UK Accounting Glossary
A class-action suit is a lawsuit filed by one or more individuals belonging to a large group on behalf of all members of the group. A class-action suit is generally initiated on behalf of a class of plaintiffs or defendants who share an interest in litigation with their representative. Thus, in a class action suit rights and liabilities can be better decided as a group than in a string of individual suits. Once the court approves the class action suit, all class members must receive a notice of the action. Members are also given an opportunity to opt-out of the class action suit. Members who fail to exclude themselves from the class action suit are bound by the judgment of the class action suit, whether it is in their favour or not. A class-action suit is an instrument often employed by shareholders as an affordable and collective way to counter corporate transgressions.
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This glossary post was last updated: 4th February 2020.