The business judgment rule emerges from the duty of due diligence that a manager owes to the corporation.

Question

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The business judgment rule is a legal principle that grants managers of a corporation a presumption of sound decision-making, as long as they act in good faith, with reasonable care, without conflicts of interest, and in the best interests of the company. The duty of due diligence is part of the standard of care that directors and officers owe to their corporation, and it requires them to make informed and deliberate decisions based on available information and professional expertise. Thus, the business judgment rule and the duty of due diligence are interrelated concepts, with the former providing a safe harbor to the latter.

The Business Judgment Rule Emerges from the Duty of Due