Are You Still Negligent if Nothing Bad Happens?
By: Debi Peverill
Tags: Governance, Negligence, Productivity, Meetings, Due Diligence

This is like the question about does the tree falling in the forest make a sound if no one is there to hear it?

If you serve on a board then the topic of due diligence, due care and negligence should be one that has been discussed. Boards are concerned with liability for their actions or at least they should be. Understanding the differences between being negligent and making a mistake can be crucial for boards and also for any individual who must follow rules, and that is all of us.

One hopes that the determination about whether the board is negligent or not, is not taking place in a court of law. I am not a lawyer, but I do know that the definition of negligence is the absence of due diligence and the definition of due diligence is avoiding negligent activities. This is a complicated way of saying that every situation is different. We can come up with examples of clear cut negligence.

For example, if you are operating a motor vehicle and your blood alcohol level is above the legal maximum in your area, then you are negligent. If you successfully drive home without an accident then there would be no consequences under the motor vehicle act of your area. If, however you are involved in an accident where a person is killed, then you are going to be charged with criminal negligence causing death. In both of these cases you were negligent in that you did not adhere to the rules, but in only one case did you get “caught.”

Let’s look at examples that are not that grim. The board makes a decision to buy a new building rather than pay rent. They consider all of the information, they do projections and analyses, talk about it at multiple meetings and then they do it, they buy the building. They have done their due diligence. One year later they lose their funding through no fault of their own, just that the government spent so much money on the pandemic they were unable to provide funding to their group any longer. They are unable to get any funding and they cannot make the mortgage payments and the building has to be sold. Was the board negligent in making the decision to buy the building?

In my opinion they were not negligent, they simply made a mistake. If the government agency had told them that their funding was in jeopardy and they bought the building anyway, that is a different story. Then you might think that they were negligent because they ignored credible information, when making their decision. The decision about whether or not someone is negligent will always be made after the fact and will take into consideration only the evidence that the decision maker knew at the time the decision was made. Anything that happens after the decision is made is not relevant in a determination of negligence.

You don’t have to be right to avoid being negligent. If a legitimate mistake is made after taking into account all of the information that is not negligence. Due diligence means gathering all the information that is available and then making the decision.

If you do something that contravenes the rules it is negligence whether or not you get caught.