What is the primary function of disclosures in contracts?

The primary function of disclosures in contracts is to provide necessary information for making informed decisions. Disclosures serve as a critical tool to ensure that all parties involved in a contractual agreement have access to pertinent facts, terms, and risks associated with the contract. By facilitating transparency, disclosures enable each party to understand the implications of the contract, allowing them to assess whether to proceed and under what conditions. This informed decision-making process is essential to fostering trust and clarity in contractual relationships.

While the other choices touch on important aspects of contractual obligations and rights, they do not capture the essence of the primary purpose of disclosures. Ensuring obligations are met and outlining rights are outcomes that follow informed decision-making rather than being the focus of disclosures. Legal penalties for non-compliance relate to enforcement rather than the initial informative function of disclosures. Thus, the correct understanding of disclosures emphasizes their role in facilitating informed choices by the parties involved.