Fact Pattern 30-1
Ray is a shareholder of Small Biz Company (SBC). When the directors fail to undertake an action to redress a wrong suffered by SBC, Ray files a suit on the firm's behalf.
-Refer to Fact Pattern 30-1. Ray's suit is a shareholder's

Question

Quizplus · Accepted Answer

Ray's suit is a derivative suit, which is filed by a shareholder on behalf of the corporation against a third party or against the corporation's directors and officers for breach of duty. In this case, Ray is filing the suit to redress a wrong suffered by SBC, which makes it a derivative suit. The business-judgment rule, duty of care, and duty of loyalty are not relevant to this fact pattern as they pertain to different aspects of corporate governance and decision-making.

Fact Pattern 30-1 Ray Is a Shareholder of Small Biz Company (SBC). When