LAW 505-002 – Contracts I

Restatement Second of Contracts § 161


When Non-Disclosure Is Equivalent to an Assertion

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A person's non-disclosure of a fact known to him is equivalent to an assertion that the fact does not exist in the following cases only:

  1. where he knows that disclosure of the fact is necessary to prevent some previous assertion from being a misrepresentation or from being fraudulent or material.
  2. where he knows that disclosure of the fact would correct a mistake of the other party as to a basic assumption on which that party is making the contract and if non-disclosure of the fact amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing.
  3. where he knows that disclosure of the fact would correct a mistake of the other party as to the contents or effect of a writing, evidencing or embodying an agreement in whole or in part.
  4. where the other person is entitled to know the fact because of a relation of trust and confidence between them.