What is it?
Disclosure is a contractual clause and statutory requirement that governs the sharing of material facts between parties.
disclose
UCC / CommercialLegal glossary term
Quick answer
DISLOSE usually means to share material facts with the other side. In contracts, it matters because withholding can void the deal or cause damages. Before signing, check that all material information is fully disclosed.
Definitions
What is disclose?
Legal Definition
Providing material information to the other side, often in writing, creates a duty to disclose under contract, securities, and regulatory regimes. Failure to disclose can void a contract, trigger damages, or invite regulatory penalties. The most critical qualifier is whether the information is deemed material to the transaction.
Plain-English Translation
Imagine a kid must show a permission slip before entering the playground; if the slip hides a rule that the playground is closed, the kid gets sent home.
Contract relevance
Why disclose matters in contracts
Ignoring the disclosure obligation can render the agreement unenforceable and expose the breaching party to damages.
Document context
Where disclose appears in documents
| Document type | Section | Why it matters |
|---|---|---|
| Merger agreement | Representations and warranties | Ensures honesty about assets |
| Loan agreement | Covenants | Requires ongoing financial disclosure |
| Securities prospectus | Risk factors | Mandates disclosure of known risks |
| Employment contract | Confidentiality clause | Limits what can be disclosed |
Contract language
Common contract wording
| Contract wording | Plain-English meaning | What to check |
|---|---|---|
| "The Seller shall disclose all known defects" | Must tell buyer about any problems | Verify list of defects is complete |
| "Borrower must disclose any pending litigation" | Must inform lender of lawsuits | Confirm no hidden lawsuits exist |
| "Seller provides full disclosure of financial statements" | Must give complete financial data | Check for omitted liabilities |
Red flags
Red flags to watch for
Wording examples
Clearer wording examples
Vague wording
"Disclose material facts"
Clearer wording
"Disclose all facts a reasonable person would consider material to the transaction"
Vague wording
"May disclose"
Clearer wording
"Must disclose"
Note: “clearer” means easier to read — not legally reviewed or guaranteed safe.
Pre-signature checklist
What to check before signing
1
Identify all facts that could be material to the deal.
2
Confirm the contract uses mandatory language (must, shall).
3
Ask for a list of known defects or pending litigation.
4
Verify any statutory disclosure thresholds are met.
5
Ensure deadlines for disclosure are clearly stated.
6
Check for carve-outs that limit disclosure obligations.
Party impact
How disclose affects each party
| Party | What this party should check |
|---|---|
| Seller | Must compile and provide a complete defect list |
| Buyer | Should request confirmation that no material facts are hidden |
| Lender | Needs full financial and legal risk disclosure |
| Borrower | Must report any pending lawsuits promptly |
Comparison
disclose vs similar terms
| Related term | Plain meaning | Main difference from disclose |
|---|---|---|
| Materiality | The importance of a fact | Disclosure depends on materiality, while materiality itself is a threshold test |
| Non‑disclosure agreement | A promise to keep information secret | NDA limits sharing, whereas disclose obligates sharing |
| Misrepresentation | False statement of fact | Misrepresentation is the opposite of a proper disclosure |
Missing or vague
If disclose is missing or vague
If the duty to disclose is not defined, parties may argue over what information counts as material. The seller could hide defects, leading the buyer to sue for breach. The lender might miss a pending lawsuit, resulting in a default judgment. Courts will then interpret the contract, often to the detriment of the nondisclosing party.
Document map
Document section map
| Contract section | What to inspect |
|---|---|
| Definitions | Look for a 'Disclosure' definition and materiality standard |
| Representations & Warranties | Verify required disclosures are listed |
| Covenants | Check ongoing disclosure obligations and timing |
| Termination | See if failure to disclose triggers termination rights |
Visual model
Understand disclose fast
An explainer image has not been generated for this term yet.
01
Landlord discovers a roof leak and informs the tenant before signing the lease, preventing later claims.
02
Borrower learns of a pending lawsuit against the company and discloses it to the lender during loan underwriting, preserving loan validity.
Document context
How disclose shows up in legal documents
Why does it matter?
Ignoring the disclosure obligation can render the agreement unenforceable and expose the breaching party to damages.
When does it matter?
When a party learns of a fact that could affect the other side's decision, the duty to disclose arises immediately.
Where is it usually seen?
Standard in Article 2 of the UCC, Section 10 of the Securities Act, and most merger agreements.
Who is affected?
Seller must reveal known defects; buyer gains protection against hidden risks. Lender must disclose loan terms; borrower avoids unexpected fees.
How does it work?
First, identify any fact that a reasonable person would consider material. Then, communicate that fact in writing to the other party before execution or performance. Within five business days of learning new material information, follow up with an amendment or notice.
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Wikipedia
External reference for disclose
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Where disclose connects to real contract work
This layer links the term to nearby glossary entries, document use cases, and contract-risk guides so readers can move from definition to context without dead ends.
Glossary
Use Cases
NDA
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Source & disclosure
This page is an AI-assisted plain-English explanation based on LexPredict Legal Dictionary context and contract-review patterns. It is not legal advice. Meaning may vary by jurisdiction, industry, and exact clause wording.
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