Also known as: processes due care · processed due care · due care · due process
Written by attorneys · grounded in primary & secondary sources — see below
A fiduciary standard requiring corporate directors to gather and consider all material information reasonably available before approving a merger or similar transaction. The standard ensures that the board's decision-making process itself satisfies the duty of care even when the ultimate business judgment is later reviewed under the business judgment rule.
Pearl Porter faces federal charges for a serious offense. The prosecutor seeks to bypass the grand jury by filing an information directly. The court refuses because the Fifth Amendment requires indictment by grand jury for infamous crimes.
Pilar Pena, as principal, relies on her agent to investigate a property deal. The agent fails to discover a recorded lien that ordinary diligence would have revealed. Because the agent did not use due care in performing the duty to know material facts, the principal is charged with notice of the lien under agency principles.
Select any source to read its text and confirm it supports the definition.
Pierce Patterson, a state official, refuses to issue a marriage license to an interracial couple. The couple sues claiming violation of due process. The court holds that the freedom to marry a person of another race is a fundamental right protected by the Fourteenth Amendment.
Pavel Petrov is committed to a state institution without any hearing or opportunity to contest the commitment. He challenges the commitment as lacking due process. The court agrees that the Fourteenth Amendment prohibits a state from depriving a person of liberty without due process of law.
Paul Peterson, a convicted offender, faces a state statute requiring compulsory sterilization. He challenges the statute as violating substantive due process. The court holds that the right to procreate is fundamental and cannot be infringed by mandatory sterilization schemes.
Pierre Poulin lives with his nonmarital child and the child's mother. After the mother's death the state removes the child without any hearing. Poulin sues claiming a violation of due process. The court holds that an unmarried father who has established a family unit has a protected liberty interest requiring fair process before severance.
Directors must gather and consider all material information reasonably available before approving the transaction. This includes reviewing the terms presented in the board materials and ensuring that any later changes to those terms receive fresh board consideration. Failure to do so means the board has not properly adopted the plan under state corporate law.
Supporting sources
No. External financing deadlines do not relieve directors of the obligation to review the actual terms of the merger plan. When material changes such as an altered exchange ratio or new indemnification provisions appear after the board vote, the earlier action does not constitute adoption of the plan.
No. Email exchanges indicating general support do not constitute formal board adoption. The statute requires the board to adopt the plan first through a proper meeting or resolution before shareholders act. Later ratification cannot cure the initial failure to follow the required sequence.
…the defendant directors under the business judgment rule without first determining whether the rule's threshold condition of "due care and prudence" was satisfied. The plaintiffs assert that the Trial Court found the defendant directors to have reached an informed business judgment on the basis of "extraneous…