J. S. Nelson and Lynn A. Stout, Business Ethics. What everyone needs to know, Orxord University Press, New York, 2022, pp. 84-85.
«In addition to these general disclosure requirements, there are at least four categories of disclosure requirements that appear frequently in the business world:
Hidden defects: If a product or a property contains a hidden defect, you are not allowed to let it slip past a buyer; instead, you must proactively disclose the defect. Many states imply a warranty in a company’s sale of items that the items being sold are free of hidden defects. Failure to disclose such a defect may lead to legal rescission of the sale. For example, a landowner sold his property, but he failed to mention in his property disclosures that the property had drainage problems, which the buyer could not discover until the rainy season. The court allowed the buyer to rescind the purchase because the seller had not disclosed this hidden defect.
Insurance applications: When you apply for insurance, either personally or for your business, both the law and your insurance contract typically require full and accurate disclosure of all risks.
Public companies and securities: Disclosure requirements tend to be particularly stringent when it comes to public corporations. Companies that wish to sell securities to the public must, for example, provide extensive and accurate information about the company. The law further requires public corporations to disclose extensive financial information to shareholders on a regular basis. Federal statutes, like the Sarbanes-Oxley Act and the Dodd-Frank Act, require additional myriad disclosures from corporate directors, officers, and outside auditors about corporations.
Drug companies and side effects: Some products, such as pharmaceuticals, pose sufficient health risks if misused that the Federal Drug Administration maintains special disclosure requirements for labeling and side effects. Such disclosures help consumers make informed decisions regarding their health.
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