What Is Moral Hazard?
Moral hazard is the risk that a party has not entered into a contract in good faith or has provided misleading information about its assets, liabilities, or credit capacity. In addition, moral hazard also may mean a party has an incentive to take unusual risks in a desperate attempt to earn a profit before the contract settles.
Moral hazards can be present anytime two parties come into agreement with one another. Each party in a contract may have the opportunity to gain from acting contrary to the principles laid out by the agreement.
Anytime a party in an agreement does not have to suffer the potential consequences of a risk, the likelihood of a moral hazard increases.
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Check out other legal English topics: https://blog.seocopywriting.ro/2025/01/15/topics-for-our-legal-english-courses-opening-statements/
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