Question

Guy is a director of Healthcare Corporation. Guy attempts to use his best judgment in guiding corporate management but makes a few honest mistakes. His best defense against liability for these mistakes is a. the business judgment rule. b. business success insurance. c. the duty of loyalty. d. none of the choices.

Answer 1

The best defense that Guy can make against liability for these mistakes is:  a. the business judgment rule.

The business judgment rule states that unless otherwise proved, managers are making decisions in the best interest of the organization and its stakeholders.

In Guy's case above, we see that the honest mistakes he made were in the best interest of the organization. He had no ulterior motives.

Learn more about the business judgment rule here:

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