As a general concept, due diligence has been around longer than the armies of lawyers specialising in ensuring that appropriate and sufficient information is available to make a decision, specifically regarding buying a property or a company.
The first time the two words were used in combination was around 1600 by Richard Carew in his fantastic poem A Herring’s Tale. In the poem, Carew writes that monarchs had their commands obeyed “with due diligence.”
In the United States, the term has a much shorter history and became a legal staple as a result of the Great Depression. The Securities Act of 1933, meant to curtail reckless sale of securities, contained the so-called “due diligence” defense which described a means of legal defense for brokers accused of inadequately disclosing information. Once introduced to the legal vocabulary of the nation, the term due diligence has become an important concept and in its present meaning refers to either an investigation of an individual or corporation prior to signing a contract or to a specific level of caution or care applied to an action.
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