This paper explores the parameters of the concept of a business judgment, by examining how, if at all, the courts of England, Australia and the US (primarily Delaware) have defined directors' business judgment. It considers what a judgment is, and what kinds of decisions are business judgments; is judgment an event or a process? is it possible to categorise different types of decisions involving business judgment? What kinds of decisions are not deferred to and why? What does it mean to designate something as a business judgment?
A comprehensive database search has been conducted of the case-law in England and Wales on the directors’ duty of care; wrongful trading, applications for leave to bring a derivative claim, unfair prejudice, improper purpose cases, and director’s disqualification to identify cases in which business judgment or equivalent terms have been used, or in which the courts have reviewed directors’ decisions; key US decisions on the business judgment rule; and Australian cases examining business judgment are also considered.