Date: Thu, 12 Jul 2007 01:39

From: Barry Allan

Subject: Negligent misrepresentation - duty to speak

Neil Foster wrote:

Dear Colleagues

The decision of the House of Lords in Hamilton v. Allied Domecq plc ...

there are some interesting comments in the judgement of Lord Rodger at paras [19]-[23] on the question whether, in an action for negligent misrepresentation, there can be liability for a "failure to speak".

Thanks for pointing this case out. I wonder why these arguments get run sometimes, about whether silence is a misrepresentation, whether there is a duty to speak. It seems to me that they're an argument that gets trotted out when there is already conduct which has created the necessary erroneous belief. In this case, that was clearly so – there had been big talk about how the water was going to be marketed, so there was room for a belief that it would be distributed through both channels. But then, before the contract was signed up, there was a clarification - that only one channel would be used (29 - 30) - so that the contract was taken up with a correct understanding of the facts.

If there had not been that clarification, it would not have been the failure to speak which was at fault, but the original representations that both channels would be used. At least on a contractual analysis (and this decision seems to flick between contract and delict) we'd see it as having the necessary influential effect to count as contractual misrepresentation. In tort, having made the original representation that two channels would be used when there was no realistic possibility that that would happen, wouldn't that count as our negligent misrepresentation?

Barry
--
*****************************************
Barry Allan
Senior Lecturer
Faculty of Law
University of Otago
PO Box 56
Dunedin
New Zealand
phone: ++(64) (03) 479 8830.  fax:(03) 479 8855

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