n. the requirement that a trustee, pension fund manager, city or county treasurer, or trustee (trusted agent) may invest the funds entrusted to him or her only as a prudent person would, that is, with discretion, diligence and intelligence. Therefore, prime securities, secured loans, government-backed mortgages, treasury bills 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 achieve higher returns, which has led to bankruptcy and disaster, as in the case of Orange County, California (1994). n. the duty of a person to act towards others and the public with the vigilance, care, prudence and prudence that a reasonable person would apply in the circumstances. If a person`s actions do not meet this standard of care, the actions are considered negligent and any resulting damages may be claimed as part of a negligence claim. The prudent person rule is a hypothetical person used as a legal norm, precisely to determine whether someone has acted negligently. It is a rule that allows a fiduciary, especially a fiduciary, to manage someone else`s business and invest another`s money with the same skill 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 the decision or completion of the action. Prudence implies a duty of care to others. Due diligence is enhanced when there is a significant risk to public safety or an economic risk to taxpayers.

For example, in determining whether the conduct of a defendant was appropriate, the conduct of the defendant is compared to the conduct of a reasonable person in similar circumstances. Attention, caution, attention and good judgment applied to actions or behavior. The degree of care required by the requirements or circumstances in which it is to be exercised. Cronk v. Railway Co., 3 S. D. 93, 52 N. W. 420.

This term is often associated with “care” and “diligence” in the language of the law, and contrasts with “negligence.” See these titles. Prudenter agit qui praecepto legis ob temperat. 5 Coke, 49. He acts prudently and obeys the command of the law.