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THE BUSINESS JUDGMENT RULE
An Opinion
By Jan Bergemann
Published
April 28, 2026
There are lots of different interpretations
trying to explain the reasoning for the BUSINESS JUDGMENT RULE. But
is it right in many cases it is being used in community
associations? In all reality it gives board members a "CARTE
BLANCHE" for often openly violating the Florida Statutes regulating
community associations.
Here is one interpretation of the BUSINESS JUDGMENT RULE
I found on the web (Cornell Law School):
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The business
judgment rule provides a director of a corporation
immunity from liability when a plaintiff sues on grounds
that the director violated the duty of care to the
corporation so long as the director’s actions fall
within the parameters of the rule.
In suits alleging a corporation's director violated
their duty of care to the company, courts will evaluate
the case based on the business judgment rule. Under this
standard, a court will uphold the decisions of a
director as long as they are made in good faith, with
the care that a reasonably prudent person would use, and
with the reasonable belief that the director is acting
in the best interests of the corporation.
Practically, the
business judgment rule is a presumption in favor of the
board. As such, it is sometimes referred to as the
"business judgment presumption." |
You can find as well some pretty good explanations on
WIKIPEDIA
We have seen many cases where board members clearly violated the
governing documents of the community -- or even the Florida Statutes
-- only to get away with it by just declaring: "I acted in good
faith and didn't know better!" In this case incompetence is a valid
excuse!
And judges allowed them to get away with it -- over and over again.
They even allow it if it's not even used as defense. See latest
example where a decision of the 3rd DCA overruled the summary
judgment of a lower court, despite a clear violation of the
statutes.
As long as courts allow the BUSINESS JUDGMENT RULE as
a valid defense, it will be pretty difficult to go after board
members who violate rules and statutes, as long as it is not a
criminal offense!
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