Legal Definitions - loyalty

Loyalty, in a legal context, refers to a fundamental commitment of faithfulness or allegiance owed by one party to another, or to a specific duty or cause. This commitment often implies a responsibility to act in the best interests of the party to whom loyalty is owed, and to avoid conflicts of interest that could undermine that trust.

Here are some examples illustrating the concept of loyalty:

• Employee's Duty to an Employer: Imagine an engineer working for a technology company who has access to proprietary software designs. If this engineer were to secretly develop a competing product using their employer's confidential information and then attempt to sell it, they would be breaching their duty of loyalty. Their employment contract, and general legal principles, require them to act in the best interests of their employer, protect company secrets, and not engage in activities that directly compete with or harm the company while employed.

• Fiduciary Duty of a Board Member: Consider a member of a non-profit organization's board of directors. This board member learns about a grant opportunity that perfectly aligns with the non-profit's mission and could secure significant funding. If the board member were to secretly apply for that grant for their own personal project or another organization they control, rather than bringing it to the attention of the non-profit, they would be violating their duty of loyalty. Board members have a legal obligation to prioritize the organization's interests above their own personal gain or the interests of other entities they might be involved with.

• Attorney-Client Relationship: A lawyer represents a client who is selling a piece of commercial property. During the negotiation, the lawyer discovers that a potential buyer is a company in which the lawyer holds a significant financial stake. The lawyer's duty of loyalty to their client would require them to immediately disclose this conflict of interest to the client and potentially withdraw from representing them, as their personal financial interest could compromise their ability to advocate solely and impartially for the client's best interests in the sale.