Playing your cards right: obligations of disclosure in commercial negotiations

Abstract

There is a traditional view that parties involved in commercial negotiations are entitled to keep their cards close to their chest. Such a view holds that, in the absence of any fiduciary relationship or obligations of utmost good faith, parties are entitled to operate on the basis of advancing their own interests. They are free to conduct investigations to determine and verify legal, accounting and general business information. Any other matters are generally seen to be at the risk of the parties. But while this view is often expressed by the courts, negotiating parties and their lawyers need to be aware of the extent to which it is under challenge from developments in the law relating to matters such as misleading and deceptive conduct, negligent misstatement, equitable estoppel, unconscionable conduct, and even the rules on professional ethics. The paper will review recent case law in each of these areas to determine the extent to which parties may be liable for non-disclosure of information during commercial negotiations.