Close X

Business Judgment Rule

Business Judgment Rule

  • Term

    Main definition

  • Business Judgment Rule

    A judicial principle that the courts should defer to and will not second-guess most judgments made by the boards of directors of corporations, the managers of LLCs, or the general partners of partnerships.

    A legal presumption that actions taken or refrained from by a corporation's board of directors are done in good faith, after having been considered and decided on an informed basis, and reflecting a reasonable business judgment concerning whether such action is in the best interests of the corporation and its stockholders. The decisions made by the board of directors will not be second-guessed by a reviewing court. This rule is grounded in state corporation law and judicial interpretations, and thus may vary from state to state in details of its substance or application and exclusions.

Contact us Today

The Nick Yocca Law Firm is committed to answering your questions regarding business law, corporate compliance, and other important legal matters in Orange County.

We'll gladly discuss your case with you at your convenience. Contact us today to schedule an appointment!