Question

The business judgment rule has been replaced by good faith statutes in most states. True or False

Answer 1

Answer:

False

Explanation:

The business judgement law is the law principle that provides honest business decision made in good faith and on which no further investigations are actionable even the decision is mistaken or harmful.

The Business Judgement Rule States:

An officer who makes business judgement in good faith fulfills (the day of care) if he

1. Is not interested in subject of his business judgement
2. Is informed with subject of his business judgement to the extent (he) reasonably believes to be appropriate under the circumstances
3. Rationally believes that his business judgement is in the best interest of the company

Moreover, none of the states has replaced it with good faith statues as it's the law for taking critical business decisions.