Constructive notice is the

legal fiction A legal fiction is a construct used in the law where a thing is taken to be true, which is not in fact true, in order to achieve an outcome. Legal fictions can be employed by the courts or found in legislation. Legal fictions are different from ...

The phrase "legal fiction" should not be construed to mean that the concept of constructive notice is legally invalid. that signifies that a person or

entity An entity is something that Existence, exists as itself. It does not need to be of material existence. In particular, abstractions and legal fictions are usually regarded as entities. In general, there is also no presumption that an entity is Lif ...

should have known, as a reasonable person would have, of a legal action taken or to be taken, even if they have no actual knowledge of it.

Overview

The doctrine is generally construed with regards to legal notices published, either by posting them at a designated place in a courthouse, or publishing them in a newspaper designated for legal notices. Because both methods of publication are available to the general public (courthouses being open to all members of the general public, and newspapers readily available in public places such as libraries), the person to whom the notice is being issued (even if issued in a generic form, such as "To All Heirs of John Smith, a Resident of Orange County") is considered to have received notice even if they were not actually aware of it. Another use of constructive notice is in the recording of

deed A deed is a legal document that is signed and delivered, especially concerning the ownership of property or legal rights. Specifically, in common law, a deed is any legal instrument in writing which passes, affirms or confirms an interest, right ...

mortgage A mortgage loan or simply mortgage (), in civil law (legal system), civil law jurisdictions known also as a hypothec loan, is a loan used either by purchasers of real property to raise funds to buy real estate, or by existing property owners t ...

lien A lien ( or ) is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation. The owner of the property, who grants the lien, is referred to as the ''lienee'' and the pers ...

s, and similar documents in county registries in the United States. Since such documents are considered public information and can be accessed by any member of the public, such recordings are considered constructive notice of land conveyances or encumbrances having taken place. In

corporate law Corporate law (also known as company law or enterprise law) is the body of law governing the rights, relations, and conduct of persons, companies, organizations and businesses. The term refers to the legal practice of law relating to corpora ...

, the doctrine of constructive notice is a

doctrine Doctrine (from , meaning 'teaching, instruction') is a codification (law), codification of beliefs or a body of teacher, teachings or instructions, taught principles or positions, as the essence of teachings in a given branch of knowledge or in a ...

where all persons dealing with a company are deemed (or "construed") to have knowledge of the company's

articles of association In corporate governance, a company's articles of association (AoA, called articles of incorporation in some jurisdictions) is a document that, along with the memorandum of association (where applicable), forms the company's constitution. The ...

and

memorandum of association The memorandum of association of a company is an important corporate document in certain jurisdictions. It is often simply referred to as the memorandum. In the UK, it has to be filed with the Registrar of Companies during the process of incorp ...

. The doctrine of indoor management is an exception to this rule. The New York City Housing Court allows use of the concept of constructive notice by either the tenant or the landlord. For example, constructive notice could be given to a landlord if a broken and unsupported metal grate on a public sidewalk collapses when stepped on by a pedestrian. The landlord is reasonably expected to know that this is a safety hazard.

Indoor management

The harshness of the doctrine of constructive notice is somewhat reduced by the "Rule of Indoor management" or "Turquand's Rule". The rule derives its name from the case of '' Royal British Bank v Turquand'', where the defendant was the liquidator of the insolvent Cameron's Coalbrook Steam, Coal and Swansea and Loughor Railway Company. The company had borrowed from Royal British Bank by giving a bond worth £2,000. The articles of the company stated that the directors could only borrow if authorised by a resolution of the company's general meeting, and could not borrow more than the amount specified in the resolution. The articles were registered with

Companies House Companies House is the executive agency of the British Government that maintains the Company register, register of companies, employs the company registrars and is responsible for Incorporation (business), incorporating all forms of Company, co ...

so there was constructive notice. But the bank could not have known about the resolution, as they were not registrable and thus were not a public document. The bond was held valid and there was no requirement to know the company's internal workings.

References

Notes

{{DEFAULTSORT:Constructive Notice Legal terminology Legal fictions