Asked by Eunice Gwendolyn on Jun 22, 2024
Verified
Gil is an officer for HVAC Corporation. Due to a bad choice of supplier on Gil's part, HVAC's costs increase. Gil is most likely liable for breach of
A) breach of trust and confidence.
B) breach of the business judgment rule.
C) negligence or mismanagement.
D) none of the choices.
Negligence Or Mismanagement
Failures in duty or improper handling of responsibilities, often leading to harm or loss, due to carelessness or lack of competence.
Breach Of Trust And Confidence
This legal term refers to an act that undermines the trust and confidence between parties in a relationship, particularly in employment, where an employer significantly violates an implied term of mutual trust and confidence.
- Understand conditions that can lead to breaches of corporate duties by directors and officers, and the ensuing legal consequences.
- Scrutinize the legal outcomes associated with corporate governance choices, including employment approaches, breaches of agreement, and neglect.
Verified Answer
LC
Lauryn ClinkscalesJun 25, 2024
Final Answer :
D
Explanation :
Gil's decision, even if it resulted in increased costs, does not necessarily constitute a breach of trust and confidence, a breach of the business judgment rule, or negligence/mismanagement without further evidence of bad faith, lack of due diligence, or violation of company policies. The business judgment rule often protects officers and directors when they make decisions that turn out poorly, as long as those decisions were made in good faith, with the care that an ordinarily prudent person would use, and in a manner they reasonably believe to be in the best interests of the corporation.
Learning Objectives
- Understand conditions that can lead to breaches of corporate duties by directors and officers, and the ensuing legal consequences.
- Scrutinize the legal outcomes associated with corporate governance choices, including employment approaches, breaches of agreement, and neglect.