Utmost good faith Definition

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What does Utmost good faith mean?

Utmost good faith, or the principle of uberrima fides, is a term of art for insurance contracts. The common law duty of utmost good faith requires both parties to the contract to disclose all material facts. In practice, the onus of the obligations rests with the party being insured, the proposer, who must disclose all material facts known to it during preliminary negotiations for an insurance contract.

If a proposer fails to make full disclosure, the insurer is entitled to avoid the contract, including if the proposer makes an innocent misrepresentation of a material fact. If the insurer fails to make full disclosure, the proposer’s remedy is the return of the premium and not for breach of contract damages. Case law suggests a proposer/insured may have a claim in damages ‘in an exceptional case’. The common law duty of utmost good faith can be qualified by express contractual terms. These are more common in non-marine insurance contracts, where the amount of disclosure that would otherwise be required can be defined, regulated or limited.

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General principles of insurance contract law

What is insurance law?Insurance law can be split into three parts:•insurance contract law which governs the contractual relationship between insureds and insurers•the law of intermediaries which regulates insurance business which is transacted through agents (this is true for most insurance business)•insurance company law which is concerned with the financial soundness, probity and regulation of insurance companiesThis Practice Note largely deals with insurance contract law. For more information on insurance regulation, see: General matters relating to insurance regulation—overview.Reform of the insurance sectorFollowing several previous attempts, most notably in 1980 (see the Law Commission’s 1980 report for details), in January 2006 the Law Commission and Scottish Law Commission (together the Law Commissions) started consulting on reforming insurance contract law. Following the consultation, the Law Commissions’ work was broken into three sub-projects:•consumer insurance law reform: pre-contract disclosure and misrepresentation•insurance contract law reform: business disclosure, warranties, insurers’ remedies for fraudulent claims, and late payment•insurance contract law reform: insurable interestConsumer insurance law reform—pre-contract disclosure and misrepresentationAfter the 2006 consultation, there followed a series of statements...

The nature of a limited partnership and its legal framework

The nature of a limited partnership and its legal framework Sources of limited partnership law The main body of law governing a limited partnership formed under English law (as opposed to a general partnership, a limited liability partnership or a general partnership formed under Scottish law) is the Limited Partnerships Act 1907 (LPA 1907). However, it is not a complete code of the law on limited partnerships and expressly preserves the provisions of the Partnership Act 1890 (PA 1890) and rules of equity and common law applicable to partnerships, except where they are inconsistent with the express provisions of the LPA 1907. As is the case for general partnerships, there will often be a written agreement between the partners setting out the rights and duties of the partners between themselves although this is not obligatory, save where the limited partnership is designated as a private fund limited partnership (see Practice Note: Limited partnership agreements). Both the LPA 1907 and the PA 1890 set out a number of...

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Limited liability partnership agreement—law firm

Limited liability partnership agreement—law firm This llp Agreement is made on [insert date and month] 20[insert year] Parties 1 The parties listed in Schedule 1 (Initial Members); and 2 [insert name] LLP a limited liability partnership (registration number OC [insert number]) whose registered office is at [insert address] (LLP). background (A) The LLP was incorporated on [insert date]. (B) The Initial Members are entering into this agreement to set out the internal arrangements of the LLP and their rights, obligations and duties in relation to the LLP. The parties agree: 1 Definitions and interpretation 1.1 In this agreement: Accounting Period • means each period of 12 months ending on the Accounting Reference Date; Accounting Reference Date • means [insert date] in each year or such other date as the Members may from time to time designate; Accounts • means the profit and loss account and balance sheet of the LLP drawn up in accordance with clause 22; Act • means the Limited Liability Partnerships Act 2000; Auditors •...

UK regional franchise development agreement

UK regional franchise development agreement This DEED of agreement is made on [insert date] Parties 1 [insert name of party] [of OR a company incorporated in [England and Wales] under number [insert registered number] whose registered office is at] [insert address] (Franchisor); and 2 [insert name of party] [of OR a company incorporated in [England and Wales] under number [insert registered number] whose registered office is at] [insert address] (Developer); and (each of the Franchisor and the Developer being a party and together the Franchisor and the Developer are the parties). Background: (A) The Franchisor has developed the Method and the Business. (B) The Franchisor [has applied to register OR is the registered proprietor of OR owns OR has the right to sub-license] the Trade Marks. (C) The Franchisor wishes to expand its franchise network and is therefore willing to appoint the Developer to run the Development Business in the Territory. (D) The Developer wishes, and is able, to accept such appointment. The parties agree:...

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What remedies are available to a director shareholder of a limited company who is one of three directors, each of whom own a one-third share in the business, and one of the other two director shareholders are excluding them from the business (including by changing the locks to the business property and removing access to the company’s joint account)?

What remedies are available to a director shareholder of a limited company who is one of three directors, each of whom own a one-third share in the business, and one of the other two director shareholders are excluding them from the business (including by changing the locks to the business property and removing access to the company’s joint account)? Is it possible to obtain injunctive relief? An injunction is a discretionary remedy that takes the form of a court order and which requires a party to either refrain from doing something (prohibitory) or to specifically do something (mandatory). The courts are, generally, more willing to grant prohibitory injunctions than they are to order mandatory injunctions. An injunction is typically a temporary measure put in place pending the outcome of proceedings between the parties. They are generally only appropriate when the respondent’s alleged continued wrongdoing is likely to cause irreparable harm to the applicant’s interests before the issue is resolved at trial, which could not be adequately compensated by...

In an employer’s liability case, the defendant’s insurers stated that during an investigation after the claimant’s death, the insurer discovered that the defendant had provided non-disclosure and misrepresented material facts and therefore the insurers avoided the insurance policy for the time of the accident and the previous year. The defendant’s company is in voluntary liquidation. Is it possible for the insurers to get out of paying the claim in this way?

In an employer’s liability case, the defendant’s insurers stated that during an investigation after the claimant’s death, the insurer discovered that the defendant had provided non-disclosure and misrepresented material facts and therefore the insurers avoided the insurance policy for the time of the accident and the previous year. The defendant’s company is in voluntary liquidation. Is it possible for the insurers to get out of paying the claim in this way? It is possible for an insurer to avoid an insurance policy on the basis of non-disclosure and/or misrepresentation of material facts (see, by way of example, Pan Atlantic Insurance Co Ltd v Pine Top Insurance Co Ltd). An insurance contract is one of utmost good faith, and failure by the insured to disclose a material fact, or misrepresentation of a material fact, potentially enables the insurer to make use of the legal remedy of avoiding the policy. If the policy is avoided, the insurer is entitled to act as though the policy never existed....

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Ireland—commencement dates for Consumer Insurance Contracts Act 2019 announced

Insurance & Reinsurance analysis: It has been revealed that the Consumer Insurance Contracts Act 2019 (the Act) will commence shortly. Tara Cosgrove and Martin Browne, both partners, and Seán O’Halloran, solicitor at Beale & Co, Dublin consider the key actions to implement before commencement.

‘Spiking’ of mesothelioma reinsurance claims—appeal resolved prior to Supreme Court hearing

Insurance & Reinsurance analysis: Equitas Insurance Ltd v Municipal Mutual Insurance Ltd settled. Nigel Brook and David Wynn, both partners at Clyde & Co, consider the position.

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