constructive notice

A person has constructive notice when they are presumed or deemed to know of a particular state of affairs although they do not have actual notice. The circumstances of the case are relevant to whether or not a person has constructive notice of relevant facts, because a person is deemed to know facts which would have come to his knowledge if he had made the enquiries that a reasonable person would have made in similar circumstances, thus constructive notice is deemed when a person is expected to have made enquiries and failed to do so.

Circumstances of Constructive Notice

It may be that the nature of the transaction or the factual background puts a person on enquiry to conduct further searches or attempts to elicit further information. If it is the case that a reasonable person in similar circumstances would have made further enquiries and did not, the person is likely to be found to have constructive notice of the facts which would have been ascertained had those enquiries been made.

Constructive Notice: Example

A typical example is when a transaction or dealing with property appears on a public register and the person does not inspect the register prior to entering a transaction. This is relevant in acquisitions of registered intellectual property rights, where a reasonable person is likely to be expected to have inspected the relevant Registers of Trade Marks or Register of Patents prior to the acquisition, to ascertain whether mortgages or some other impediment to title would be recorded. In such circumstances, the person deemed to know the contents of the Register. Likewise, a person signing a shareholders agreement is likely to be considered to have constructive notice of the provisions of the Articles of Association of a private company in which the shares are acquired.