The Smith v.Van Gorkam decision underscores which of the following regarding statements of officers or directors?
A) An outside director, but not an inside director, may in good faith rely upon any statement of an executive officer.
B) An inside director, but not an outside director, may in good faith rely upon any statement of an executive officer.
C) Any director may in good faith rely upon any statement of an exeecutive officer.
D) Not every statement of an executive officer can be relied upon in good faith.

Question

Quizplus · Accepted Answer

The Smith v. Van Gorkam decision established that not every statement of an executive officer can be relied upon in good faith. Directors have a duty to independently review and assess information presented to them, rather than blindly accepting statements made by executives. Therefore, Option C is incorrect as it implies that any director may rely on any statement without analyzing it independently. Option A and B are also incorrect as they both limit the ability to rely on statements to either outside or inside directors, respectively, which is not supported by the decision.

The Smith V