Scienter is a legal term that describes the understanding of a person that their actions will cause harm or that the actions of another will cause harm. In many cases, a person must have knowledge and understanding of the harm that their actions will cause or the negligence of another for civil suits.
For example, in a financial fraud case where a corporate entity is accused of failing to inform customers of the potential risks of their investments, scienter would have to be proven. In order for the company to be held legally responsible, it must have knowingly failed to disclose the relevant risks.
What Is the Difference Between Scienter and Negligence?
Scienter is a more specific type of negligence. With scienter, the person must show not only that they failed to meet a certain standard of caution, but that they knew they were doing wrong or that they willfully took risks. It must be shown that the person understood the consequences of their actions or that the person was aware of the reckless behavior of another.
What Are the Different Types of Scienter?
The most common types of scienter are “actual” and “constructive” scienter. Actual scienter is when a person had actual knowledge of the dangers of their actions or another’s actions. Constructive scienter, on the other hand, is when a reasonable person would understand the danger in their actions or negligence of another. The courts refer to this as “hard-headed business judgment” which includes knowledge of reasonable risks.
How Is Scienter Applied in Legal Cases?
In civil cases, a plaintiff must prove that a defendant had actual or constructive scienter knowledge if they are to be held liable for harm caused. In cases of fraud, scienter is considered an essential component in proving criminal behavior. In criminal cases, scienter is used to show that the defendant knowingly committed the crime, and not simply negligently or through some oversight.
In the end, it is important to understand that scienter is a very specific concept in the law that must be proven to hold a defendant legally responsible for their actions or the negligence of another.