Understanding Maryland’s Business Judgment Rule


The “Business Judgment Rule” (“BJR”) is a common law stan- dard of judicial review. The BJR is applied by the courts to favor the actions of corporate managers. According to Henry Manne, a leading commentator on corporate law, the BJR protects from ju- dicial review “honest if inept business decisions” made by corpo- rate managers. By accomplishing this strategic objective, the BJR tries to obtain its ultimate goal – preventing courts from exer- cising regulatory authority over corporate management. The creation of the BJR as a means of obtaining this goal is a direct product of the time period in which it originated. The BJR first appeared in the 19th century, a time when there was a fear of gov- ernment regulation. Since then, the BJR has been used by the courts as a means to avoid the exercise of regulatory authority over corporations.
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