Chapter 8: duty of care

Question 1

duty of care

Answer 1

diligence act = obligation of the means

Question 2

director not liable if

Answer 2

act on informed basis
take time and steps (expert)
decision in good faith

Question 3

BJR doctrine

Answer 3

assume good faith, informed basis, company’s best interest

Question 4

overcome BJR

Answer 4

breach of loyalty, failure to inform, criminal conduct, irrational decision

Question 5

director can be liable FOR

Answer 5

misfeasance (damaging) & nonfeasance (failure to monitor)

Question 6

Caremark standard

Answer 6

ensure legal compliance & adequate info flows

Question 7

art. 2381(3) ICC

Answer 7

duty to assess adequacy of corpo systems

Question 8

smith vs gorkom

Answer 8

sell comp without board approval -> BRJ overcome gross negligeance

Question 9

caremark international

Answer 9

illegal payment -> settle -> no sustained failure + compliance system and expert reliance

Question 10

DGCL 102b-7

Answer 10

remove monetary liability for outside directors