages?

The plaintiff must be put n a position he would most likely have been in had the contract been performed.

Where do the common losses that an investor will incur as a result of an investment manager's breach of the mandate divide into?

Absolute portfolio losses in the form of a depreciation in its value and relative or contingent losses in the form of opportunity costs.

Why is quantifying the relative cost of a lost opportunity is a less certain affaire?

It depends on certain contingencies. The challenge of establishing what that return would have been. Damages must be assessed as best as possible based on the available evidence.

Where does the assessment of damages depends on as well?

The scope of the manager's investment discretion.

What gives breach of fiduciary duty rise to?

To the equitable remedies of rescission or is rescission is no long possible, in the alternative the fiduciary will be liable to account for the benefits received as a result of the transaction entered into in breach of the fiduciary duty.

The question on the page originate from the summary of the following study material:

England and Wales

View summary

A unique study and practice tool
Never study anything twice again
Get the grades you hope for
100% sure, 100% understanding

Remember faster, study better. Scientifically proven.

England and Wales

48 important questions on England and Wales

When can a preliminary statement be classified as a primary or collateral term?

Which principal duty will arise under an asset management agreement?

What is quite common for an asset management agreement drafted under English law?

Waht is the essence of the service of an asset manager?

What will typically be subject to specified investment constraints?

What is the concept of construction?

How can terms be implied into a contract?

What is the main source of implied duties of the manager?

When breaches the agent its investment duty?

What is the benchmark in the context of th supply of asset management services?

Which general duty has the agent as well?

How is a discretionary authority to use agency powers characterized and what does that mean?

What is the rationale for the imposition of fiduciary duties?

In which four categories is the body of fiduciary duties divided?

Where does the operational range of fiduciary duties depend on?

Where can freedom of contract lead to?

What was teh consequence?

Which provisions form the principle terms of the mandate?

When can a institutional investor have the benefit of the protective statutory provision in the FSMA?

When will the asset manager will be liable for a breach of a contractual duty?

What will definitely cause a breach?

What requires liability for breach of the manager's investment duty?

How does the performance of the investment manager must be judged?

What did the lord conclude in the Nestle v. National Westminster Bank?

What is not proof of a failure to fulfil a duty of care?

What is not a form of delegation?

What is the result of the client's consent tot delegate responsibilities and authority?

What is the type of loss that an investor will incur?

In what form will an investor seek for compensation?

When will the asset manager be liable in the event of a breach?

When will it not be problematic to establish that the breach caused the portfolio loss?

What is a difficult question of causation?

On what grounds can a certain claim be based?

When is the causation requirement satisfied in case of breach?

When is the causation requirement satisfied in case of misrepresentation?

When is the causation requirement satisfied in case on failure to disclose certain features of the mandate?

Which two steps does the establishment of the claim require?

What is the traditional account of the test for remoteness of damages in contract?

When are special losses recoverable?

What is the second remoteness test?

Where will contractual liability depend on?

Thwat is the most foreseeable and likely loss that will occur in the event of a breach?

What is the very purpose of the asset management service?

What is the general rule in contract for the assessment of damages?

Where do the common losses that an investor will incur as a result of an investment manager's breach of the mandate divide into?

Why is quantifying the relative cost of a lost opportunity is a less certain affaire?

Where does the assessment of damages depends on as well?

What gives breach of fiduciary duty rise to?

Summaries related to England and Wales

England and Wales

HC week 48

Fiduciary duties

HC week 50

Week 1

Indian Economics

Global politics

Essentials of international relations

Behavioral genetics

Management and organisational behaviour

Follow Up Engels idioom 4/5 H

International Business