Directors’ Duty of Care and the Business Judgment Rule: American Precedents and Australian Choices

Abstract

Regardless of local differences in detail, directors occupy a central position in systems of corporate law. Significant and pervasive questions surround the expectations defined by the law for directors’ performance in office, along with the circumstances under which directors incur personal liability. This essay begins by explaining the development, in the United States, of the law defining the duty of care a director owes to a corporation, along with the circumstances under which a director will be personally liable for breaching that duty. It then examines the relevance of these developments to the current Australian context.