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Due diligence can be a legal obligation, but the term more commonly applies to voluntary investigations. It may also offer a defence against legal action. A common example of due diligence is the process through which a potential acquirer evaluates a target company or its assets in advance of a merger or acquisition. [1]
Typically this occurs after the buyer gets the property under contract and during the period that it is performing due diligence. The buyer may raise a due diligence issue and demand a purchase price adjustment to a lower re-trade price. The seller can be left in a bad situation where it must either accept the lower price or lose the sale and ...
Due diligence is the amount of diligence required to avoid negligence in professional activities. It commonly arises in major acquisitions where the legal principle of caveat emptor ("let the buyer beware") requires the purchaser to make diligent inquiries about the property or service being sold. [14]
Enhanced due diligence [4] is required when initial identity checks have been completed and high-risk factors have been identified for an individual or a business. When these requirements have been met "enhanced" or additional due diligence above and beyond CDD is conducted which identifies the following information: [4] Source of wealth and ...
legal review, covering (amongst other things) design and establishment of the legal structure, advice taken by the alternative investment fund and its manager, material contracts, investment terms, indemnifications and insurances (although this may be performed as a separate legal due diligence)
The Corporate Sustainability Due Diligence Directive 2024 (2024/1760) is a directive in European Union (EU) law to require due diligence for companies to prevent adverse human rights and environmental impacts in the company's own operations and across their value chains. [1] It was adopted in 2024. [5]
Generally, in a civil case, a continuance sought due to absence of evidence will not be granted unless reasonable diligence has been used to procure it. [89] The question of diligence is a matter of fact, addressed to the sound discretion of the court. [90] In some jurisdictions, the issuance of a subpoena is evidence of due diligence. [91]
The concept of legal process outsourcing is based on the division of labour principle, prevalent in law firms, where various time consuming and onerous processes like due diligence are delegated to paralegals, document reviewers or interns. [14]