Define Legal Term Prudence

n. the requirement that a trustee, pension fund manager, city or county treasurer or trustee (trusted representative) may invest the funds entrusted to him or her only as a prudent person, that is, with discretion, care and intelligence. Therefore, prime solid securities, secured loans, government-backed mortgages, Treasury certificates, and other conservative investments that offer a reasonable return fall under the prudent man rule. Some states have laws that list the types of investments allowed under the rule. Unfortunately, the rule is subjective and some financial managers have invested funds in speculative investments to generate higher returns, which has led to bankruptcy and disasters, as in the case of Orange County, California (1994). The prudent person rule is a hypothetical person that is used as a legal standard, particularly to determine whether someone acted negligently. It is a rule that allows a trustee, especially a trustee, to run someone else`s business and invest someone else`s money with the same ability and care that a person with average prudence and intelligence would use to manage their own affairs or investments. Prudence is defined as an appropriate standard of judgment, management and behaviour in the circumstances, based on what was or should have been known at the time of a decision. Prudence implies a duty of care to others. The duty of care is increased if there is a significant risk to public safety or an economic risk to fee payers.

For example, in determining whether a defendant`s conduct was appropriate, the defendant`s conduct is compared to that of a reasonable person in similar circumstances. Care, caution, attention and good judgment with respect to actions or conduct The level of care required by the needs or circumstances in which it is to be exercised. Crouk v. Railway Co., 3 P. D. 93, 52 N. W. 420. This term is often associated with «care» and «diligence» in the language of the law and contrasted with «negligence».

See these titles. Prudenter acts that prsecepto legis ob- temperat. 5 Coca-Cola, 49 He acts prudently, obeying the command of the law. Powered by Black`s Law Dictionary, 2nd ed. free. und The Law Dictionary.