due diligence

[doo dil-i-juhns, dyoo]

noun

Law, Business.

1. reasonable care and caution exercised by a person who is buying, selling, giving professional advice, etc., especially as required by law to protect against incurring liability.

   The court said there was due diligence on the part of the plaintiff.

2. the process of gathering or disclosing relevant and reliable information about a prospective sale, purchase, contract, etc..

   You should perform due diligence on a company before investing.

Word History and Origins

Origin of due diligence¹

First recorded in 1450–1500, for the earlier sense “requisite effort”; 1785–90, for the current sense

Example Sentences

“WLF conducted extensive due diligence before the deal with ALT5,” wrote Clare Locke attorney Tom Clare to an attorney for Dow Jones, Barron’s parent company.

Read more on Barron's

“We authenticated through polygraph and eyewitnesses due diligence,” Kohler said.

Read more on Los Angeles Times

“For example, organizations would be well-served to conduct both pre- and post-award due diligence on the activities of their grantees, funders, fiscal sponsors and partners.”

Read more on Salon

At their best, Cook said, those vehicles conduct due diligence and closely monitor their loans to privately held companies for signs of distress on their investors’ behalf.

Read more on Barron's

Ahead of the meeting, Tesla Chair Robyn Denholm told the Journal that she questioned the logic of such an investment and said the board hadn’t yet done any of the due diligence required to move forward.

Read more on The Wall Street Journal

When To Use

What does due diligence mean?

Due diligence most generally means reasonable care and caution or the proper actions that a situation calls for, especially those that help to avoid harm or risk.Due means “proper” or “required.” In legal contexts, diligence means “the degree of care required in a given situation.” In this way, due diligence is the level of care or caution that a specific situation calls for.Due diligence is especially used in legal and business contexts involving buying, selling, or giving professional advice. This kind of due diligence is often required by law in order to prevent liability.The phrase due diligence can also refer to the process of researching or disclosing pertinent information before entering into a contract or deal.For example, in the sale of a house, due diligence on the part of the seller involves disclosing information about the house, such as major problems and the dates when repairs were made. The buyer performs their due diligence by gathering this information and making the proper inspections of the house before the purchase.It can also be used in more general contexts, as in Don’t believe everything you read on the internet—do your due diligence and fact-check anything that sounds fishy.The phrase is often used with the verbs perform and do.Example: Be sure to do your due diligence before investing—you want to be sure where your money is going and what the terms are.