unedited 10/14/11


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Constructive Knowledge

 

Black's law dictionary defines constructive knowledge as "if by prudent action one should have known a fact they are deemed to have knowledge of that fact." One may not be able to prove that a waitress had factual knowledge that meals were served with a knife, spoon and fork but she has constructive knowledge of that fact by exercise of her duties and so she would be deemed to know that fact. A used  car dealer makes a living buying used cars. If he or she knew little about the mechanical condition of cars they would soon be out of business. Dealers know that the name of the game is marginalizing used cars, that is to raise the price on good looking cars hoping the buyer will overlook mechanical defects. You cannot prove that in fact the dealer did not know the engine was bad, but then again they tactically avoided having a mechanic asses the car prior to sale. This is tactical ignorance on the part of the salesman. Moreover, the dealer likely knows from experience that their cars are in marginal mechanical shape by virtue of the years of complaints they have received back from their customers. Constructive knowledge and constructive fraud bear a relationship here.

Constructive Fraud

Constructive Taking

A key concept in understanding constructive frauds of all kinds is "plausible deniability." It is easy to deny that one had factual knowledge of say a bad transmission in a car that was sold to a naive buyer. But, a closer analysis would reveal a pattern of fraud. This sort of unethical behavior goes under the category of pleading innocence.