A disclosure letter is the seller’s main line of defence against warranty claims: a document delivered alongside the sale agreement that tells the buyer, in writing, the specific facts that qualify what has been warranted.
Technically, it is a document delivered by the seller at signing that discloses matters against the warranties in the sale agreement. Where a disclosure meets the fair disclosure standard, the seller is not liable for breach of the warranty in respect of that disclosed matter.
The buyer wants disclosures narrow and specific, so as little as possible actually qualifies the warranties. The seller wants every material issue captured clearly, because an issue disclosed properly cannot later become a warranty claim, while the same issue left out or buried is a liability waiting to surface after completion.
Drafting the disclosure letter well is one of the most consequential, and most rushed, tasks in the entire deal. It usually happens in the final days before signing, under time pressure, which is exactly when a genuinely material issue is most likely to get left out or described too vaguely to count.
What you as a seller should push back on: being asked to finalise the disclosure letter in the same short window as signing itself, and any suggestion that a general reference to the data room can substitute for specifically disclosing the issues that actually concern you.