Youtor
Duty of Care
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http://youtube.com/watch?v=tvnl9_IXk0I
The duty of care applies to directors, officers, and employees of the corporation. Learn about the four standards that fall under the duty of care, including ordinary negligence, gross negligence, recklessness, and intentional misconduct. • Brought to you by Learn Law Better https://learnlawbetter.com • Newsletter Sign-Up: http://eepurl.com/cBOaBv • RESOURCES: • Facebook : / learnlawbetter • Twitter: / learnlawbetter • Blog: https://learnlawbetter.com/blog • Members on a board of directors are in a fiduciary relationship with the corporation. If a director breaches a fiduciary duty, the director can be sued by the corporation or by a shareholder of the corporation. • The duty of care requires directors to act reasonably under the circumstances. Failing to act reasonably under the circumstances results in the director breaching the duty of care, which is called negligence. Over time the courts have created four categories under duty of care: ordinary negligence, gross negligence, recklessness, and intentional misconduct. • Most corporate negligence falls in the ordinary negligence category. To protect directors from ordinary negligence, the courts created the Business Judgment Rule. The Business Judgment rule exists because the courts realize that the directors are in the best position to make decisions for the corporation, and that any other approach would replace the director’s judgment with a judge’s judgment as to what is reasonable. • The second category is gross negligence. It falls short of a reckless disregard of the consequences, and differs from ordinary negligence only in degree, and not in kind. • The third category is recklessness, which is defined as acting with a conscious disregard for the rights of another. I • The fourth category is intentional misconduct. This occurs when someone desires to commit an unreasonable act. • Learn Law Better is helping law students get better grades and prepare for the bar exam.
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