Jurisdiction(s):
United Kingdom

Key definition

Due diligence definition

What does Due diligence mean? In legal practice, due diligence describes (1) compliance steps to prevent offences; and (2) pre‑transaction investigation in corporate and finance work. As a statutory defence to many strict‑liability and regulatory offences (for example under the UK Consumer Protection from Unfair Trading Regulations 2008 and the Food Safety Act 1990, and under Ireland’s Consumer Protection Act 2007 and food legislation), it requires the defendant to show that all reasonable precautions were taken and all due diligence was exercised to avoid the commission of the offence. Depending on the statute, this may place a legal or evidential burden on the defendant,...

Achieving bankability in project finance: lender-focused due diligence across technical, legal, contractual, environmental and social, insurance, tax and financial modelling

Published by a LexisNexis Banking & Finance expert

Practice notes

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While Due diligence features in every commercial finance deal, it becomes indispensable in project finance, where the nature of projects brings heightened risk. For more information on the typical risks involved in a project finance transaction, see Practice Note: Project risks and risk allocation. Across most projects, the Diligence exercise concentrates on a number of recurring themes. This Practice Note outlines those focus areas and indicates the information lenders are likely to demand.

Scope of due diligence in project finance transactions

In a standard project finance deal, diligence spans a wide range of matters, such as:

legal and political matters
environmental and social matters
insurance Requirements
tax and accounting issues

Lenders and the sponsor frequently engage in robust negotiation over the breadth of the diligence reports, especially the legal report. For more information on the role of a sponsor, see Practice Note: Project finance—key project parties—Sponsor. Lenders will seek comfort that every element of the project has been thoroughly examined and is well understood, whereas the sponsor—typically footing the bill—will aim to keep the process tightly managed...

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Web page updated on 21/05/2026

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