Smith was an officer of CCC Corp.  As an officer, the business judgment rule applied to Smith in which of the following ways?
A. If Smith makes, in good faith, a serious but honest mistake in judgment, Smith is generally liable to CCC for damages caused, and CCC is prohibited from reimbursing Smith for any damages Smith paid.
B. If Smith makes, in good faith, a serious but honest mistake in judgment, Smith is generally liable to CCC for damages caused, but CCC may elect to reimburse Smith for any damages Smith paid.
C. Because Smith is not a director, the rule does not apply.
D. If Smith makes, in good faith, a serious but honest mistake in judgment, Smith is generally not liable to CCC for damages caused.
Answer:D
D is corrent. The requirement is to identify the application of the business judgment rule. D is corrent because if a corporate officer makes a judgment in good faith, he or she is not liable for a mistake.
A is incorrect because if Smith acts in good faith, Smith is not generally liable to the corporation.
A is incorrect because if Smith acts in good faith, Smith is not generally liable to the corporation.
C is incorrect because the good-faith rule applies to officers.