uberrimae fidei

The ordinary rule of the Indian Contract Act, 1872 is that mere silence is not fraud (explanation to Section 17). Contracts uberrimae fidei are an exception: the party with knowledge must volunteer every material fact. Insurance contracts are the main example, since the insurer depends on the proposer's disclosure; others include contracts between partners, family settlements, and fiduciary relationships.

Non-disclosure of a material fact makes the contract voidable. For life insurance, Section 45 of the Insurance Act, 1938 (as amended in 2015) bars the insurer from questioning a policy on any ground after three years from its date, which limits the effect of the doctrine.

Example

Because insurance is a contract uberrimae fidei, the insured's failure to disclose his earlier heart surgery entitled the insurer to avoid the policy.

In Indian law

• Section 17 (explanation), Indian Contract Act, 1872
• Section 45, Insurance Act, 1938 (policy not to be called in question after three years)

See also

fraud · misrepresentation · insurable interest

Read more in the study notes

• Sole proprietorship, partnership and limited liability partnership (Business Environment)
• Misrepresentation and fraud (Contract I)
• Contract of indemnity (Contract II)
• Relations of partners: rights and duties (Contract II)
• Insurance: nature, history and classification (Insurance Law)
• Utmost good faith, non-disclosure and section 45 (Insurance Law)