My favourite names for both a boy and a girl were taken by close friends, so we went back in to the 'name pool' to find something else.
If close friends named their child the same as mine, I wouldnt like it. (It just seems 'wierd' to me!) If they are people you rarely see, or socialise with, I wouldnt mind.
I think it best if you can get the confidence to say something to your friend - because if you don't, you will have a daily reminder of this instance because their son will always be called the same as your son!
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