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  • InsideTrack
  • September 17, 2014

    Ethical Dilemmas: Must I Speak Up About a Contract Omission that is Favorable to My Client?

    Sept. 17, 2014 – This month’s Ethical Dilemmas question focuses on a contract omission that is favorable to your client. What do you do?

    Question

    I represent the seller in the sale of a business. The buyer’s lawyer and I negotiated the terms of the sale to the buyer. The buyer’s lawyer drafted the contract but omitted a provision that was insisted on by the buyer and reluctantly agreed to by my client. The omission is favorable to my client. Must I inform my client about the mistake?

    Answer

    No, the seller’s lawyer does not have an ethical obligation under SCR 20:1.4 to advise the seller of the error. In this circumstance, there is no “informed decision,” in the language of SCR20:1.4(b) that the seller needs to make. The decision on the contract has already been made by the seller. See ABA Informal Opinion 86-1518.

    Moreover, the seller cannot take unfair advantage of the error.The seller’s lawyer is prohibited by SCR 20:1.2(d) from counseling the seller to engage in, or assisting the client in, conduct the lawyer knows is fraudulent. Similarly, Rule 4.1(b) requires the lawyer to disclose a material fact to a third person when disclosure is necessary to avoid assisting a fraudulent act by a client. In addition, Rule 8.4(c) prohibits the lawyer from engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation.


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