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Nondisclosure Violations in a Contract Claim

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What are Nondisclosure Violations in a Contract Claim?

Nondisclosure violations in a contract claim refer to the failure of one party to disclose information to the other party.  But generally speaking, there is no duty for either party to disclose facts to the other party, even if they are related to the transaction. 

The theory here is that it’s unfavorable to impose a duty on either party to disclose information.  Rather, each party should take their own affirmative steps to learn as much as they can about the transaction before entering it.  This is known as entering into a contract with “eyes open”, or being informed as much as possible of the agreement.

On the other hand, there are several exceptions to this idea, and a party could be held liable for a violation for failing to disclose certain types of information to the opposite party to a contract.  These are known as “nondisclosure violations”.  This is different from a nondisclosure agreement, which is language in a contract prohibiting the parties from disclosing confidential information.

What are Some Examples of Nondisclosure Violations in a Contract Claim?

There are certain instances where a party must disclose information to the other party in a contract agreement.  These usually have to do with the relationship of the parties and the circumstances surrounding the contract. 

Some examples of nondisclosure violations in a contract claim include:

  • Unknown Defect or Condition:  In some cases a seller has a duty to disclose any unknown defects or hidden conditions of a product.  This is especially true where the hidden defect poses a risk of harm or injury to the purchaser.  Rules regarding unknown defects may be different when it comes to selling real estate (most jurisdictions enforce the “buyer beware” principle for real estate transactions).
  • Confidential Relationship:  If the parties have a relationship that is confidential in nature, they may have a duty to disclose important information to one another.  A common example of a confidential relationship is that between attorney and client.  If an attorney fails to convey information related to the client’s case, they could be held liable for malpractice.
  • Fine Print:  A party may be held liable for concealing important information in the “fine print” of written contract.  This is true especially where there’s an assumption that the other party won’t read all of the fine print.
  • Active Concealment:  A court may find a nondisclosure violation where one party has taken steps to actively conceal vital facts from the other party, while intending to create fraud.

Thus, while each party is generally allowed to remain silent on some contract terms, the circumstances above require that the parties disclose information to one another in order to avoid injury or an unfair agreement.

What are the Consequences of Nondisclosure Violations in a Contract Claim?

Nondisclosure violations in a contracts claim can lead to legal consequences for the liable party.  These can involve the liable party paying damages for any losses caused by the nondisclosure.  In some cases, especially those involving fraud, the contract may be rescinded (cancelled), and a new one created in its place.  However, the injured party will usually have to choose between a damages award and contract rescission. 

Do I Need a Lawyer if I Have Issues with Nondisclosure Violations in a Contract Claim?

If you have any questions, issues, or disputes regarding nondisclosure violations in a contract claim, you may wish to contact a contracts lawyer immediately.  A qualified attorney in your area will be able to provide you with legal advice and guidance.  In particular, a lawyer will be able to help you file a lawsuit so you can recover damages for any losses you have experienced.

Photo of page author Ken LaMance

, LegalMatch Law Library Managing Editor and Attorney at Law

Last Modified: 07-07-2015 01:57 PM PDT

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