the court held that yes, the actions of Fruehauf’s management violated the busin

Question

the court held that yes, the actions of Fruehauf’s management violated the business judgment rule. The business judgment rule requires management of a company to act in good faith and in the best interests of the corporation’s shareholders. Management must not put their personal interests before those of the company’s shareholders. In this case, the court held that the management and directors of Fruehauf violated the business rule. Using a minimum of three sentences, a) Do you agree with the court's ruling? b) Why or why not?

Explanation / Answer

I agree with the court judgment that the management and directors of Fruehauf violated the business rule. It was proved that there was a breach of trust towards their fiduciary duties to shareholders because the “no shop” agreement was violated as management always preferred for their own bid over that of the Edelman group. Therefore, it was a violation of the business ethics judgment rule.

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