I would agree with cinders. I have been contacted several times by potential employers asking for a reference for different people. It doesn't look good if I am taken by surprise when they call as it looks as through the potential employee couldn't even be bothered to inform me. Also, as happened in one case with me, I had to refuse to give a reference. If the person had contacted me first I could have told them that I could not supply them with a reference thereby giving them a chance to get someone else as a referee and avoiding the embarrassment of being refused. So, yes they should be told (even if you are not sure if they will be contacted...if you are using their name, they shoud know about it).