due diligence


Definitions (4)

1.General: Measure of prudence, responsibility, and diligence that is expected from, and ordinarily exercised by, a reasonable and prudent person under the circumstances.
2.Business: Duty of a firm's directors and officers to act prudently in evaluating associated risks in all transactions.
3.Investing: Duty of the investor to gather necessary information on actual or potential risks involved in an investment.

Negotiating: Duty of each party to confirm each other's expectations and understandings, and to independently verify the abilities of the other to fulfill the conditions and requirements of the agreement. Also called reasonable diligence.

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Use due diligence in a sentence

  • A business considering a merger with another company, making sure that the company they are considering merging with is financially sound, is an example of due diligence.

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  • When it came to his investments, Ken never put much research into it, but after a huge huge loss, he started to do his due diligence.

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  • The kindergarten teacher exercised due diligence by telling parents that there would be a school outing the next day, and to dress their children appropriately.

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