The breach of the legal and pre-contractual obligation to accurately declare all relevant circumstances which allows an insurer to identify insured property and to asses risk, leads to the nullity of a contract, whether the breach comes from error, negligence or the fraud of the proponent (article 557 Nº 1 Code of Commerce).
Under section 44 of the Civil Code, gross negligence is equivalent to dolus or bad faith in civil matters. Gross negligence is contrary to the good faith with which the parties must perform the contract (article 1545 of the Civil Code). It is not possible that whoever acts with gross negligence acts at the same time in good faith.
In equating gross negligence and bad faith the law compensates the creditor in proportion to the extent of the debtor negligence. It also discourages gross negligence.
Is the risk of gross negligence by the insured insurable?
Under section 552 of the Commercial Code, it is forbidden for an insurer to take responsibility for the personal acts of the insured, if these acts involve gross negligence or bad faith. It only authorises covering acts that occur by ordinary negligence. An insurance policy that covers bad faith or gross negligence of the insured will be void.
Evidence of gross negligence
Section 1547 of the Civil Code states that the burden of proof regarding diligence or care falls on the party that should have acted diligently. Therefore, contractual culpa or negligence is presumed and it is the debtor of the obligation that must prove there was no negligence. On the other hand, the creditor will only need to prove the existence of the obligation. Conversely, bad faith is not presumed, whether in tort or in contractual liability.
There are doubts about whether gross negligence is automatically equivalent to bad faith in civil matters and is presumed within the scope of contractual liability, or if it needs to be proven.
Scholars think that equating gross negligence and bad faith does not extend to the evidence regime, therefore, while dolus must always be proven by whoever pleads it, gross negligence is presumed, as is the case with ordinary negligence.
However, notwithstanding this assimilation the law makes for civil purposes, bad faith and gross negligence are different concepts, as section 44 of the Civil Code defines them separately.