Business Judgment Rule

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Business Judgment Rule

In American business law, the concept granting members of the board of directors of a corporation the presumption that they intend to work for the company's profitability, provided they act in good faith. That is, courts assume boards of directors think they are doing the right thing even if an act harms the company in retrospect. This protects members from shareholder lawsuits in the event their actions do not go as planned. On the other hand, if a board of directors is found to have squandered the company's resources by, for example, grossly overpaying when buying or receiving far too little when selling assets, it may still be found legally liable.
References in periodicals archive ?
53) It appears that the Court would approve of judicial protection for trustees, much in the same way it does for corporate directors, by employing the business judgement rule.
Business Judgement Rule The validity of the agreement which raised these issues was then dealt with by Mr.
22) Bayless Manning, The Business Judgement Rule and the Director's Duty of Attention: Time for Reality, 39 BUS.
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