due diligence

Definition of due diligence

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.

Examples of due diligence in a Sentence

Recent Examples on the Web Whereas typically owners in need of a new manager would scan the market for the latest flavor of the month, or use a network of agents to identify available and willing candidates, now many clubs conduct a much more extensive form of due diligence. — New York Times, "European Soccer Learns a New Virtue: Patience," 23 Dec. 2020 Saudi Telecom had offered to pay $2.39 billion for the stake in January, and parties had extended talks because of delays to due diligence, amid coronavirus restrictions. — Shaji Mathew, Bloomberg.com, "Vodafone Ends Talks to Sell Egyptian Stake to Saudi Telecom," 21 Dec. 2020 The land purchase, to be completed by the end of the year, kicks off a two-year period of due diligence to assess the feasibility of the project, the impact on the environment and consultation with the community. — Anthony Mcauley | Staff Writer, NOLA.com, "Port Nola board approves land purchase for $1.5B St. Bernard container ship terminal," 17 Dec. 2020 Erik Gordon, a professor at the Ross School of Business at the University of Michigan, said the rapid departure indicates someone at Ford failed to perform due diligence. — Phoebe Wall Howard, Detroit Free Press, "Ford hires global CMO from eBay amid shakeup in tech, vehicle launches," 24 Nov. 2020 Perform due diligence to ensure that facts are correct. — Tribune Content Agency, oregonlive, "Horoscope for Oct. 23, 2020: Happy birthday Emilia Clark; Scorpio, you’ll be forced to choose a side," 23 Oct. 2020 There were also concerns about the project’s height and density, the closed-door process, and the city’s lack of due diligence — such as conducting traffic studies. — Katie Surma, The Arizona Republic, "Nationwide Insurance bought one of the state's most valuable parcels of land in Scottsdale. It also got a great deal," 20 June 2018 But in case the laws of physics ceased to exist, Loreen Zahara does her due diligence. — Los Angeles Times, "Unfair ratings cost some Instacart shoppers hundreds a week. Here’s what’s happening," 21 Dec. 2020 The European Commission is expected to propose new rules for due diligence on human rights and the environment throughout supply chains in 2021. — Julia Horowitz, CNN, "What are companies responsible for? Swiss voters are about to weigh in," 29 Nov. 2020

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'due diligence.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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Last Updated

6 Jan 2021

Cite this Entry

“Due diligence.” Merriam-Webster.com Dictionary, Merriam-Webster, https://www.merriam-webster.com/dictionary/due%20diligence. Accessed 18 Jan. 2021.

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More Definitions for due diligence

due diligence

noun

Legal Definition of due diligence

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.

2a : 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