Tavaris is the president of Lotus Corporation (Lotus). Tavaris decided to have Lotus manufacture large, non-fuel-efficient sport
Question:
Tavaris is the president of Lotus Corporation (Lotus). Tavaris decided to have Lotus manufacture large, non-fuel-efficient sport utility vehicles (SUVs) just before gasoline prices rose dramatically. As a result, Lotus lost a significant percentage of its automotive market share. Lotus shareholders want to sue Tavaris for his bad decision that cost them millions of dollars. However, Tavaris made a reasonable investigation before making this decision, he had a rational basis for it, and he had no conflicts of interest regarding this decision. Which of the following is the most likely outcome if the shareholders file a lawsuit against Tavaris?
Tavaris will be held liable under theultra vires rule. | ||
Tavaris will not be held liable, since corporate presidents have absolute immunity from liability for decisions they make in the ordinary course of business. | ||
Tavaris will not be held liable under the business judgment rule. | ||
Tavaris will be held liable under the vicarious liability rule |
Business Statistics A Decision Making Approach
ISBN: 9780133021844
9th Edition
Authors: David F. Groebner, Patrick W. Shannon, Phillip C. Fry