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FINDLAW LEGAL DICTIONARY

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Due Diligence

due diligence n

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 esp. 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



Source: Merriam-Webster's Dictionary of Law ©1996. Merriam-Webster, Incorporated. Published under license with Merriam-Webster, Incorporated.