Introduction

“Bona fide” might sound like a fancy legal phrase, but it really just means doing business with good intentions—no tricks or shady dealings. It’s about being upfront and honest, without trying to pull a fast one on the other side. When you see “bona fide” in a contract, think of it as a reminder that everyone should play fair and keep things above board.

Knowing what “bona fide” really means can help you avoid headaches and keep your business relationships running smoothly (and maybe even save you from a few awkward conversations).

Let’s break down what “bona fide” means, why it’s important in business contracts, and how it can affect your dealings.

Why is “bona fide” important?

“Bona fide” is more than just a legal term—it’s about setting expectations for honest behavior in a contract. It’s the glue that holds business relationships together by ensuring everyone acts with trust and integrity. Here’s why “bona fide” is so important:

1. Builds trust: When everyone agrees to act in good faith, it lays a strong foundation for trust and teamwork in any business deal.

2. Prevents disputes: With all parties committed to fairness, there’s less chance for misunderstandings or conflicts.

3. Guards against fraud: Requiring good faith helps protect against tricks, scams, or shady practices that could harm the agreement.

Example of “bona fide” in a business context

Let’s say your company is negotiating a deal to buy a fleet of delivery trucks from another business. The seller is expected to provide all the relevant details about the trucks—like their condition, service history, or any pending recalls—in a bona fide manner, meaning they should be honest, act in good faith and not hide any issues. If the seller knowingly fails to mention that several trucks have serious mechanical problems, they’re not acting in good faith.

On the other side, as the buyer, you’re also expected to act in good faith. This means being upfront about your ability to pay or any financing hurdles that could affect your ability to complete the purchase.

How understanding “bona fide” can help you

Understanding what “bona fide” means can help you handle contracts and business dealings with more confidence. If you’re entering a deal, it’s a reminder to be upfront and expect honesty from the other party. The main way you can do this is insert “bona fide” into your contract. This helps ensure that everyone acts in good faith.

How Cobrief can help

Cobrief automates the review of business agreements in minutes for small to medium-sized businesses. Save time, cut legal costs, and sign your contracts with confidence.

Upload your contract to Cobrief's AI contract review software, click review, and you'll get it screened for risks in plain English, helping you decide if you want to sign, reject or negotiate the contract—or escalate it to a lawyer.

Conclusion

“Bona fide” is more than just a fancy Latin phrase; it’s a fundamental principle that underpins fairness and honesty in business. By understanding what “bona fide” means, you can ensure that your business dealings are based on trust, reduce the risk of disputes, and protect yourself from dishonest practices.

Next time you see “bona fide” in a contract, remember it’s a commitment to act openly and fairly, creating a strong foundation for your business relationships.