The formation of an amide using a carbodiimide is a common reaction, but carries the risk of several side reactions.  The acid 1 will react with the carbodiimide to produce the key intermediate: the O-acylisourea 2, which can be viewed as a carboxylic ester with an activated leaving group. The O-acylisourea will react with amines to give the desired amide 3 and urea 4.
The possible reactions of the O-acylisourea 2 produce both desired and undesired products.  The O-acylisourea 2 can react with an additional carboxylic acid 1 to give an acid anhydride 5, which can react further to give the amide 3. The main undesired reaction pathway involves the rearrangement of the O-acylisourea 2 to the stable N-acylurea 6.  The use of solvents with low dielectric constants such as dichloromethane or chloroform can minimize this side reaction.