The Ohio Supreme Court has ruled that Huntington Bank was not required to disclose additional risk-related information to a co-signer of a $77 million guaranty, reaffirming long-standing principles of Ohio contract law.
In its decision, the Court reversed an appellate ruling and reinstated a trial court judgment in favor of Huntington Bank. The case centered on whether the bank had a legal duty to inform investor Raymond Schneider of potential financial risks tied to his business partner before he signed a personal guaranty agreement.
The Court clarified that under Ohio common law, there is no duty to disclose facts that materially increase risk to a contracting party unless a “special trust or confidence” exists between the parties. The ruling rejected application of the so-called “doctrine of increased risk,” which had been advanced by the American Law Institute in 1941 but has never been recognized under Ohio law.
“Schneider had the opportunity to ascertain facts from his business partner or other sources,” the Court noted. “The responsibility to investigate potential risks did not shift to Huntington Bank.”
The decision effectively confirms that in standard arm’s-length transactions—such as guaranty agreements—banks are not obligated to provide additional disclosures absent a special relationship of trust.
Justice Jennifer Brunner issued a partial dissent, agreeing that the appellate ruling should be overturned but cautioning against what she viewed as overly broad reasoning.
The case is Huntington National Bank v. Schneider, case number 2024-0208, in the Supreme Court of Ohio.
