Is Withholding Information a Legitimate Tactic?
Imagine you're sitting in a law office, trying to seal a crucial deal for your business. Your attorney suggests not to lie, but simply not to disclose certain details to the other party. Does this sound like something you'd be willing to partake in? Many of my clients have approached me at exactly this point, wondering if this is truly the best strategy for them. In one case, a client of mine was negotiating a significant contract. His lawyer suggested not revealing an important detail, thinking it would help improve his negotiating position. What he didn't expect was that the other party found out about this information from another source, and the negotiation completely fell apart.
What Courts and the Law Actually Consider
When it comes to withholding information, Israeli law focuses primarily on honesty and good faith. The Contracts Law (General Part), 1973, talks about the duty of good faith in negotiations. This means that during negotiations, there is a duty to act honestly and in good faith towards the other party. Failing to disclose a material fact may be considered a breach of the duty of good faith and could lead to the annulment of the agreement or a lawsuit for damages. In many cases, courts examine whether the withheld information was material to the deal and whether the other party would have acted differently had they known it. If the answer is yes, it might be a breach of the duty of good faith. Additionally, the context of the withheld information must be considered. If it is information that could influence the decision of the other party, its concealment might be deemed misleading.
When It's Relevant — A Checklist
- ✓Could the withheld information influence the other party's decision?
- ✓Is there a specific law or regulation requiring the disclosure of the information?
- ✓Is there a duty of good faith in the discussed agreement?
- ✓Is there a chance the other party will discover the information from another source?
The Specific Law That Applies
The Contracts Law (General Part), 1973, establishes that good faith must be maintained during negotiations. This means that even if it's not an outright lie, concealing material information may be considered a breach of the duty of good faith. If the other party would have changed their position had they known the information, it can lead to serious legal repercussions.
Questions Everyone Asks — But No One Asks the Lawyer
Real Situations — Which Side of the Line Are You On?
- ✓A procurement manager at a company who concealed information about a new supplier. The information was discovered, and the deal was annulled.
- ✓A financial advisor whose concealment of information about investment risks led to a client's financial loss. The client sued and won.
- ✓A negotiator who decided to disclose all available information, gained the other party's trust, and successfully closed the deal.
What to Do Right Now
The first step is to review the information you hold and ensure no material information is concealed from the other party. If you're unsure, consult with a trusted lawyer. If you do nothing and the information is later revealed, you may face legal and business consequences.