Taking Information Seriously: Misrepresentation and Nondisclosure in Contract Law and Elsewhere
Stanford Law School
October 24, 2005
Stanford Law and Economics Olin Working Paper No. 314
Stanford Public Law Working Paper No. 111
Contract law attempts in various ways to regulate the information that contracting parties exchange. However, most contract law doctrines (and most contract law scholars) have yet to come to grips with the practical issues involved in regulating information. For instance, the disclosure of information can produce costs as well as benefits, by distracting parties from other, more important information; so it is often hard to decide which information should have been disclosed in any given case. Similar costs and benefits are often involved even in cases involving false statements (misrepresentations), where liability might seem less controversial.
While these issues are underappreciated in contract law, they are much more familiar in federal consumer protection law, especially in cases involving false advertising; and they are beginning to be recognized in products liability cases involving the duty to warn. This paper suggests various ways to improve contract law's handling of misrepresentation and nondisclosure, all of which involve closer attention to the relevant costs and benefits.
Number of Pages in PDF File: 81
Keywords: contracts, misrepresentation, disclosure, information, consumer protection, products liability
JEL Classification: K13, K14
Date posted: October 27, 2005