>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.
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Just a point of clarification, due diligence has nothing to do with determining what terms and conditions apply to you. The terms and conditions are known. Rather, the premise upon which those terms and conditions were forumulated are verified. For example, a bank agrees to purchase the consumer loan portfolio of another bank for 1 billion dollars. The purchasing bank's acceptance is based on the selling banks's representations about the portfolio. The purchasing bank will use due dilligence to inspect the contents of the portfolio to ensure the selling bank's representations are valid. If they are not, the purchasing bank can pull out of the deal. If the representations are valid, the purchasing bank must go through with the deal.

It is important to note that all of this must be specified in the contract as conditional promises. i.e., you promise to perform is subject to certain conditions. In this case, the condition is whether the selling bank's representations are true.

I don't mean to get into a debate about this. However, it is important to separate terms of a contract and conditions upon which a party incurs liability. Without knowing the terms and conditions that apply to you, you cannot have the manifest intent to contract, and therefore, no contract would exist. And, if no contract or agreement in principle exists, the process of due diligence is moot.

Your latter examples are on the mark..

This is a good discussion because I think in this arena, many consultants and business people are not aware of the potential trouble they can get into .