There are two types of due diligence.

You use due diligence in your dealings with others by doing your homework and being sure that you understand what terms and conditions apply to you. Example: If you agree to do work for a client who has no money without checking if he has no money you didn't use due diligence in making your decision to do the work.

The client also must use due diligence in selecting a supplier. If the client didn't check with your references and didn't ask you for refrences then the client failed to do his due diligence.

Due diligence is using standard business practices to determine the facts of any given situation at any given time. Example: You buy a house based on the representations of the real estate agent with a clause in the contract that a home inspector must approve the construction and condition of the house. You then call an inspector to do the inspection. You just used due diligence.