A loan was to be made. An agent of the borrower came to know of the fraudulent nature of the loan, but said nothing.
Held: A failure to disclose a known fraud may itself amount to a misrepresentation, but nondisclosure (whether dishonest or otherwise) does not as such give rise to a claim in damages: ‘without a misrepresentation there can be no fraud in the sense of giving rise to a claim for damages in tort’ but ‘We can see no sufficient reason on principle or authority why a failure to speak should not be capable of giving rise to liability in negligence under Hedley Byrne principles, provided that the two essential conditions are satisfied.’ The two essential conditions were ‘that there has been on the facts a voluntary assumption of responsibility in the relevant sense and reliance on that assumption.’ and ‘These features may be much more difficult to infer in a case of mere silence than in a case of misrepresentation.’
Slade LJ
[1990] 1 QB 665
England and Wales
Cited by:
Appeal from – Banque Keyser Ullmann SA v Skandia (UK) Insurance Co Ltd HL 1991
Banks had made loans against property which the borrower had said was valuable, and, also insurance policies against any shortfall on the realisation of the property. The borrower was a swindler and the property worthless. The insurers relied upon a . .
Cited – HIH Casualty and General Insurance Limited and others v Chase Manhattan Bank and others HL 20-Feb-2003
The insurance company had paid claims on policies used to underwrite the production of TV films. The re-insurers resisted the claims against them by the insurers on the grounds of non-disclosure by the insured, or in the alternative damages for . .
Cited – Hamilton and others v Allied Domecq Plc (Scotland) HL 11-Jul-2007
The pursuers had been shareholders in a company which sold spring water. The defenders took shares in the company in return for promises as to the promotion and distribution of the bottled water. The pursuers said that they had failed to promote it . .
Lists of cited by and citing cases may be incomplete.
Contract, Torts – Other
Leading Case
Updated: 11 November 2021; Ref: scu.219300