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CHAPTER 4 The source of the duty of utmost good faith

Good Faith and Insurance Contracts

Page 95


The source of the duty of utmost good faith

The source of the duty of utmost good faith

4.01 There have been a number of attempts to delve into the mists of time and the well of authorities to divine the nature of the obligation to exercise good faith in the relations of insurer and assured. These attempts have been prompted by a search for the trove of remedies available for bad faith, the fierce debate about the duration of the duty, an explanation of the effect of an assignment of a policy upon the duty and a determination of the extent to which the duty can be trimmed or enlarged by express agreement between the parties. While the practical effects of the characterisation of good faith in insurance contracts have fallen for consideration before the courts, there have been many occasions when the courts have taken the opportunity, whilst examining the duty, to explain the basis of the duty.

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