Comparative Contract Law and Economics

Comparative Contract Law and Economics

New Horizons in Law and Economics series

Mitja Kovač

Comparative Contract Law and Economics provides a deeper understanding of the similarities and differences between the legal systems of France, England, the US and Germany in terms of contract law.

Chapter 2: Pre-contractual Duty to Disclose Information

Mitja Kovač

Subjects: economics and finance, law and economics, law - academic, commercial law, law and economics, law of obligations


The question of the circumstances under which an individual has a duty to disclose valuable information unknown to the person with whom she bargains represents one of the most puzzling and extensively debated legal issues. This chapter overcomes an old legal and moral crux; critically examines the disclosure duties of France, England, the USA and Germany; and openly challenges widely-accepted comparative premises. The central premises in this chapter are the following: (1) when looking at the law in action, French, English, American and German law differs less than comparatists tend to believe; (2) there is a growing trend from inefficient towards more efficient legal practices; (3) economic analysis suggests that several landmark decisions have been incorrectly interpreted; (4) from a technical viewpoint, it is best to take a broadly defined duty of disclosure as a point of departure; and (5) from an economic point of view some of the statutory provisions governing disclosure duties may be improved further. 2.1. INTRODUCTION The comparative investigation begins in the pre-contractual stage, where the hotly debated question is under what circumstances an individual has a duty to disclose valuable information. The question of whether this party has the right to remain silent and profit from her secret knowledge, or whether she has to disclose it, has fascinated scholars in philosophy, law and history from ancient times and has produced an impressive amount of literature, decisions and comments. Most recently, it has also gained extensive attention in many prominent laws and...

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