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

Question

Quizplus · Accepted Answer

Directors are not liable for mere errors of judgment when they act with care and good faith. This is the business judgment rule. The rule precludes the courts from substituting their business judgment for that of the corporation's managers. In short, it protects officers and directors from personal liability for honest mistakes in judgment.

When a Corporate Manager Makes an Honest Error in Judgment