What is the effect of the Business Judgment Rule on directors' decisions?

The Business Judgment Rule serves as a legal principle that protects corporate directors when making decisions on behalf of the corporation. The correct answer highlights that this rule presumes directors act in good faith and in the best interests of the corporation. This presumption is crucial because it acknowledges that directors are appointed to make informed decisions based on their business judgment and expertise, thus allowing them the freedom to make choices without the constant fear of litigation.

The rationale behind this is to encourage directors to take risks that can potentially benefit the corporation, knowing that not every decision will lead to success, but that they are acting with the corporation's welfare in mind. This does not mean that directors can act with disregard for their duties; rather, it provides a framework where their decisions, if made in good faith and with reasonable care, are typically upheld by the courts.

The other options do not accurately reflect the purpose of the Business Judgment Rule. For instance, it is not a blanket protection against lawsuits for any decisions made, nor does it endorse reckless decision-making. Additionally, while seeking external advice can be prudent, the rule does not mandate directors to do so before every decision.