Bank references: UK Supreme Court rules on liability to an undisclosed principal

In this article, Michael Brown, Matthew Pack and Louise Lanzkron analyse the implications of a recent UK Supreme Court decision on liability to an undisclosed principal

While acknowledging that the principle established in Hedley Byrne v Heller is capable of incremental development, the Supreme Court refused to extend it to a case where a bank provided a reference to an agent and the bank had no knowledge of that agent’s undisclosed principal ([1964] AC 465; Banca Nazionale del Lavoro SpA v Playboy Club London Limited and others [2018] UKSC 43). As a result, the bank was not liable to the undisclosed principal for negligent misstatement in tort.

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This article first appeared in the September 2018 issue of PLC Magazine http://uk.practicallaw.com/resources/uk-publications/plc-magazine