Information Asymmetry
/ˌɪnfɚˈmeɪʃən æsɪˈmɛtrɪ/
Definitions
- (n.) A condition in which one party in a legal or economic transaction has more or better information than the other, potentially affecting the fairness or outcome of the transaction.
Information asymmetry can lead to unfair contracts when one party hides material facts from the other.
Forms
- information asymmetry
Related terms
See also
Commentary
This term is often crucial in drafting disclosure obligations to mitigate risks arising from unequal information distribution between parties.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.