Also known as: reasonable care · ordinary care
Written by attorneys · grounded in primary & secondary sources — see below
The standard of conduct that a reasonably prudent person would exercise under the circumstances. This standard requires attention to foreseeable risks and the steps needed to minimize them when performing duties owed to another.
Angela served as purchasing manager for Coastal Food and regularly inspected seafood shipments from Gold Restaurant. She noticed boxes with vague species labels but performed no further checks despite her experience in food procurement. Coastal Food later incurred losses from misidentified allergens in the shipments.
Pine Play leased an office building to a dental practice and promised in the lease to maintain the central heating system. After the tenant took possession, a janitor's error allowed hot water to flow through cold pipes, scalding a patient during treatment. The practice sued Pine Play for the resulting injuries.
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Dover Bank hired an independent contractor to service its ATM machines located on bank property. After the work, bank employees failed to test the machines for safety before reopening them to customers. A customer was injured when a machine malfunctioned and dispensed cash improperly.
Dynamic Solutions produced steering assemblies for passenger vehicles and sold them to several car makers. One assembly contained a latent defect that caused a wheel to detach during normal driving. A pedestrian struck by the vehicle sued Dynamic Solutions even though the pedestrian had no direct contract with the company.
Duarte Shipping received a shipment of perishable produce from Dixon Foods and rejected it after inspection revealed spoilage. Duarte Shipping stored the produce in a refrigerated warehouse for ten days while awaiting pickup instructions. Dixon Foods claimed the delay caused further deterioration and refused to accept return of the goods.
Damian Decker served as trustee of a family trust holding volatile technology stocks. He failed to review the portfolio for six months despite market warnings that several holdings faced regulatory action. The trust suffered substantial losses when the stocks declined sharply.
Due care requires directors and officers to act with the care a reasonably prudent person would exercise under similar circumstances. The business judgment rule presumes that decisions were made on an informed basis only if that standard of care was met. Failure to exercise due care removes the presumption of protection.
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A secured party must use reasonable care in the custody and preservation of collateral. When the collateral consists of specialized equipment whose value depends on controlled conditions, ordinary warehouse procedures may fall short of the required standard if they create a foreseeable risk of damage.
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A gratuitous agent must exercise the care and skill required of persons who are not agents when performing similar undertakings. The standard is lower than that applied to a compensated professional because the relationship lacks the expectation of specialized diligence.
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Evidence that the professional followed the mechanical steps required by the applicable standard, such as obtaining necessary data before exercising judgment, can demonstrate due care. Conformity to accepted practice in the locality also supports a finding that due care was used.
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…to the corporation by any of its officers, or by an independent certified public accountant, or by an appraiser selected with reasonable care by the board of directors ..., or in relying in good faith upon other records of the corporation. [^maj-16]: In support of the defendants' argument that their judgment as to the adequacy…