The Business Judgment Rule

question 447

Multiple Choice

The business judgment rule:

• A) is applied when directors of a corporation act negligently
• B) protects directors and managers of a corporation who have made honest mistakes in judgment
• C) is used by courts to impose strict liability on directors and managers when violated
• D) protects directors and managers of a corporation who have made honest mistakes in judgment and is used by courts to impose strict liability on directors and managers when violated
• E) none of the other choices

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Definitions:

Conditions Precedent

Specific conditions outlined in a contract that must be met before a party is required to fulfill their part of the agreement.

Conditions Subsequent

Contractual clauses that stipulate certain events or actions must occur or fail to occur, which will terminate an existing obligation or contract.

Nominal Conditions

Conditions in name only, having little to no impact on the terms or outcome of a contract or agreement.

Specific Performance

A legal remedy in contract law that requires a party to perform their obligations under a contract, rather than only compensating the other party with money.