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.

Examples of due diligence in a Sentence

Recent Examples on the Web

Seasoned agents and brokers also offer insights into property values, taxes, regulations, and zoning laws while overseeing thorough due diligence processes. —Tim Hur, Fortune, 3 Apr. 2024

Consumers often fail to do their due diligence before purchasing paper towels. —Amber Smith, Discover Magazine, 3 Apr. 2024

Asking for audited financial statements for the issuer of financial instruments is another very basic due diligence technique. —Jay Adkisson, Forbes, 28 Mar. 2024

Always do your due diligence and check your local gambling policies. —Sponsored Content, The Mercury News, 8 Mar. 2024

That is by design, as Hurley and his assistants do as much due diligence as possible before constructing the roster. —Tim Casey, Forbes, 29 Mar. 2024

This includes transparency with regard to the types of training data, testing and evaluations, incident reporting, sources of labor, human rights due diligence, and assessments of environmental impacts. —Rebecca Finlay, Fortune, 28 Mar. 2024

The prevalence of scams and fraud in the crypto space highlights the importance of due diligence. —Tyler Shepherd, The Arizona Republic, 21 Mar. 2024

As the digital currency market continues to evolve, the importance of due diligence cannot be overstated. —Maria Williams, USA TODAY, 21 Mar. 2024

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