Definition Of Business Judgment

The business judgment rule is invoked in lawsuits when a director of a corporation takes an action that affects the corporation and a plaintiff sues alleging that the director violated the duty of care to the corporation.

Definition of business judgment. It protects the management from decisions that result in loss or turn out to be wrong. Means any decision to take or not take action in respect of a matter relevant to the business operations of the company. 2 aktg 2005 hatte der bgh sog. Legal presumption that the management of a firm is acting in the firm s best interest and therefore its decisions are protected from judicial review.

The business judgment rule is a case law derived doctrine in corporations law that courts defer to the business judgment of corporate executives. The business judgment rule protects companies from frivolous lawsuits by assuming that unless proved otherwise management is acting in the interests of shareholders. A legal principle which grants directors officers and agents of a company immunity from lawsuits relating to corporate transactions if it is found that they have acted in. Der gedanke der business judgement rule bjr entspringt dem us amerikanischen recht schon vor ihrer gesetzlichen einführung über 93 abs.

A legal principle that makes officers directors managers and other agents of a corporation immune from liability to the corporation for loss incurred in corporate transactions that are within their authority and power to make when sufficient evidence demonstrates that the transactions were made in good faith. If the management is found however to be in violation of its fiduciary duties. The definition of the business. The business judgment rule definition has traditionally been defined as protecting a corporation s non interested officers and directors from personal liability for their actions in operating the corporation in the honest exercise of their business judgment even if their decisions are wrong unwise or negligent.

A rule of law that provides corporate immunity to directors of corporations protecting them from liability for the consequences of informed decisions made in good faith. In suits alleging a corporation s director violated his duty of care to the company courts will evaluate the case based on the business judgment rule. Legal definition of business judgment rule. It is rooted in the principle that the directors of a corporation.