The Modern Business Judgment Rule

The business judgment rule may be the most enigmatic doctrine in corporate law, but it has always performed a relatively straightforward task in the corporate governance system of the United States, namely, protecting corporate directors from liability for honest mistakes. The words that courts use to convey that simple idea have varied greatly, but perhaps none are more confusing than the words most often employed in the Delaware courts: “The business judgment rule … is a presumption that in making a business decision the directors of a corporation acted on an informed basis, in good faith and in the honest … Read more