Legal Definitions - reasonable cause

Reasonable cause refers to a set of facts and circumstances that would lead a prudent and cautious person to believe that a particular action is justified, or that a particular event or condition exists. It is a standard of belief that is more than mere suspicion but less than absolute certainty. It requires an objective basis for the belief, meaning that the reasons for the belief must be understandable and acceptable to an impartial observer.

This standard is applied in various legal contexts to determine if an action was warranted or if an excuse for non-compliance is valid.

• Example 1: Tax Penalty Abatement

  A small business owner, Mr. Henderson, was unable to file his quarterly payroll taxes on time because his accountant unexpectedly passed away a week before the deadline, and Mr. Henderson himself was hospitalized for an emergency appendectomy shortly thereafter. He eventually filed the taxes, but late. The IRS assessed a penalty for late filing.

  How it illustrates "reasonable cause": Mr. Henderson can argue that he had "reasonable cause" for the late filing. The sudden death of his accountant and his own medical emergency are objective, unforeseen events that would prevent a prudent person from meeting the deadline. These circumstances demonstrate that he acted with ordinary business care and prudence, but was prevented from complying due to factors beyond his control, which may lead the IRS to abate the penalty.

• Example 2: Workplace Investigation

  An HR department receives several independent complaints from employees alleging that a senior manager, Ms. Chen, has been making inappropriate and discriminatory remarks during team meetings. The complaints are consistent in their details and come from different departments.

  How it illustrates "reasonable cause": The HR department now has "reasonable cause" to launch a formal investigation into Ms. Chen's conduct. The multiple, consistent, and independent complaints provide an objective and prudent basis for believing that misconduct may have occurred, justifying the need for a thorough inquiry. It's not just a single, unverified rumor, but a pattern of information that a responsible employer would take seriously.

• Example 3: Insurance Claim Denial

  A homeowner files an insurance claim for significant damage to their roof, stating it was caused by a sudden, severe hailstorm. However, the insurance adjuster inspects the roof and finds extensive wear and tear, missing shingles, and evidence of long-term neglect, but no impact marks consistent with recent hail damage.

  How it illustrates "reasonable cause": The insurance company has "reasonable cause" to deny the claim. The adjuster's findings (wear and tear, missing shingles, lack of hail impact) provide an objective and prudent basis for believing that the damage was not caused by the claimed hailstorm, but rather by pre-existing conditions and lack of maintenance, which are typically excluded under standard homeowner policies. The evidence contradicts the homeowner's assertion, giving the insurer a sound reason for denial.