Business Judgment Rule

Business Judgment Rule

What does Business Judgment Rule mean in American Law?

The definition of Business Judgment Rule in the law of the United States, as defined by the lexicographer Arthur Leff in his legal dictionary is:

Very roughly, a rule that immunizes management (and the directors) or a corporation from liability for losses if the decisions were within the normal business judgment or such persons, i.e., not ultra vires, fraudulent, in bad faith, self-serving, etc. Briefly, management ordinarily has no liability to a corporation or its stockholders for ordinary errors made in the ordinary course of business.






Leave a Reply

Your email address will not be published. Required fields are marked *