due diligence

noun

1

law : the care that a reasonable person exercises to avoid harm to other persons or their property

failed to exercise due diligence in trying to prevent the accident

2

business : research and analysis of a company or organization done in preparation for a business transaction (such as a corporate merger or purchase of securities)

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Doing Your Due Diligence

Due diligence has been used since at least the mid-fifteenth century in the literal sense “requisite effort.” Centuries later, the phrase developed a legal meaning, namely, “the care that a reasonable person takes to avoid harm to other persons or their property”; in this sense, it is synonymous with another legal term, ordinary care. More recently, due diligence has extended its reach into business contexts, signifying the research a company performs before engaging in a financial transaction. This meaning may also apply to individuals: people are often advised to perform their due diligence before buying a house, signing a loan, or making any important purchase.

Example Sentences

Recent Examples on the Web

They were provided all the data upfront for the purchase of Frank and Charlie Javice highlighted the restrictions placed by student privacy laws during due diligence. —Quinn Owen, ABC News, 7 Apr. 2023

Financial terms of the deal, which, among other things, is subject to customary due diligence, corporate approvals and a definitive agreement, weren’t disclosed. —Georg Szalai, The Hollywood Reporter, 13 Apr. 2023

That could mean background checks, reference checks or just a little DIY due diligence. —Alissa Jubelirer, Rolling Stone, 21 Mar. 2023

Brian Reider did his due diligence. —Sam Cohn, Baltimore Sun, 21 Mar. 2023

Proven says its tech would be especially helpful for investors in the crypto space, by helping with due diligence. —Marco Quiroz-gutierrez, Fortune Crypto, 9 Mar. 2023

There has to be a level of due diligence. —Christian Davenport, Anchorage Daily News, 8 Mar. 2023

That’s just part of doing due diligence. —Dave Hyde, Sun Sentinel, 7 Mar. 2023

Call it civic duty, or due diligence. —Dan Hernandez, Longreads, 28 Feb. 2023

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Word History

First Known Use

1598, in the meaning defined at sense 1

Legal Definition

due diligence

noun

1

: such diligence as a reasonable person under the same circumstances would use : use of reasonable but not necessarily exhaustive efforts

called also reasonable diligence

Note: Due diligence is used most often in connection with the performance of a professional or fiduciary duty, or with regard to proceeding with a court action. Due care is used more often in connection with general tort actions.

2

a

: the care that a prudent person might be expected to exercise in the examination and evaluation of risks affecting a business transaction

b

: the process of investigation carried on usually by a disinterested third party (as an accounting or law firm) on behalf of a party contemplating a business transaction (as a corporate acquisition or merger, loan of finances, or especially purchase of securities) for the purpose of providing information with which to evaluate the advantages and risks involved

the greatest exposure…for failure to conduct adequate due diligence arises in the context of public offerings of securities

—G. M. Lawrence

c

: the defense (as to a lawsuit) that due diligence was conducted