Fiduciary duty is a legal obligation where one party, known as the fiduciary, must act in the best interest of another party, often referred to as the principal or client. This relationship is built on trust and requires the fiduciary to prioritize the interests of the principal over their own. Common examples include relationships between financial advisors and their clients, or trustees and the beneficiaries of a trust. Fiduciaries are expected to provide full disclosure of any potential conflicts of interest and to manage the principal's assets with care and loyalty. Breaching this duty can lead to legal consequences, as the fiduciary is held to a high standard of conduct.