Disclosure

Morally Required Disclosure

A person or an organization may be morally required to disclose information for three reasons: The release of information (1) may prevent some significant harm that cannot easily be prevented in other ways, (2) may be required to ensure fairness in markets, and (3) may manage a conflict of interest.

With regard to the first reason, a manufacturer may have a moral obligation to release information about a defect in a product in order to protect consumers from serious injury or even death, and they are also morally obligated to inform employees about some workplace hazards that can cause illness or injury. The disclosure of some product defects and workplace hazards are also required by law either directly through legal requirements, such as an order from the Consumer Product Safety Commission or the Occupational Safety and Health Administration, or indirectly by the standards for negligence in tort law. Thus, a manufacturer may be said to have a legal obligation to disclose a defect if the failure to disclose it could be considered negligence. The principle involved in both morality and law is that one ought not to knowingly cause harm to another. However, disclosure is only one means for preventing harm, and so it may not be morally required if other, more effective means are used. Thus, an employer may not have an obligation to inform employees of workplace hazards if the employer takes other, more effective steps to protect employees.

The second reason—to enable markets to operate fairly—arises from the fact that markets produce mutually beneficial outcomes only if there is perfect information. Fair, as well as efficient, markets require, in other words, that buyers and sellers have full information about what they are giving up and receiving in return. The need of markets for perfect information does not, by itself, entail an obligation on either party in a transaction to disclose except in two cases. One exception is fraud, which is committed when one party to a transaction makes a false or misleading statement or omission of a significant fact that the other party relies on to his or her detriment. Thus, a seller of a house is under a moral and a legal obligation to disclose significant defects since a failure to disclose is an omission that constitutes fraud.

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