The significance of a ‘basis of contract’ clause

In Genesis Housing Association Ltd v Liberty Syndicate Management Ltd [2013] EWCA Civ 1173 the Court of Appeal held that the claimant was not entitled to make a claim under an insurance policy because it had provided incorrect information contrary to a ‘basis of contract’ declaration in the proposal form. The fact that that information had been provided without any fraudulent intent did not avail the claimant. The parties had agreed that the proposal and the statements made therein formed the basis of the contract between them and this was sufficient to turn the statements in the proposal form into warranties on which the insurance contract was based. Given this conclusion, it is important to examine proposal forms with great care because the price of the inclusion of factually incorrect information in the proposal can be a very high one, as the present case demonstrates.