Business Judgment Rule

The Business Judgment Rule is a legal principle that protects corporate leaders, like directors and officers, when they make decisions for the company. It recognizes that business decisions often involve risks and uncertainties. As long as these leaders act in good faith, with reasonable care and in the company's best interest, courts generally won't second-guess their choices. This rule encourages executives to take necessary business risks without the fear of legal repercussions, fostering innovation and effective management.