Smith v. Van Gorkom (legal case)

Smith v. Van Gorkom (1985) is a landmark U.S. corporate law case in which the Delaware Supreme Court held that directors have a duty to adequately inform themselves before making decisions, particularly regarding significant matters like a company sale. In this case, the board approved a quick sale of Trans Union without thoroughly analyzing the company's value. The court found the directors breached their duty of care by not doing enough due diligence, rendering the approval negligent. This case emphasized that directors must exercise careful judgment and fully inform themselves to fulfill their fiduciary duties.