In The U.s. Corporate Law Duty Of Care Study

Being the important content of fiduciary duty, duty of care plays a very significant role in regulating the behavior of directors to work diligently for interests of the corporation. Duty of care is not clearly regulated by Corporation Law of China. As a country having established the most developed corporation system, America has set up a perfect system of duty of care and established its unique business judgment rule during the process of judicial practice, which provided an important reference for China to perfect this system.Chapter 1 introduces the meaning of duty of care in American corporation law, illustrating the provisions in statutory law, comparing duty of care with duty of loyalty to deeply explain its meaning and traits, and analyzing its criterions through both statutory law and case law.Chapter 2 introduces the function of duty of care in American corporation law, explaining its theoretical foundation and establishment background to analyze the necessity of this duty. This chapter illustrates as the development of modern corporations, the role played by duty of care in reducing the cost of corporation contract and easing the conflict between shareholders and directors caused by separation of corporation ownership and operation rights.Chapter 3 introduces relating content of business judgment rule, discussing its function and applicable conditions to analyze the relationship between duty of care and business judgment rule.Chapter 4 introduces relating regulations in Corporation Law of China, analyzes its defects and discusses how to learn from America to perfect duties of directors.Establishing the system of duty of care is crucial for perfecting corporation governance. Business judgment rule is included in duty of care and also a case law rule of the latter. It is necessary for China to learn from American corporation law to perfect the system of duty of care, mainly by setting up criterions of this system during the process of judicial practice to make up the deficiency of the legislation.