Due diligence refers to the level of investigation, care, and judgement that is appropriate and expected in a given situation. It is often used to describe the obligations of a business to investigate material facts before making a major decision, such as signing a contract, acquiring an asset, making an investment, merging with another business, hiring an employee, or establishing a partnership. Due diligence is a key aspect of corporate governance, which refers to the responsibilities of a business’s directors and management to stakeholders. In many cases, due diligence is legally required.