business judgment rule



Legal presumption that the management of a firm is acting in the firm's best interest and, therefore, its decisions are protected from judicial review. It protects the management from decisions that result in loss or turn out to be wrong. If the management is found, however, to be in violation of its fiduciary duties, the rule does not apply and its activities come under the scrutiny of the courts.

Related Videos

Have a question about this term? Ask for help in the
Browse by Letter: # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z