Constructive notice CASES
In English law, constructive notice refers to the legal presumption that an individual is deemed to have knowledge of certain facts or circumstances, even without actual awareness, because the information was reasonably accessible.
Definition and Principles
Constructive notice applies when facts or information are publicly available or clearly indicated, making it reasonable for a party to be aware of them. This principle typically arises in property law, company law, and contract law contexts.
Applications
- Property Law: Purchasers deemed aware of rights and interests recorded in public registers, even if not actually checked.
- Company Law: Parties dealing with companies are presumed aware of publicly registered documents like articles of association.
- Contract Law: Terms incorporated by clear and accessible notices can be enforceable even if unread.
Practical Implications
Parties must exercise due diligence, as constructive notice can limit claims based on ignorance. Ensuring reasonable investigation and inquiry is essential to avoid unintended legal obligations.
Importance
Constructive notice promotes transparency, efficiency, and fairness, encouraging responsible behaviour and safeguarding informed decision-making.
Home » Constructive notice
Homeowners in financial difficulty entered a 'sale and rent back' scheme, selling their property at a significant undervalue. They sued the lenders, alleging they had constructive notice of undue influence. The court held one lender was put on inquiry, but another was not. Facts The claimants, Mr and Mrs Beesley, were homeowners in financial difficulty facing repossession. They entered into a ‘sale and rent back’ scheme promoted by New Century Group Limited (‘NCG’). In December 2005, they sold their property, valued at £325,000, for a stated price of £180,000 to Ms Wilkinson, a nominee for NCG. The Beesleys only received
In eight conjoined appeals, wives mortgaged their homes to secure husbands' business debts. The House of Lords clarified the doctrine of undue influence and set out practical steps a bank must take to ensure the wife's consent is properly obtained. Facts The case comprised eight conjoined appeals, each involving a similar factual pattern. A wife charged her interest in her home, often the matrimonial home held in joint names, as security for a loan or overdraft facility provided by a bank to her husband or a company through which he operated his business. The businesses later failed, and the bank
A junior employee provided an unlimited guarantee over her flat for her employer's business debts. She received no benefit and no independent advice. The court set aside the transaction for undue influence, finding the bank failed its duty of inquiry. Facts Miss Andrea Burch, a 21-year-old junior employee, worked for a travel company owned and run by Mr Andrea Pelosi, a man she trusted. At his request, she agreed to provide security for the company’s overdraft with Credit Lyonnais Bank Nederland NV. She executed a legal charge over her flat, securing an unlimited, all-monies guarantee for all the debts of
A husband pressured his wife to remortgage their home for his stock market speculation. The loan application falsely stated the funds were for a holiday home. The House of Lords held the mortgage was enforceable as the bank had no notice of the husband's undue influence. Facts Mr and Mrs Pitt were joint owners of their matrimonial home. Mr Pitt, wishing to speculate on the stock market, pressured his wife into agreeing to a remortgage of the property for £150,000 with the plaintiff, CIBC Mortgages plc. The loan application, prepared by Mr Pitt, falsely stated that the purpose of the
Facts Mr. and Mrs. O’Brien were joint owners of their matrimonial home. Mr. O’Brien’s company, in which Mrs. O’Brien had no interest, required an increased overdraft facility from Barclays Bank. The bank agreed, on the condition that it was secured by a second charge over the O’Briens’ home. Mr. O’Brien misrepresented the nature of the transaction to his wife, falsely stating that the security was limited to £60,000 and would be released within three weeks. In reality, the charge was unlimited in amount and duration, securing all liabilities of the company, which eventually reached £154,000. Bank staff were instructed to
