For the significant change provision to be effective, the person must have had what legally known as ______ that an NEM exists.

• A. Actual Knowledge
• B. Constructive Knowledge
• C. Notice
• D. Assumed Knowledge

Answer: (B)

Constructive knowledge is knowledge that a person is deemed to have by law because a reasonable person in their position would have discovered it through ordinary diligence. In the significant change provision, this means the person is treated as knowing that an NEM exists if a prudent person would have learned of it through reasonable inquiry or inspection. This makes the provision effective by preventing someone from escaping obligations simply by claims of ignorance when the information was readily discoverable.

Actual knowledge would require that the person personally knew the fact, which is stronger than necessary here. Notice requires being formally informed, which is narrower than what constructive knowledge captures. Assumed knowledge isn’t a recognized legal standard for imputing awareness.