Definition of Due diligence:
Business: Duty of a firms directors and officers to act prudently in evaluating associated risks in all transactions.
Due diligence became common practice (and a common term) in the U.S. with the passage of the Securities Act of 1933. With that law, securities dealers and brokers became responsible for fully disclosing material information about the instruments they were selling. Failing to disclose this information to potential investors made dealers and brokers liable for criminal prosecution.
General: Measure of prudence, responsibility, and diligence that is expected from, and ordinarily exercised by, a reasonable and prudent person under the circumstances.
Negotiating: Duty of each party to confirm each others 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.
Find out how to use due diligence in a sentence.
Due diligence is an investigation, audit, or review performed to confirm the facts of a matter under consideration. In the financial world, due diligence requires an examination of financial records before entering into a proposed transaction with another party.
Reasonable steps taken by a person in order to satisfy a legal requirement, especially in buying or selling something.
Investing: Duty of the investor to gather necessary information on actual or potential risks involved in an investment.
How to use Due diligence in a sentence?
- The same strategy will work on many other types of investments.
- The individual investor can conduct due diligence on any stock using readily available public information.
- 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 .
- If trading is carried on, however, there is a duty to manage with due diligence in doing so.
- 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 .
- 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.
- Look at the company's numbers. Compare the numbers over time. Compare them to their competitors' numbers.
Meaning of Due diligence & Due diligence Definition