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Vanderbilt University Law School

Business Organizations Law

Duty of care

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Full-Text Articles in Law

The Forgotten Derivative Suit, Kenneth B. Davis, Jr. Mar 2008

The Forgotten Derivative Suit, Kenneth B. Davis, Jr.

Vanderbilt Law Review

One of U.S. corporate law's most salient features is its flexibility. Those who control and manage the corporation are given a long leash. This is particularly evident when the United States is compared with other countries in studies like the World Bank's annual Doing Business project. According to the detailed study that developed the World Bank methodology for measuring investor protection,1 the United States scored a 0.33 for "ex ante private control of self-dealing." This was not only below the world average of 0.36, but also well below the 0.58 average for common law countries. The United Kingdom, in contrast, …


An Historical Perspective On The Duty Of Care, The Duty Of Loyalty, And The Business Judgment Rule, Marcia M. Mcmurray Apr 1987

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 …


Recent Developments Concerning The Duty Of Care, The Duty Of Loyalty, And The Business Judgment Rule, Patricia A. Daniel Apr 1987

Recent Developments Concerning The Duty Of Care, The Duty Of Loyalty, And The Business Judgment Rule, Patricia A. Daniel

Vanderbilt Law Review

The judiciary faces a difficult task in attempting to define the proper standards of conduct for corporate directors and officers. Although courts have enunciated various standards, the prevailing theme has been that corporate directors and officers are fiduciaries who have a "distinct legal relationship" with the corporation and its shareholders. As fiduciaries, directors and officers must con-form to the duty of care and the duty of loyalty. The business judgment rule, which creates a presumption of propriety for directors' and officers' substantive business decisions, developed concurrently with these duties. Several recent court decisions concerning corporate director and officer liability appear …


The Duty Of Care And The Duty Of Loyalty In The Revised Model Business Corporation Act, Thomas A. D'Ambrosio Apr 1987

The Duty Of Care And The Duty Of Loyalty In The Revised Model Business Corporation Act, Thomas A. D'Ambrosio

Vanderbilt Law Review

In 1950 the Committee on Corporate Laws of the Section of Corporation, Banking and Business Law of the American Bar Association (the Committee) adopted the Model Business Corporation Act (Model Act or MBCA). The Committee drafted the Model Act in order to provide a dynamic model for keeping state corporation laws updated and responsive to the current demands of the business and legal communities.' Because of this goal, the Model Act was in a constant state of revision. This constant state of revision provided an impetus for the Committee to adopt, in 1984, the Revised Model Business Corporation Act (Revised …


The Corporate Governance Debate And The Ali Proposals: Reform Or Restatement?, Kathryn N. Fine Apr 1987

The Corporate Governance Debate And The Ali Proposals: Reform Or Restatement?, Kathryn N. Fine

Vanderbilt Law Review

Much of the debate concerning corporate governance centers on the American Law Institute's proposed Principles of Corporate Governance [hereinafter ALI Proposals or ALI Principles].' The "restate" the law of corporate governance without departing from the primary goal stated in the ALI's charter: "to promote the clarification and simplification of the law and its better adaptation to social needs."' The ALI Proposals, however, have evolved into a"new art form"' and, unlike a restatement, have proposed reforms in addition to codifying the common law. Because of the predominance of statutory corporation law, the ALI Proposals have focused selectively on those areas that …