Uberrimae Fidei Legal Definition:

Latin: of the utmost good faith.

A contract in which knowledge of the material fact(s) lies with one party alone; that party is under a duty to make a full disclosure of these facts, and failure to do so makes the contract voidable.

A Latin expression: the utmost of (good) faith.

At page 500 of the 29th edition of Chitty on Contracts:

"Mere non-disclosure of fact, material or not, does not ordinarily amount to misrepresentation, and the general rule is that in order to be actionable a representation must take an active form.

"But in certain cases a stricter rule is enforced.

"The most important of these are the contracts uberrimae fidei, in which knowledge of the material facts generally lies with one party alone; that party is under a duty to make a full disclosure of these facts, and failure to do so makes the contract voidable.... The duty varies in its extent from one type of contract to another.

"Contracts of insurance of every kind form the main group of contracts uberrimae fidei.

"Other examples generally included, though these are probably not all uberrimae fidei in the strict sense, are contracts to subscribe for shares in a company, family settlements, contracts for the sale of land, contracts of suretyship, and partnerships.

"Contracts of service are not uberrimae fidei, nor are contracts of sale of goods."

In Jowitt's 1977 Dictionary, the term was described as follows:

"A contract is said to be uberrimae fidei when the promisee is bound to communicate to the promisor every fact and circumstance which may influence him in deciding whether to enter into the conract or not.

"Contracts which require uberrimae fidei are those entered into between persons in a particular relationship, as guardian and ward, solicitor and client (and) insurer and insured."

In Coronation Insurance v Taku Air, Canada's Supreme Court wrote:

"The uberrima fides doctrine is a longstanding tenet of insurance law which holds parties to an insurance contract to a standard of utmost good faith in their dealing. It places a heavy burden on those seeking insurance coverage to make full and complete disclosure of all relevant information when applying for a policy."

In a Canadian case, Gabriel v. Hamilton Tiger-Cat Football Club, Justice O'Leary used these words:

"(T)here is a limited class of contracts in which one of the parties is presumed to have means of knowledge which are not accessible to the other and is, therefore, bound to tell him everything which may be supposed likely to affect his judgment. They are known as contracts uberrimae fidei, and may be avoided on the ground of non-disclosure of material facts.

"Contracts of insurance of every kind are in this class. There are other contracts, though not contracts uberrimae fidei in the same sense, which impose a duty of full disclosure of all material facts by the parties entering into them. Contracts for family settlements and arrangements fall into this category.

"I am dealing here with a contract of personal service. The House of Lords in Bell v Lever Bros. Ltd. refused to extend the duty of disclosing material facts to contracts for service."

In the context of maritime law, Justice McKeown of the United States Court of Appeals , 9th Circuit, used these words in the February 2008 decision of Certain Underwriters at Lloyd's v Inlet Fisheries Ltd.:

"This case involves the interplay between an ancient legal doctrine and contemporary vessel pollution insurance. Historically, all insurance policies were contracts uberrimae fidei, meaning that both parties were held to the highest standard of good faith in the transaction.

"The doctrine of uberrimae fidei was grounded both in morality and efficiency; insureds were considered morally obligated to disclose all information material to the risk the insurer was asked to shoulder, but such a principle was also an economic necessity where insurers had no reasonable means of obtaining this information efficiently, without the ubiquity of telephones, email, digital photography, and air travel.

"The reasons which brought into being the strict marine insurance law doctrine as to disclosures, go far back into the early days of marine insurance, when sailing ships in faraway seas were insured in London by underwriters who could get no information except from the shipowners.

"The contract of insurance, is one of mutual good faith; and the principles which govern it, are those of an enlightened moral policy.

"Today, uberrimae fidei has been displaced in most insurance contexts. Nevertheless, the doctrine enjoys continuing vitality in the world of marine insurance."

REFERENCES

  • Bell et al. v. Lever Bros. Ltd. et al. 1932 A.C. 161
  • Coronation Insurance v Taku Air (1991) 3 S.C.R. 622
  • Gabriel v. Hamilton Tiger-Cat Football Club Ltd. 57 D.L.R. 3d 669 (Ontario Supreme Court, 1975)
  • Certain Underwriters at Lloyd's v Inlet Fisheries Ltd., United States Court of Appeals, 9th Circuit (2008)

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