A COGNITIVE THEORY OF FIDUCIARY RELATIONSHIPS

Is there anything special or distinctive about fiduciary relation- ships? Or is the term "fiduciary" nothing more than a label that ob- scures rather than clarifies? Recently, several law-and-economics scholars, building on the economic literature on agency costs,1 have argued that nothing categorically distinguishes fiduciary from nonfi- duciary legal relationships. So-called fiduciary relationships, they ar- gue, are nothing more or less than contractual relationships. Judge Frank Easterbrook and Dean Daniel Fischel, for example, state that "[fliduciary duties are not special duties; they have no moral footing; they are the same sort of obligations, derived and enforced in the same way, as other contractual undertakings."2 While acknowledging that "[c]ases announcing fiduciary obligations teem with [moralizing] language"3 of the kind Cardozo employed in his famous opinion in Meinhard v. Salmon,4 Easterbrook and Fischel argue that, analytically, fiduciary relations are just contractual arrangements with unusually high transaction costs. This high-faluting rhetoric is just that-over- blown rhetoric that obscures more than it illuminates.