Legal Definitions - uberrima fides

uberrima fides

This Latin term translates to "utmost good faith." In legal contexts, it refers to a special class of contracts where one party has a legal duty to disclose all material facts to the other party, even if not specifically asked. This duty goes beyond the general requirement of honesty and fair dealing; it demands complete and voluntary disclosure of all information that could influence the other party's decision to enter into the contract or the terms of that contract. The party with superior knowledge must not only avoid misrepresentation but also actively reveal all relevant information.

• Example 1: Applying for Life Insurance

  When an individual applies for a life insurance policy, they are under a duty of uberrima fides. They must disclose all relevant medical history, lifestyle factors (like smoking or dangerous hobbies), and any pre-existing conditions, even if the application form does not specifically ask about every single detail. The insurance company relies entirely on this full disclosure to accurately assess the risk of insuring the applicant and to determine the appropriate premium. Failure to disclose a material fact, even if unintentional, could lead to the policy being voided later.

• Example 2: Marine Insurance for a Cargo Ship

  A shipping company seeking to insure a cargo vessel for a voyage is also bound by the principle of uberrima fides. The company must inform the insurer about all known facts that could affect the risk, such as the ship's recent maintenance history, any past incidents (like minor collisions or groundings), the nature of the cargo, and even the political stability of the ports of call. The insurer, often thousands of miles away, cannot easily verify all these details and depends on the shipping company's complete and honest disclosure of all material information to underwrite the policy correctly.