What principle involves two parties relying on each other's statements and promises, assuming no deception has occurred?

The principle that involves two parties relying on each other’s statements and promises, with the assumption that no deception has occurred, is known as utmost good faith. This principle is particularly important in insurance, where the parties involved must act honestly and disclose all material facts relevant to the contract. Utmost good faith creates a foundation of trust, requiring that both parties deal with each other sincerely and transparently.

In the context of insurance contracts, this means that the insurer and the insured must rely on the information provided during the application process and throughout the term of the policy. If either party fails to uphold this duty of honesty—say, by making misleading statements or omitting crucial information—it can lead to disputes and affect the terms of the contract.

While other terms like misrepresentation, estoppel, and waiver have important meanings in contract law, they do not specifically capture the essence of both parties needing to trust and build their agreement on promises made without deceit, which is the core concept of utmost good faith.