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Why Banca Nazionale v Playboy Club London is important

A bank does not owe an undisclosed principal a duty to take reasonable care when giving a credit reference.

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The Playboy Club arranged for an associated company (Burlington Street Services) to obtain a credit reference about a customer from that person’s bank, Banca Nazionale. The Playboy Club remained an undisclosed principal so that the purpose of obtaining the credit reference was not disclosed.

The bank negligently confirmed the customer’s credit, which was relied on by the Playboy Club. The Club suffered a net loss of just over £800,000 from unpaid cheques.


The Playboy Club brought a claim in the tort of negligence against the bank.


Whether the bank owed the Club as an undisclosed principal a duty to take reasonable care. It was common ground that the bank had breached its duty if one was owed, for there was no reasonable for the basis that was given.

This was more important because the agent (Burlington Street Services) did not have a valuable claim because it had not suffered any loss.


The Playboy Club conceded that (1) there was no evidence that the reference would be relied on by anyone other than Burlington, and (2) that ordinarily a representor owes no duty to B where the statement is given to be relied upon by A, unless the representor knew it was likely that the statement would be passed by A to B.

The Playboy Club argued that this case was different because the Club was Burlington’s undisclosed principal. The Club highlighted that the case was “equivalent to contract” because, as a matter of contract law, the Club was entitled to declare itself and assume the benefits of the contract.

The bank argued that no duty could be owed because (a) the Club was not a specific person or within a group of persons to whom responsibility had been undertaken, and/or (b) the bank was unaware of the purpose of the reference.


No duty was owed by the bank to the Playboy Club.


Lord Sumption, with whom the rest of the Supreme Court agreed, rejected the Playboy Club’s argument for three reasons:

Firstly, he rejected that every case which is “equivalent to contract” necessarily imports the required proximity for a duty to take reasonable care. (para [13])

Secondly, Lord Sumption emphasised that the relationship between a representor and an undisclosed principal is different to the cases where a duty of care was owed. The concept of an undisclosed principal is a legal, rather than factual, construct, and the relationship between the UP and the representor is not proximate, nor “voluntary or consensual.” (para [14])

Thirdly, Lord Sumption rejects that the Law should import a complicated concept of contract law into the tort of negligence, highlighting that it lacks the requisite level of mutuality that exists in a true contract.

Lord Sumption held that the appropriate test was the ‘voluntary assumption of responsibility’ test (following the Supreme Court’s recent confirmation and clarification in Steel v NRAM). For this reason, Lord Sumption suggested that the law goes further than the Playboy Club’s concession: not only must it be likely that the statement be relied on by B, “[i]t must also be part of the statement’s known purpose that it should be communicated and relied upon by B, if the representor is to be taken to assume responsibility to B” (para [11]). Because the bank did not know that Burlington was acting for anyone else, Lord Sumption therefore could not conclude that the bank voluntarily assumed a duty to the Playboy Club.

Lord Mance

Lord Mance greed with Lord Sumption, but added his own words to deal specifically with the bank’s argument.

He rejected the bank’s second argument that the failure to communicate the purpose of reference disposed of the Club’s claim. Instead, what is important is the intention (or awareness) that the representation would be relied upon. In Lord Mance’s words:

“There is no reason in principle why a duty of care should not arise in relation to so unspecific a purpose, provided (as is here clear) that the representation was requested and given in terms showing that it was intended to be and would be relied on.”

Lord Mance therefore concluded that it was only the bank’s first argument which disposed of the appeal: the reference was made to Burlington, so could not be relied on by the Playboy Club. This is so even though the bank “ was probably as uninterested in Burlington and its identity as it was in the nature and purpose of the intended financial commitment” (para [22]).

In obiter dicta, Lord Mance said the case would be different if Burlington acted for an unnamed principal (para [25]).

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