Summit Elec. v. Pepin Bros. Constr. - 121 N.H. 203, 427 A.2d 505 (1981)

Rule:

Equity imposes a duty to speak when one knows or ought to know that his silence is misleading and will induce another to act upon it to his detriment. 

Facts:

The state entered into a construction contract with the contractor, who subsequently entered into a subcontract with the subcontractor. The subcontractor brought an action against the contractor for extra work, and the contractor brought an action against the state for the same work. Upon recommendation of a special master, the trial court entered judgments in favor of the state and subcontractor. The contractor sought review, and the court affirmed. 

Issue:

Was the contractor entitled to collect from the state for extra work performed by the subcontractor?

Answer:

No.

Conclusion:

The court held that the contractor was not entitled to collect from the state for extra work performed by the subcontractor because the contract provided that there would be no payment for extra work unless approved by the engineer. Also, the subcontractor was entitled to recover from the contractor because the contractor's silence when knowing of the state's interpretation of the contract induced the subcontractor to perform the work.