The duty to disclose during contractual negotiations

Abstract

This thesis sets out to analyse the existence, and extent thereof, of the contracting parties’ duty to disclose information during contractual negotiations, and the potential annulment of a concluded contract further to a breach or non-adherence to the aforementioned duty. Founded upon the principles of Roman law, the contracting parties are bound by a positive obligation of information, and an obligation not to provide false or inaccurate information. Hence the duty to disclose information plays a protective role by setting standards of behaviour. Consequently, the law requires disclosure of material and determinate information; which affects the counter-party’s will to contract. Nevertheless, the said protection is not unconditional, but subject to the fulfilment of the duties of due diligence by the counter-party. The thesis considers that fraudulent non-disclosure shall constitute a vice of consent which will inherently lead to annulment as the aforementioned fraud counter-acts the essential characteristics for a valid contract. Reference to specific contractual relationship, namely insurance and consumer contracts, illustrate that legislative developments on a National and EU level equally play a normative and preventive role. Nevertheless, the said normative preventive approach may not be very effective unless the seller is effectively obliged to setup and present the information in a way that makes it accessible and useable to the uninformed buyer. The thesis concludes that the subjective case-based approach adopted by Maltese law enables the Courts to take into consideration various essential characteristics to determine whether disclosure is due. Similarly, the constant legislative and jurisprudential developments upon the standards of behaviour pave the way for a more effective and efficient principle of disclosure which inherently ensures contractual certainty, whilst curtailing the potential for abuse by contracting parties.