Business Judgement Rule

According to the National Paralegal College (NPC), it has been said that defining the Business Judgment Rule is complicated to define. However, we need to understand the parameters in which this law is based on. Business Judgement Rule (BJR) is commonly defined as “A legal principle that makes officers, directors, managers, and other agents of a corporation immune from liability to the corporation for loss incurred in corporate transactions that are within their authority and power to make when sufficient evidence demonstrates that the transactions were made in Good Faith.” (TFD) In the United States, the idea behind this rule is that doing business is making decisions that may be controversial or risky nature. This is why; this corporate

“Decisions must be made in good faith, must be reasonable, and must be under the belief that was made for the interest of the company; in order to be applicable.” Sometimes, miscalculations can cause irreversible damages to a company, but, we need to remember within the imperfections and errors, we can find perfection —metaphorically speaking— within a person. We cannot pretend we will build a prosperous emporium on a clean and successful path. From my perspective, I approve this rule’s policy, because, I believe that some scratches along our path, can impact positively for any company. Back in the days, many innocent people had to deteriorate their lives in a prison for a bad decision. It is impossible not to make mistakes in a company; therefore, this legal policy (BJR) gives corporate officers a relief to prove their innocence in front of a judge, and audience that will later determine if his/her actions were made in “Good Faith.” Nevertheless, if his action was delivered it on purpose, he must pay for his crime or contemplation. As an investor, I would not like to lose money, but I cannot imprison, whoever I want, because I had a negative turnover. Although, it is easier to blame somebody else, point his/her mistakes, and ignore his/her achievements in prior decisions. Consideration should be reciprocal. The business judgement rule prioritizes a common human mistake to

Australia like the U.S states that members of the executive board have a duty of care to their companies. If misbehavior or the belief of misconduct occurred in a company, it can be brought to court by a shareholder or, more commonly, a group of shareholders. The business judgment rule is used to review these cases to determine whether people can litigate a lawsuit. If they do, the board will be responsible for the decisions they made and ask them to be kept to demonstrate their reasoning. Nonetheless, the major difference between the U.S and Australian Judgement Rule is that if the company presents just one evidence, even though, the director or corporate officer has more evidence on his/ her side, court can rule in favor of the company. Consequently, the director, will have to sign a “private contract” to make his mistake a personal debt. If, he does not have enough money to pay his/her mistake, he will work for a reasonable time to pay back the losses caused by his bad decision. Subsequently, after all this process, the corporate officer may go to prison depending of the degree of its