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PRINCIPLES OF AGREEMENT - Coggle Diagram

- - - - “let the buyer beware”:The terms and conditions offered by the seller are either queried when you buy, or else you accept that they are true and correct. There can be no comeback, unless the seller gives you some form of warranty. There is no “cooling off” period when a major purchase is made, however cooling off period only applies to credit agreements. ASISA code of conduct only allows 30 day cooling off period during which an endowment or life cover policy may be cancelled without penalty.
        
        You will be able to apply to the courts for relief in the event of deliberate fraud or misrepresentation of the facts in a contract. However, ignorance of the law cannot be accepted as a valid defence. You are also expected to be aware of what you are signing or agreeing to at all times, as “Ignorance is no excuse in the eyes of the law.”
    - - The very nature of an insurance contract requires that the buyer (the proposer or insured) provides the seller (the insurer) with all the facts at his disposal. Non-disclosure or misrepresentation of any of the facts will give the insurer the right to claim that the policy was void from the beginning (ab initio). Over the years debate has arisen as to whether insurance contracts are contracts of utmost good faith (uberrima fides) or simply contracts of good faith (bona fides).
        
        The case of Mutual and Federal Insurance Company Ltd. v Oudtshoorn Municipality (1985) finally cleared up this confusing principle. The Appellate Division decided that utmost good faith was an impractical concept since there can only be good faith or bad faith. A person may be less than honest but cannot be more honest than honest and utmost good faith was declared to be a meaningless concept in South African law.
        
        With a contract uberrima fides it was accepted that there was an obligation placed on the proposer to disclose all that he knows. The non-disclosure of any material circumstance, whether the proposer thought it was relevant or not, would allow the insurer to void the contract from inception.
        
        The implication of this and further court rulings has resulted in the conclusion that the principle of uberrima fides placed too heavy a responsibility on the proposer and the reasonable man test has been established.
- - - - Insurance record of the proposer/insured
      - The fact that a policy has been cancelled, or that a previous proposal was declined, or accepted at other than ordinary terms, must be disclosed.
      - Risk experience of proposer
      - Should the proposer have submitted a dread disease or disability claim at any time in the past and is now looking for cover for the same risk, this must be disclosed.
      - Medical Questions
      - The following is a direct extract from Gordon and Getz - The South African law of Insurance.