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An Historical Perspective On The Duty Of Care, The Duty Of Loyalty, And The Business Judgment Rule, Marcia M. Mcmurray

Vanderbilt Law Review

For more than two hundred years courts have attempted to define the status and character of corporate directors and officers in an effort to establish and delineate their responsibilities and liabilities. In Charitable Corp. v. Sutton,' an eighteenth century English case, the Lord Chancellor described corporate directors as both agents and trustees. This mixed characterization was adopted and subsequently persisted in later American cases until courts finally determined that directors and officers are fiduciaries"who have a "distinct legal relationship" with the corporation. As fiduciaries, directors and officers must conform to the duty of care'and the duty of loyalty, duties that …