Business Judgment Rule Officers

States extend the rule to corporate officers by statute and the trend is to not do so judicially.

Business judgment rule officers. 8 lori mcmillan the business judgment rule as an immunity doctrine. The principle underlying the rule is to allow these persons to make business decisions without fear of frivolous lawsuits. Are clothed with the presumption which the law accords to them of being motivated in their conduct by a bona fide regard for the interests of the corporation whose affairs.

The business judgment rule is corporate law s central doctrine pervasively affecting the roles of directors officers and controlling shareholders. As professor lyman p q. Often moreover judicial assertions concerning the rule s application to officers are extraneous to the ratio decidendi of the case and hence constitute mere dicta.

But does it apply to business decisions made by corporate officers. Johnson has observed avoiding judicial encroachment into business decisions is one of the policy rationales commonly advanced for applying the business judgment rule to officers. Directors and officers owe a duty of care in general directors and officers of a corporation including nonprofit organizations owe the corporation a duty of care.

This duty of care means you. Increasingly moreover versions of the business judgment rule are found in the law governing the other types of business organizations ranging from such common forms as the general partnership. Corporate officers and the business judgment rule 441 extended to an officer qua officer.

The business judgment rule is a legal principle that makes officers directors managers and other agents of a corporation immune from liability to the corporation for any loss incurred as a result of corporate transactions that are within their authority. The business judgment rule provides a presumption that a director or officer acted appropriately and in the interests of the company. Corporate officers and the business judgment rule 60 bus.

If you are an officer or director accused of making a bad decision the business judgment rule is an important defense to understand. It is rooted in the principle that the directors of a corporation. Block et al 1987 the business judgment rule fiduciary duties of corporate directors and officers clifton n j prentice hlm.