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Due diligence

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Due diligence is a concept in common law. It is most commonly used in criminal law where the offence is one of strict liability, and in commercial transactions as a concept in contract law and malpractice in the legal profession. For the most part, it can be defined as the level of diligence expected of a reasonable person.

Criminal LawEdit

In criminal law, a strict liability offence is one where there is no need for the prosecutor to show mens rea, only an actus reus. However, the law allows a defence of due diligence, that is, that the defendant took all reasonable steps to avoid the act complained of.

For example, in most jurisdictions, an employer can be charged if one of their employees is injured on the job. Once it is proved it was an accident (rather than a deliberate act of the employee), the only defence is that the employer took all reasonable steps to prevent the injury. This usually means that the employer can prove:

  • That a training program was in place to teach workers about dangers of the job and the rules of the workplace to prevent injury
  • That the rules were actually enforced; and
  • That employees who transgressed the rules were appropriately disciplined.

Establishing a defence of due diligence is meant to be difficult. It is not enough merely to show that the employer took some steps, or steps other companies in the same industry took. They must demonstrate that they took all steps reasonable to protect the worker from injuries caused by inattention or even recklessness.

Commercial LawEdit

A buyer is required under the doctrine of caveat emptor to make all necessary inquiries before acquiring property. In a large commercial transaction, this usually means searching all public records to ensure the assets or company being purchased does not have hidden liabilities which would pass with the assets and does not have outstanding lawsuits against it.

However, it is not a requirement to do more than what is generally understood to be necessary in such transactions. Some liabilities or deficiencies may exist, and due diligence is not a mechanism for uncovering fraud or deliberate misrepresentation.

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