Keywords
Duty of Care
Business Judgment Rule as a standard of liability
Business Judgment Rule as a doctrine of judicial abstention
Good Faith
Self Dealing
How to Cite
Abstract
It is quite a uniform understanding that the Business Judgment Rule (BJR), even though deeply and widely developed, is still a foggy and unclear concept. There seems to be a consensus on the generally formulated rationales of the rule, but their shades, even after more than 25 years of analysis and debate1, remain undecided.
This paper reflects an analysis grounded on the seminal decisions that the Delaware Courts have produced on the BJR and will set what limits have these courts drawn. It is well known that Delaware jurisdiction is fundamental not only for American corporate law, but also for international corporate law.
Recent world known corporate failures have encouraged the judiciary, if not to reformulate the BJR, at least to suggest a narrower spectrum for its application, which responds to the world new command for corporate security and director’s accountability.
In the first part of this work we make a brief exposition on the basics of the BJR, without purporting to cover or even touch all issues and ramifications of the rule. In the second part we review the comments upon current decisions in order to understand the modern conception of the rule. This part, on one side, will focus on describing the seminal decisions of the Delaware Courts regarding the BJR and, on the other, whether the rule, after Enron’s crisis is being considered as an abstention rule or as a standard of liability.
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