business judgment rule

Definition of "business judgment rule"
  1. A legal principle shielding directors of corporations from liability for outcomes of sound, well-informed decisions made in the genuine interests of the corporation
How to use "business judgment rule" in a sentence
  1. The board of directors was covered by the business judgment rule when they made the decision to cut costs by relocating headquarters.
  2. In the case of a risky investment, the business judgment rule could save the corporate directors from being held accountable should the decision lead to losses.
  3. Because they had done comprehensive research before making the decision, the business judgment rule protected the company's board of directors from any liability.

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