Business Judgment Rule Legal Meaning and Definition

Here is a simplified definition of the legal term Business Judgment Rule.

Business Judgment Rule


The Business Judgment Rule is a legal principle that protects corporate directors and officers from personal liability for their management decisions. The rule assumes they are acting in good faith, with reasonable care, and in the best interest of the corporation, even if their decisions result in loss or damage. This rule does not protect directors or officers whose decisions are influenced by self-interest, corruption, or ignorance.