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An Introduction to the Law of Corporations: Cases and Materials, Fall 2017

Brehm v. Eisner

Aronson test include two prongs. The first prong deals with the interestedness and lack of independence of directors who approve a challenged transaction. The second prong deals with transactions that are not the product of a valid business judgment. In the following case, the interestedness of the board of Disney is not seriously at issue. Consequently, plaintiffs are left to argue that the board's approval of the challenged employment agreement was not the product of a valid business judgment so therefore demand upon the board would be futile.