When a Corporate Manager Makes an Honest Error in Judgment

question 6

Multiple Choice

When a corporate manager makes an honest error in judgment, the business judgment rule directs that the manager will:

• A) be liable for corporate losses.
• B) not be liable and a court will step in to correct the manager's mistake.
• C) not be liable if he acted with care and in good faith.
• D) be liable for all losses resulting from the error.

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Definitions:

Acquisition

Acquisition refers to the process of gaining knowledge, skills, or qualities through experience, practice, or the receiving of information.

Performance

The act of carrying out or accomplishing an action, task, or function.

Punishment Consistent

The reliable and systematic application of a negative consequence following an undesired behavior in order to decrease its occurrence.

More Severe

Describing a condition or situation that is of greater intensity, seriousness, or urgency than previously noted or compared to others.