In short, the Business Judgment Rule is defined by Georgia Case Law, that presumes a business decision by a company employee (who acts in good faith and exercises ordinary care) that fails to achieve its desired outcome is protected from a legal challenge by owners, employees, vendors, and other stakeholders. But actually, it’s only protected from a legal challenge if you document the acquisition and type of information, and prove its reliability and of the sources, and prove that it wasn’t simple negligence. Experts advise the decision maker to keep a log of what information is used to make the decision and meetings/discussions with the sources of the information.
I guess the 3 most important words to use the Business Judgment Rule in the decision maker’s defense are: Document – document – document!
Source of post: Atlanta Business Chronicle, September 5-11, 2014.