Business Risk as a Legal Category : the Content and Scope of Application

My diploma is devoted to the risk of the entrepreneur (or business risk) . This topic is actual as the category of risk has great legal value in the Russian legislation. Firstly, the enterprise risk is used for the separation of force majeure circumstances. Under Russian law, force majeure exempts the entrepreneur from liability for failure to perform obligations. So, the entrepreneur bears responsibility for inadequate execution of the obligation in all circumstances, except for cases when appropriate execution was impossible owing to force majeure. In this regard the enterprise risk acts as criterion of differentiation. If actions of the person are qualified within enterprise risk that he will bear responsibility. If the court considers that execution was impossible owing to force majeure, then responsibility won’t come. Secondly, the concept of enterprise risk is used when we talk about the responsibilities of CEO for breach of fiduciary duties of reasonableness and good faith (analogue duties of loyalty and care in the Anglo-American law). Exactly CEO makes decisions on expediency of transaction and estimates risk of the legal entity, not his own. So, expressing the will of the Corporation outside, CEO has to act within a reasonable business risk. This means that he must act in the best interests of the Corporation and not in his own. It is extremely important to note that if the legal entity suffered losses due to conventional business risk, there is no basis for prosecuting his CEO. The activities of the CEO feature potential and actual conflicts of interest and the need to accommodate the interests of majority and minority shareholders. Normal business activity is possible only in circumstances when some degree of freedom is provided to the CEO. If we assume the involvement of the CEO to responsibility only on the ground that his decision was unsuccessful, then it will not possible to expect any development of entrepreneurship.