What is the definition of a "prudent purchaser?"

Hello,

This has been an interesting question to research.  According to
Dictionary.com ( http://www.dictionary.com/search?q=prudent ) the
definition of "prudent" is as follows:

  pru·dent

  1.) Wise in handling practical matters; exercising good judgment or
common sense.
  2.) Careful in regard to one's own interests; provident. 
  3.) Careful about one's conduct; circumspect. 

This sheds a lot of light on the situation.  However, my internet
searches found even more details:



What is a prudent purchaser?
http://medicaid.aphsa.org/issues/bullenspeech.htm

A speech by the Commissioner of the Massachusetts Division of Medical
Assistance, this article details what "prudent purchaser" from a
health care perspective.  It is very interesting.  For example, a
quote from the article says: "In order to obtain health care value,
the prudent purchaser must define quality, measure it, seek to improve
it, and exert market leadership."  The Commissioner goes on in detail
on each of those points.



Glossary of Real Estate, Mortgage & Legal Terms:
http://www.legalwiz.com/glossary.htm

"Marketable Title: Title which can be readily marketed to a reasonably
prudent purchaser aware of the facts and their legal meaning
concerning liens and encumbrances."

In this case, a "prudent purchaser" is someone who is completely aware
of what they are doing.  They know all the facts and legal meanings. 
This definition of a prudent purchaser is also applicable in other
legal agreements.  The term "prudent purchaser" is used so that
liability is limited to individuals who were aware of what their
actions meant.  It is normally used in phrases relating to
"reasonability".  For example:

"In applying this factor, we consider the degree of care expected of a
'reasonably prudent purchaser' or 'ordinary consumer using ordinary
care.'"
http://www.judicial.state.ia.us/supreme/opinions/19990324/97-0771.asp
(see under Section Six)



As you can see, a basic legal definition of a prudent purchaser is:

"An individual or organization who is informed of all the facts
regarding the purchase and aware of the legal consequences concerning
it" or "An ordinary consumer using ordinary care."

A more general defition would be:

"Someone who makes sure that they know what they're doing before they
do it."

Thanks for the question and if you require more information, don't
hesitate to ask for clarification.  And if you find this answer
satisfactory, please feel free to rate it. Thank you!
     
xemion-ga

---

Clarification of Answer by xemion-ga on 13 Jun 2002 18:33 PDT

Forgot to add that I found this information by searching Google for
(including quotes):

"prudent purchaser"
"what is" "purdent purchaser"
"purdent purchaser" glossary

Thank you!
xemion-ga

An excellent answer by xemion!

Unfortunately not all people are able to meet the definition of a
prudent purchaser. However under contract law a naive purchaser may
have redress where they rely on a so-called expert's opinion.
For example in The Arthur Murray court cases the court decisions were
as follows:
Vokes v Arthur Murray, Inc. : - Court says elderly lady had a right to
rely on what would otherwise be "puffing" by the Arthur Murray
salespeople.
Parker v Arthur Murray, Inc. : - Court denies same to man who was a
college graduate.

See these links for details of the above:

http://www.muw.edu/~tconaway/contracts/read/mutualassent.htm

and Section H.3.b of the following document
http://www.ilrg.com/download/cont5.rtf

Search keywords used were:
naive purchaser
court decision vokes v arthur murray