4.3 Good Faith in the Performance of the Deal

If a trustee’s fiduciary duty is merely a contract term, susceptible to waiver, then good faith in performance of the “deal” is the only immutable, trust value. This approach would be compatible with the interpretation of fiduciary duty espoused by Judge Easterbrook and Professor Fischel: “Fiduciary duties are not special duties.”[1] Professor Langbein embraces the “contractarian vision of the trust” as a useful way “to account for the trust more accurately.”[2] He seems willing to transpose good faith in contract as the basis for regulating trustee discretion: “The good faith standard in contract law echoes the norms of trust fiduciary law, which regulate the trustee’s embedded discretion in performing the trust deal.” [3] He does not, however, go so far as to argue that fiduciary duty can be eliminated in favor of a mere obligation to act in good faith under the contract law standard. Fiduciary duty may be highly alterable by a settlor, but a settlor may not dispense with fiduciary obligations altogether:

Oddly, however, although the various fiduciary rules are default rules, the settlor may not abrogate them in their entirety, because eliminating all fiduciary duties would make the trust illusory.[4]

* * *

In this way, the requirement that the trust must have enforceable duties has the consequence of placing aggregate limits on the manner and the extent to which a settlor can oust the default law.[5]

We are not told where the line is to be drawn, nor, of course, was such a line drawn with any precision under the Uniform Trust Code.[6] [1] Easterbrook & Fischel, supra note 11, at 427.

[2] Langbein, “Contractarian,” supra note 6, at 671.

[3] Id. at 655.

[4] Langbein, “Mandatory Rules,” supra note 45, at 1122-3.

[5] Id., at 1123.

[6] This is not meant as a criticism of the Uniform Trust Code. Indeed, it is one of its great strengths: the Uniform Trust Code was intentionally structured to permit courts to continue to have the traditional discretion to decide where the lines ought to be drawn in any particular case. See infra notes 84-5 and accompanying text.