|Title of host publication
|Encyclopedia of Sustainable Management
|Samuel Idowu, René Schmidpeter, Nicholas Capaldi, Liangrong Zu, Mara Del Baldo, Rute Abreu
|Number of pages
|Published - 2023
The business judgment rule is a rule in corporate law which provides directors of a business corporation a defense in lawsuits where corporate decisions have been challenged in the courts. The rule provides a defense where directors can demonstrate that they have acted in good faith. The rule is based on the general corporate law principle that the courts will not impose liability where a corporate decision has had negative consequences for the company provided that the directors have acted in the best interests of the company when taking those decisions (Arsht 1979; Sheehy and Feaver 2014).