Brice is on the board of ABC Corporation.XYZ Corporation has made a move to acquire ABC.Taylor,the president of ABC,advises the board that the offer made by XYZ is a good one that should be accepted.Taylor did not disclose,however,that XYZ had offered a generous bonus if Taylor could convince the board members of ABC to take XYZ's offer.Brice tells the other board members that they should simply rely on Taylor,who is probably right,and under the business judgment rule they are protected even if Taylor is wrong.Which of the following is true regarding Brice's advice?
A) Brice is correct.
B) Brice is correct only if the directors of ABC had been soliciting offers,and Taylor was charged with reviewing them.
C) Brice is incorrect unless it can be established that Taylor has prior experience in mergers and acquisitions.
D) Brice is incorrect because no statement made by an officer is entitled to blind reliance.

Question

Quizplus · Accepted Answer

Brice's advice is incorrect because directors of a corporation cannot blindly rely on statements made by officers without conducting their own independent investigation. Additionally, Taylor's failure to disclose the bonus offered by XYZ creates a conflict of interest and undermines his credibility. Therefore, the business judgment rule may not provide protection in this situation.

Brice Is on the Board of ABC Corporation