Duty to Disclose in UK Law

Ordinarily the failure to disclose a material fact which might influence the mind of a prudent contractor does not give the right to avoid the contract. There are certain contracts expressed by the law to be contracts of the utmost good faith where material facts must be disclosed; if not the contract is voidable. In such cases the duty does not arise out of contract; the duty of a person proposing an insurance arises before a contract is made; so of an intending partner.

130. However, the judge went on to say (in paragraph 202 of his judgment) that where the breach of the duty of disclosure is fraudulent, a party to whom the duty is owed who suffers loss by reason of the breach may recover damages for that loss in the tort of deceit. Once again, I respectfully agree with him. Non-disclosure where there is a duty to disclose is tantamount to an implied representation that there is nothing relevant to disclose.

But there is authority, including very strong persuasive authority, for the existence of such a duty.

However, in a criminal case, the Crown is under a duty to give disclosure of significant material which may affect the credibility of a prosecution witness. The most important illustration is, however, the rule that the prosecution is obliged to disclose previous convictions of a prosecution witness. In an important judgment in Wilson v. Police [1992] 2 N.Z.L.R. 533, the Court of Appeal of New Zealand considered what convictions of a prosecution witness must be disclosed.

Such "relational" contracts, as they are sometimes called, may require a high degree of communication, cooperation and predictable performance based on mutual trust and confidence and involve expectations of loyalty which are not legislated for in the express terms of the contract but are implicit in the parties' understanding and necessary to give business efficacy to the arrangements.

It appears therefore that there must be either active and intentional concealment of a fact relevant to a cause of action, or at least the intentional concealment by omission to speak of a fact relevant to a cause of action which the defendant knew himself to be under a duty to disclose. There is no decision that anything less than a duty to disclose will suffice in the absence of active concealment.

The duty is, however, limited to facts which are material to the risk insured, that is to say, facts which would influence a prudent insurer in deciding whether to accept the risk and, if so, upon what terms and a prudent insured in entering into the contract on the terms proposed by the insurer.