Asq Certified Quality Auditor CQA · Free Practice Question Medium
Question 8
What is the primary purpose of conducting due diligence before entering into a contract or agreement with another party?
- A To ensure the agreement is legally binding
- B To identify potential risks and issues associated with the agreement
- C To create a stronger negotiating position
- D To promote the interests of one party over the other
Reveal correct answer
Correct answer: B
Explanation
The primary purpose of due diligence is to identify any potential risks or issues associated with an agreement before entering into it. This includes researching both parties' legal and financial backgrounds, verifying relevant facts, and evaluating the terms of the agreement. Due diligence helps to ensure that both parties are well-informed and aware of any potential risks or liabilities associated with the agreement.Discussion
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