BA621-L7A3 - February 1 2010 BA621 Business Law Lesson#7...

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February 1, 2010 – May 21, 2010 BA621 Business Law Lesson #7 Assignment #3 Case 16-3 Summary: Smith v. Van Gorkom The chapter includes this case (pages 452-453 of your text) to highlight the issue of a director’s duty of care. In this case, a shareholder, Smith, became a plaintiff after he and other shareholders discovered that a board of directors allegedly failed to give due consideration to a merger offer. A lower court held in favor of the defendant director Van Gorkom, but the appellate court reversed. The board did not scrutinize the deal offered to the Board by Van Gorkom. Consequently, they breached their duty to shareholders. The lower court was too lenient with the Board, inappropriately relying on the business judgment rule. Answer the following questions (from page 454 of your text). 1) To demonstrate your ability to recognize ambiguous language, identify at least two examples, from Case 16-3, of such language in the court's opinion. Clue: Remember that adjectives are often ambiguous.
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