The Lawyer's Duty to Disclose Material Facts in Contract or Settlement Negotiations

The extent to which lawyers have an obligation to disclose material information in contract or settlement negotiations is both uncertain and controversial. This article argues that a duty to disclose exists when the lawyer?s nondisclosure amounts to a misrepresentation or when disclosure is required by applicable law, such as discovery rules. After a review of cases imposing a duty of disclosure, the article argues that disclosure is required in four situations: (1) corrective disclosure of prior representations that the lawyer now knows are false, (2) disclosure when the lawyer knows that a writing fails to incorporate the agreement of the parties, (3) disclosure when a fiduciary duty exists, and (4) disclosure of fundamental facts when required by the duty of good faith and fair dealing. The article goes on to discuss the scope of the duty of good faith disclosure.