The Modest Business Judgment Rule
Washington and Lee University - School of Law; University of St. Thomas, St. Paul/Minneapolis, MN - School of Law
This article argues that Delaware mis-formulates and mis-uses the business judgment rule. Properly understood, the business judgment rule's function in corporate law is quite modest. It is a narrowly-drawn judicial policy of nonreview which, in duty of care cases, shields the merits of board decisions from judicial scrutiny. The article contends that the business judgment rule, therefore, should be de-emphasized as an analytical construct in the law of director fiduciary duties and should be sharply differentiated from the broader-gauged duty of due care. Doing so will pave the way for Delaware courts to rethink the importance of articulating a robust, generally applicable ? but concisely formulated ? director duty of due care.
working papers series
Date posted: July 10, 2000
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