Directors' Duties (Care & Loyalty)
Business Associations · Lesson 05
Directors' Duties (Care & Loyalty)
這一課問的是：董事是否違反注意或忠誠義務？商業判斷規則能否保護其決定？
ActorActObjectStandardConsequence
Visual Scene · the picture in your head
Issue. Did the director breach the duty of care or loyalty — and does the business judgment rule shield the decision?
這一課問的是：董事是否違反注意或忠誠義務？商業判斷規則能否保護其決定？
Core Terminology · 7 must-know
Tap a card to flip and reveal the meaning.
duty of care
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Director must act with reasonable diligence and informed judgment.
注意義務。
duty of loyalty
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Director must act in corporation's best interest, not self-interest.
忠誠義務。
business judgment rule
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Presumption that informed, disinterested directors acted in good faith.
商業判斷規則。
self-dealing
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Transaction in which director has personal interest.
自我交易。
corporate opportunity
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Opportunity belonging to corporation that director takes personally.
公司機會。
ratification
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Fully informed shareholders may ratify a self-dealing transaction.
追認。
entire fairness
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Standard applied when BJR doesn't shield (self-dealing).
完全公平。
Issue · what this lesson is really about
Did the director breach the duty of care or loyalty — and does the business judgment rule shield the decision?
這一課問的是：董事是否違反注意或忠誠義務？商業判斷規則能否保護其決定？
Trigger words & phrases that should flag this issue:
directorconflictself-dealingBJRbusiness judgmentnegligence
Expression Bank · how lawyers actually say it
Six function → sentence patterns. Use these in essay applications.
| Function | English sentence | 中文 |
|---|---|---|
| State BJR | Business judgment rule presumes directors acted on informed basis, in good faith, in corporation's best interest. | 商業判斷規則之推定。 |
| Apply duty of care | Directors must inform themselves of material information reasonably available. | 董事須了解可獲之重要資訊。 |
| Apply duty of loyalty | Self-dealing transactions face entire fairness review unless ratified. | 自我交易須完全公平審查或經追認。 |
| Apply corporate opportunity | Directors must offer corporate opportunities to the corporation first. | 公司機會須先讓與公司。 |
Rule Sentence · the workhorse
Directors owe the corporation a duty of care (informed, deliberate decision-making) and a duty of loyalty (no self-dealing, no usurpation of corporate opportunities); the business judgment rule presumes that informed, disinterested directors acted in good faith, shielding their decisions absent rebuttal.
Sentence Anatomy · 5 roles, 5 colors
Every rule sentence breaks into five visual roles.
Actor 行為人director董事
Act 行為making business decision作商業決定
Object 對象corporation公司
Standard 法律標準care + loyalty + BJR注意 + 忠誠 + BJR
Consequence 後果decision protected or director liable決定受保護或董事負責
Casebook Snapshot · a real American case
Smith v. Van Gorkom
Holding. Directors who approve a major transaction without adequate information — here, approving a cash-out merger in a single 2-hour meeting without reading the merger agreement, obtaining a fairness opinion, or studying the company's intrinsic value — breach the duty of care; the business judgment rule does not protect uninformed decisions.
Why it matters. Van Gorkom defined the duty of care: directors must be informed, deliberate, and engaged; rushed, uninformed decisions are negligent.
Van Gorkom：董事須知情、審慎；BJR 不保護未知情之決定。
Common Mistakes · what trips students
✗ BJR 保護所有 director decisions。
✓ BJR doesn't shield self-dealing or grossly negligent decisions.
不保護自我交易或重大過失。
✗ ratification 自動 cleanses。
✓ Must be informed and disinterested; entire fairness still applies if not.
須知情且無利益衝突。
Mini IRAC · build the Application
Issue. Did the directors breach the duty of care when they approved a $100M acquisition in a 30-minute meeting without reading any due diligence materials?
Rule. The duty of care requires directors to make informed decisions based on material information reasonably available; the business judgment rule does not protect uninformed decisions.
Application (model). The directors approved a major acquisition in a single 30-minute meeting without reading due diligence materials. Because Van Gorkom holds that directors who fail to inform themselves with material information reasonably available breach the duty of care and are not shielded by the BJR, the fact that the directors approved a $100M transaction without reading the due diligence materials means they failed to satisfy the informational predicate for BJR protection.
Pick the right element for each blank:
g1.
g2.
g3.
Conclusion. Therefore, the directors breached the duty of care and may be personally liable.
MBE Check · multiple choice
A director, D, learns of a real-estate opportunity her corporation has been considering. Without informing the corporation, D buys the property personally and resells to the corporation at a 40% markup. D has breached:
Practice Drill · tap to build the rule
Drop the chips here in correct order:
Tap chips to add → tap chips in the target to remove: