MI Bar Practice Questions - Michigan Bar Examination Exam

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A director of a Michigan corporation makes an informed, good-faith business decision that later turns out badly, causing losses. Under the business judgment rule, a court will most likely:

Hold the director personally liable for the losses Apply strict liability to all board decisions Require the director to reimburse shareholders automatically Defer to the decision and not second-guess it, absent fraud, bad faith, self-dealing, or gross negligence

Correct Answer:

Defer to the decision and not second-guess it, absent fraud, bad faith, self-dealing, or gross negligence

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