Due diligence: Difference between revisions
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===What [[due diligence]] is not=== | ===What [[due diligence]] is not=== | ||
*'''You do due diligence on facts, not legal obligations''': An exercise in asking your counterparty to explain your legal contract to you. You can read that for yourself, or appoint a lawyer to advise you. Your counterparty is not your legal adviser, and in most cases will specifically not be regulated to advise you on your contract (and, being the person on the other side of it, inherently conflicted in giving you that advice). | *'''You do due diligence on facts, not legal obligations''': An exercise in asking your counterparty to explain your legal contract to you. You can read that for yourself, or appoint a lawyer to advise you. Your counterparty is not your legal adviser, and in most cases will specifically not be regulated to advise you on your contract (and, being the person on the other side of it, inherently conflicted in giving you that advice). | ||
*It is not an excuse for extracting commercially sensitive confidential information from your | *'''A fishing expedition''': It is not an excuse for extracting commercially sensitive confidential information from your Counterparty. Don't expect them to hand over all their legal contracts with suppliers. | ||
*'''[[Deep diving]]''': Well, actually it ''is'' a sort of “[[deep dive]]” — if that sort of chat (ahem) [[floats your boat]], but that sort of spoils the joke. | |||
===What [[due diligence]] ''definitely'' is not=== | ===What [[due diligence]] ''definitely'' is not=== | ||
Ever to be referred to as “[[due dilly]]”. | Ever to be referred to as “[[due dilly]]”. | ||
Revision as of 16:49, 24 October 2018
What due diligence is
Due diligence is a process whereby a counterparty seeks comfort from its contractual counterparts as to the robustness of its operational setup: to ensure that, notwithstanding the skillfully negotiated indemnities covenants, representations and warranties extracted from that entity by your counsel in the legal verbiage, your counterparty nonetheless is factually capable of carrying out its obligations.
Due diligence thereby gives practical comfort that the legal obligations are worth the paper they’re written on.
What due diligence is not
- You do due diligence on facts, not legal obligations: An exercise in asking your counterparty to explain your legal contract to you. You can read that for yourself, or appoint a lawyer to advise you. Your counterparty is not your legal adviser, and in most cases will specifically not be regulated to advise you on your contract (and, being the person on the other side of it, inherently conflicted in giving you that advice).
- A fishing expedition: It is not an excuse for extracting commercially sensitive confidential information from your Counterparty. Don't expect them to hand over all their legal contracts with suppliers.
- Deep diving: Well, actually it is a sort of “deep dive” — if that sort of chat (ahem) floats your boat, but that sort of spoils the joke.
What due diligence definitely is not
Ever to be referred to as “due dilly”.