Entrepreneurial risk and CEO’s negligence: mistake in anticipation or in the procedure?

Authors

  •  Georgii V. Tsepov law office “Tsepov, Matveyeva and Partners”

Abstract

Any person can be subject to civil liability for negligent actions. However, risk is an inherent part of entrepreneurial activity caused by its competitive nature and fundamental uncertainty of the future. Thus, there is a contradiction: a director has to take risks, however he/she should act with caution not to be held liable. To eliminate the contradiction, the author examines traditional guilt concepts and rejects the objective approach which is based on the model of required behavior and identifies guilt with the breach of obligations. The author supports the psychological concept of guilt, according to which the understanding of guilt is based on recognition of the freedom of will, the ability of a person to be aware of his/her action and to foresee its consequences. To eliminate the collision between negligence and business risk, it is necessary to search for a solution not in the evaluation of the ability to foresee the final result (the director is aware of an abstract possibility to get a negative result), but rather in the director’s psychological attitude to the choice procedure. It means that while choosing a solution the result of which is uncertain, the director’s fault does not lie in the fact that he/she had chosen the option which later proved to be unfavourable, but in the fact that he/she had disregarded the rules of choice. To determine the innocence of the director, it is appropriate to apply a subjective-objective method. 

Keywords:

guilt, gross negligence, negligence, director, business risk, economic choice, business judgment

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Author Biography

 Georgii V. Tsepov, law office “Tsepov, Matveyeva and Partners”

PhD in law

References

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Published

01.10.2017

How to Cite

Tsepov, GeorgiiV. (2017). Entrepreneurial risk and CEO’s negligence: mistake in anticipation or in the procedure?. Pravovedenie, 61(5), 68–83. Retrieved from https://pravovedenie.spbu.ru/article/view/6601

Issue

Section

Private law