Concealment is a legal term used to describe the act of purposefully hiding important facts or information. This act of intentional obfuscation usually occurs to either spare oneself from legal liability or to deceive someone else for one’s own benefit. In a legal context, concealment can be relevant to contract disputes, insurance claims, and other various business transactions.
Types of Concealment
There are two classes of concealment that can potentially arise in a legal setting: active and passive concealment. Active concealment denotes a deliberate attempt to prevent the disclosure of material facts or information. Passive concealment, on the other hand, involves a negligent act or omission that could also potentially prevent the discovery of pertinent information. In either case, a failure to disclose relevant facts or information may be considered evidence of deception or fraud.
Is Concealment Fraud?
The answer to this question is highly dependent on the facts and circumstances of each particular case. In order to be considered fraud or misrepresentation, one party must generally have known of the concealment and have acted in reliance on the misrepresented information. It is also important to consider the source of the concealment. Intentional attempts to hide critical information are generally taken more seriously in a legal context than negligent omissions.
Real Examples
Recently, two major companies faced legal claims involving issues related to concealment. In 2018, Uber was sued by several riders who alleged that the company had concealed the fact that it had been hacked and the ensuing data breach of their private information. Separately, Facebook was subjected to a class action lawsuit alleging that it had deliberately concealed the fact that it had been collecting users’ biometric data.
Concealment Is a Fundamental Business Principle
At the end of the day, it is critical to remember that concealment is a fundamental business principle. Companies have an obligation to disclose all material facts and information in order to avoid potential charges of fraudulent conduct. Concealment can be especially relevant in the context of fraud claims, contract disputes, and insurance claims. Knowing the difference between active and passive concealment can help you steer clear of any legal repercussions associated with the concealment of important facts or information.