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  • Business Associations (Corporations) - Duty of Care Flowchart

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    Bill Brasky
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    This diagram outlines the business judgment rule (BJR) and how it protects corporate directors and officers from liability for negligent decisions and establishes a high bar for shareholder claims. The BJR presumes that directors acted with due care and in good faith unless their decision-making process was reckless. Exculpation clauses under state law like Delaware's Section 102(b)(7) further protect directors from liability for breaching their duty of care so long as their actions were not reckless or taken in bad faith. As a result, the BJR makes it very difficult for shareholders to win claims or be awarded damages unless the directors' actions were extremely unreasonable.

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    This diagram outlines the business judgment rule (BJR) and how it protects corporate directors and officers from liability for negligent decisions and establishes a high bar for shareholder claims. The BJR presumes that directors acted with due care and in good faith unless their decision-making process was reckless. Exculpation clauses under state law like Delaware's Section 102(b)(7) further protect directors from liability for breaching their duty of care so long as their actions were not reckless or taken in bad faith. As a result, the BJR makes it very difficult for shareholders to win claims or be awarded damages unless the directors' actions were extremely unreasonable.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    3K views1 page

    Business Associations (Corporations) - Duty of Care Flowchart

    Uploaded by

    Bill Brasky
    This diagram outlines the business judgment rule (BJR) and how it protects corporate directors and officers from liability for negligent decisions and establishes a high bar for shareholder claims. The BJR presumes that directors acted with due care and in good faith unless their decision-making process was reckless. Exculpation clauses under state law like Delaware's Section 102(b)(7) further protect directors from liability for breaching their duty of care so long as their actions were not reckless or taken in bad faith. As a result, the BJR makes it very difficult for shareholders to win claims or be awarded damages unless the directors' actions were extremely unreasonable.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 1

    BJR = RIP

    “BJR is Where Claims Go To Die”

    BUSINESS
    Π SH WINS
    DECISION JUDGMENT
    $$$
    RULE
    FAIR

    YES
    NOT
    NEGLIGENT
    FAIR
    (actually anything
    Π less than Reckless)
    SHAREHOLDER

    FAIRNESS
    Entirely/Intrinsically
    DECISION-MAKING Fair
    PROCESS EXCULPATION
    RECKLESS CLAUSE NO
    DUTY OF CARE DE = 102(b)(7)
    Burden on Π to
    prove Δ was reckless
    in the decision
    making process

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