Answer to Question 1
A contract can contain information that is valuable to both the signing parties and outsiders. Sometimes the law requires that certain facts be disclosed in it. Disclosure is economically desirable where a failure to disclose would reduce the economic value the agreement can produce. As an example, if you put a house on the market you must generally inform potential buyers that it has structural defects or is infested by termites. A buyer with this information is in a better position to determine its suitability than one without it.
Answer to Question 2
C