Scienter
Encyclopedia
Scienter is a legal term that refers to intent or knowledge
of wrongdoing. This means that an offending party has knowledge of the "wrongness" of an act or event prior to committing it. For example, if a man sells a car to his friend with brakes that do not work, and he does not know about the problem, then the man has no scienter. If he sells the car and knew of the problem before he sold the car, he has scienter. The word has the same root
as science
, the Latin scienter (knowingly), from scire (to know; to separate one thing from another).
law in some common law
jurisdictions which deals with the damage done by an animal directly to a human. It has a long history in English law. An action in those jurisdictions, where it has not been extinguished by statute, is in addition to the torts of negligence
and nuisance
. Where an animal is known to behave in a certain way, and that is expressed on a person causing injury, an action can be taken in this tort. This tort is not available in New South Wales
, The Australian Capital Territory
, South Australia
or New Zealand
. In these jurisdictions the actions involving animals need to be in nuisance or negligence. To be successful the plaintiff needs to take action against the person in control of the animal, and it is strict liability
, requiring no more than proof of injury, that the animal had a problematic trait, and the person in control knew about the trait in the animal. Being strict liability, there is no need to argue fault in the form of wilful intent or negligence on the part of the animal or its controller. The only defence is if it can be proved the plaintiff voluntarily assumed the risk of injury by their actions, or if the plaintiff was the cause of the injury. It is common to distinguish between harmless animals and wild animals. No scienter is needed for wild animals. Animals are classed as wild or harmless on the basis of species or kind, not on the basis of being a tame individual. An elephant is considered wild irrespective of its use. The scienter action is referred to in Rylands v. Fletcher in that one who keeps a wild thing “must keep it at his peril” to make reference to part of Justice Colin Blackburn’s comment.
in some jurisdictions. For instance, section 1960 of title 18 of the United States Code
, which prohibits unlicensed money transmitting businesses, has a scienter requirement, in that it only applies to anyone "[who] knowingly conducts, controls, manages, supervises, directs, or owns all or part of an unlicensed money transmitting business".
cause of action
, wherein the aggrieved party alleges some destruction of the meeting of the minds
, also known as mutual assent, due to fraud
, misrepresentation
or duress per minas
. It can also be used as a defense
to a breach of contract lawsuit
.
of 1995 added the requirement that a plaintiff must plead facts giving rise to a "strong inference" of scienter. The meaning of scienter under this law has been highly controversial since the enactment of the PSLRA. In 2007, the United States Supreme Court issued a decision in which it clarified what was to be understood as a "strong inference". In Tellabs, Inc. v. Makor Issues & Rights, LTD (21 June 2007), by an 8-1 ruling, the Court defined the standard that the plaintiff should meet in order to proceed with a securities fraud litigation : a complaint must show "cogent and compelling evidence" of scienter.
Knowledge
Knowledge is a familiarity with someone or something unknown, which can include information, facts, descriptions, or skills acquired through experience or education. It can refer to the theoretical or practical understanding of a subject...
of wrongdoing. This means that an offending party has knowledge of the "wrongness" of an act or event prior to committing it. For example, if a man sells a car to his friend with brakes that do not work, and he does not know about the problem, then the man has no scienter. If he sells the car and knew of the problem before he sold the car, he has scienter. The word has the same root
Etymology
Etymology is the study of the history of words, their origins, and how their form and meaning have changed over time.For languages with a long written history, etymologists make use of texts in these languages and texts about the languages to gather knowledge about how words were used during...
as science
Science
Science is a systematic enterprise that builds and organizes knowledge in the form of testable explanations and predictions about the universe...
, the Latin scienter (knowingly), from scire (to know; to separate one thing from another).
The scienter action (tort law)
The scienter action is a category within tortTort
A tort, in common law jurisdictions, is a wrong that involves a breach of a civil duty owed to someone else. It is differentiated from a crime, which involves a breach of a duty owed to society in general...
law in some common law
Common law
Common law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...
jurisdictions which deals with the damage done by an animal directly to a human. It has a long history in English law. An action in those jurisdictions, where it has not been extinguished by statute, is in addition to the torts of negligence
Negligence
Negligence is a failure to exercise the care that a reasonably prudent person would exercise in like circumstances. The area of tort law known as negligence involves harm caused by carelessness, not intentional harm.According to Jay M...
and nuisance
Nuisance
Nuisance is a common law tort. It means that which causes offence, annoyance, trouble or injury. A nuisance can be either public or private. A public nuisance was defined by English scholar Sir J. F...
. Where an animal is known to behave in a certain way, and that is expressed on a person causing injury, an action can be taken in this tort. This tort is not available in New South Wales
New South Wales
New South Wales is a state of :Australia, located in the east of the country. It is bordered by Queensland, Victoria and South Australia to the north, south and west respectively. To the east, the state is bordered by the Tasman Sea, which forms part of the Pacific Ocean. New South Wales...
, The Australian Capital Territory
Australian Capital Territory
The Australian Capital Territory, often abbreviated ACT, is the capital territory of the Commonwealth of Australia and is the smallest self-governing internal territory...
, South Australia
South Australia
South Australia is a state of Australia in the southern central part of the country. It covers some of the most arid parts of the continent; with a total land area of , it is the fourth largest of Australia's six states and two territories.South Australia shares borders with all of the mainland...
or New Zealand
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...
. In these jurisdictions the actions involving animals need to be in nuisance or negligence. To be successful the plaintiff needs to take action against the person in control of the animal, and it is strict liability
Strict liability
In law, strict liability is a standard for liability which may exist in either a criminal or civil context. A rule specifying strict liability makes a person legally responsible for the damage and loss caused by his or her acts and omissions regardless of culpability...
, requiring no more than proof of injury, that the animal had a problematic trait, and the person in control knew about the trait in the animal. Being strict liability, there is no need to argue fault in the form of wilful intent or negligence on the part of the animal or its controller. The only defence is if it can be proved the plaintiff voluntarily assumed the risk of injury by their actions, or if the plaintiff was the cause of the injury. It is common to distinguish between harmless animals and wild animals. No scienter is needed for wild animals. Animals are classed as wild or harmless on the basis of species or kind, not on the basis of being a tame individual. An elephant is considered wild irrespective of its use. The scienter action is referred to in Rylands v. Fletcher in that one who keeps a wild thing “must keep it at his peril” to make reference to part of Justice Colin Blackburn’s comment.
General use
It is generally used as an element to certain causes of action and is sometimes used as a standard for liability or guiltGuilt
Guilt is the state of being responsible for the commission of an offense. It is also a cognitive or an emotional experience that occurs when a person realizes or believes—accurately or not—that he or she has violated a moral standard, and bears significant responsibility for that...
in some jurisdictions. For instance, section 1960 of title 18 of the United States Code
United States Code
The Code of Laws of the United States of America is a compilation and codification of the general and permanent federal laws of the United States...
, which prohibits unlicensed money transmitting businesses, has a scienter requirement, in that it only applies to anyone "[who] knowingly conducts, controls, manages, supervises, directs, or owns all or part of an unlicensed money transmitting business".
In contract law
Scienter is also an element of the contract law breach of contractBreach of contract
Breach of contract is a legal cause of action in which a binding agreement or bargained-for exchange is not honored by one or more of the parties to the contract by non-performance or interference with the other party's performance....
cause of action
Cause of action
In the law, a cause of action is a set of facts sufficient to justify a right to sue to obtain money, property, or the enforcement of a right against another party. The term also refers to the legal theory upon which a plaintiff brings suit...
, wherein the aggrieved party alleges some destruction of the meeting of the minds
Meeting of the minds
Meeting of the minds is a phrase in contract law used to describe the intentions of the parties forming the contract. In particular it refers to the situation where there is a common understanding in the formation of the contract...
, also known as mutual assent, due to fraud
Fraud
In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation...
, misrepresentation
Misrepresentation
Misrepresentation is a contract law concept. It means a false statement of fact made by one party to another party, which has the effect of inducing that party into the contract. For example, under certain circumstances, false statements or promises made by a seller of goods regarding the quality...
or duress per minas
Per minas
Per minas, in British common law, to engage in behavior "by means of menaces or threats".The term comes from Latin.Per minas has been used as a defense of duress to certain crimes, as affecting the element of Mens rea...
. It can also be used as a defense
Defense (legal)
In civil proceedings and criminal prosecutions under the common law, a defendant may raise a defense in an attempt to avoid criminal or civil liability...
to a breach of contract lawsuit
Lawsuit
A lawsuit or "suit in law" is a civil action brought in a court of law in which a plaintiff, a party who claims to have incurred loss as a result of a defendant's actions, demands a legal or equitable remedy. The defendant is required to respond to the plaintiff's complaint...
.
Scienter as element of securities fraud claim
In the United States, in order to prevail in a securities fraud claim under Section 10(b) of the Securities Exchange Act of 1934, a plaintiff must allege and prove that the defendant acted with scienter. The Private Securities Litigation Reform ActPrivate Securities Litigation Reform Act
The United States Private Securities Litigation Reform Act of 1995, Pub. L. 104-67, 109 Stat. 737 implemented several substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation, and...
of 1995 added the requirement that a plaintiff must plead facts giving rise to a "strong inference" of scienter. The meaning of scienter under this law has been highly controversial since the enactment of the PSLRA. In 2007, the United States Supreme Court issued a decision in which it clarified what was to be understood as a "strong inference". In Tellabs, Inc. v. Makor Issues & Rights, LTD (21 June 2007), by an 8-1 ruling, the Court defined the standard that the plaintiff should meet in order to proceed with a securities fraud litigation : a complaint must show "cogent and compelling evidence" of scienter.
External links
- Split Widens on Scienter Pleading Standard Under the PSLRA, Cadwalader, Wickersham & Taft