Constructive Notice - Definition - Law Dictionary Home Dictionary Definition constructive-notice

Definition :

Constructive notice. The knowledge which is imputed to a party: (a) if he omits to make the usual and proper inquiry into the title of property which he has purchased; (b) if he omits to investigate some fact which has been brought to his notice suggesting the existence of such title or claim; (c) if he deliberately refrains from inquiry in order to avoid notice. See Halsbury, L.E., vol. 13, and the person affected with constructive notice takes, if at all, subject to the title or claim, whether he knew of it or not; for instance, a purchaser of land who is satisfied to take a shorter title than he could call for by statute is affected by notice of all trusts and equities of which he would have had notice if he had seen the full title. See Cox and Neve's Contract, (1891) 2 Ch 109; Patman v. Harland, (1881) 17 CD 353 illustrates the doctrine. It was there held that: (a) notice of a material document is notice of its contents, and (b) although the (English) Vendor and Purchaser Act, 1874 (37 & 38 Vict. c. 78), s. 2, enacted that, subject to any stipulation to the contrary, an intended lessee was not entitled to call for the title to the freehold reversion upon a contract for the lease, a lessee who had omitted to make the special stipulation and was bound by the prohibition in the s., had intentionally shut his eyes to the freehold title which was subject to restrictive covenants and was affected by notice of the covenants. S. 45 of the (English) L.P. Act, 1925, sub-ss. (2), (3) and (4), has replaced the corresponding section in the V. & P. Act,1874, as extended in regard to leasehold reversions by the (English) C. Act,1881, s. 3, but sub-s. (5) of s. 44 of the Act of 1925, provides that where, under sub-ss. (2), (3) and (4) of that s., an intended lessee or assign is not entitled to call for the title to the freehold or leasehold reversion, he shall not, where the contract is made after 1925, be affected with notice of any matter or thing, of which, if he had contracted that such title should be furnished he might have had notice. To that extent Patman v. Harland is overruled but the principle remains that a purchaser will be affected by constructive notice if he omits to take reasonable precautions which are not less required because the law facilitates his disregard of them, or if he obtains actual notice of a defect in title. The facts from which constructive notice will be deemed to arise are not necessarily documentary. Absence of title deeds or the possession of a tenant gives notice of the tenant's interest, Taylor v. Stibbert, (1794) 2 Ves 437, but not necessarily of an adverse claim to the reversion, see Barnhart v. Greenshields, (1853) 9 Moo. P.C.C. 18, unless there is notice that the rent is paid to another than the vendor, in which case there is constructive notice of the adverse claimant's interest. The doctrine of constructive notice has been relaxed or disregarded in commercial transactions, e.g., debentures, Re Standard Rotary Machine Co., (1906) 95 LT 829.

The doctrine has received statutory interpretation, s. 44 (8) of the (English) L.P. Act, 1925, provides that a purchaser shall not be deemed to be or ever to have been affected with notice of any matter, or thing, of which, if he had investigaged the title, or made enquiries in regard to matters prior to the period of commencement of title fixed by that Act, or any other statute or by any rule of law he might have had notice, unless he actually makes such investigation or enquiries. Contracts for less than the statutory or other legally producible length of title still fix the purchaser with notice of any defect which would have been disclosed if he had stipulated the full length of title. By s. 199 of (English) L.P. Act, 1925, replacing the (English) C. Act, 1882 (45 & 46 Vict. c. 39), s. 3:'

(1) A purchaser shall not be prejudicially affected by notice of:--

(i) Any instrument or matter capable of registration under the provisions of the (English) Land Charges Act, 1925, or any enactment which it replaces which is void or not enforceable as against him under that Actor enactment by reason of the non-registration thereof.

(ii) Any other instrument or matter or any fact or thing, unless (a) it is within his own knowledge, or would have come to his knowledge if such enquiries and inspections had been made as ought reasonably to have been made by him or (b) in the same transaction with respect to which a question of notice to the purchaser arises, it has come to the knowledge of his counsel, as such, or of his solicitor or other agent, as such, or would have come to the knowledge of his solicitor or other agent, as such, if such enquiries and inspections had been made as ought reasonably to have been made by the solicitor or other agent.

(2) Paragraph (ii) of the last sub-s. shall not exempt a purchaser from any liability under or any obligation to perform or observe any covenant, condition, provision, or restriction contained in any instrument under which his title is derived, mediately, or immediately; and such liability maybe enforced in the same manner and to the same extent as if that paragraph had not been enacted.

(3) Nothing in s. 198 is to affect a purchaser in cases where he would not have been affected by notice if the s. had not been enacted.

By s. 205 of the same Act, 'notice' includes constructive notice. See also NOTICE.