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103 Cards in this Set
- Front
- Back
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Benefits of Incorporating |
1) Separate legal identity 2) Limited liability 3) Lower corporate taxes 4) Greater access to capital 5) Continuous existence |
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Implications of Incorporating |
1) Higher start-up costs 2) Increased formalities 3) More complex structure |
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By-Laws |
Rules that will govern the daily operations of the business (ex: rules of proceedings, image of the company, compensation for directors, etc.) |
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Financing the corporation |
1) Personal loan 2) Bonds 3) Debentures 4) Securities (shares) |
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Liabilities for directors |
1) A liability in tort 2) A liability in contracts 3) A liability in criminal law |
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Statutory liabilities |
1) Taxes 2) Compulsory payments 3) Environmental spills 4) Hazardous materials 5) Dangerous goods 6) Insider trading 7) Issuing illegal financial documents |
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Tort |
A harm caused by one person to another, other than through breach of contract, and for which the law provides a remedy. |
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Examples of torts |
1) Tresspass to land 2) Deceit or fraud 3) Negligence 4) Assault 5) Battery |
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Vicarious liability |
The obligation an employer has to compensate when an employee commits a wrongdoing during the course of business. |
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Damages |
Monetary compensation for breach of contract or other actionable wrong |
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Types of Damages (4) |
1. Non-pecuniary damages 2. Pecuniary damages 3. Punitive damages 4. Aggravated damages |
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Non-pecuniary damages |
Compensation for pain and suffering, loss of enjoyment of life, and loss of life expectancy |
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Pecuniary damages |
Compensation for out-of-pocket expenses, loss of future income, and cost of future care |
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Punitive damages |
Damages that are awarded to punish the defendant. |
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Aggravated damages |
Compensation for intangible injuries such as distress and humiliation caused by the defendant's reprehensible conduct. |
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Negligence |
A careless act that causes harm to another. (The law understands carelessness as a failure to show reasonable care, that is, the care that a reasonable person would have shown in a similar situation.) |
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Negligence... |
The plaintiff need not show that the defendant intended to cause the damage or that there were deliberate acts that gave rise to the damage. Instead, the tort of negligence makes the defendant liable for failing to act responsibly - for driving too fast, for giving unprofessional advice, or for not taking proper care of furniture entrusted to its care. |
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Steps to follow when dealing with a negligence case: |
1) Does the defendant owe the plaintiff a duty of care? 2) Did the defendant breach the standard of care? 3) Did the defendant's careless act cause the plaintiff's injury? 4) Was the injury suffered by the plaintiff too remote? (there has to be sufficient link) |
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Defences to a negligence action: (3 options to follow but this is just the definition/explanation) |
Though a court may find the defendant to have been negligent, the plaintiff is not automatically entitled to recover all of her damages. The defendant may raise defences against the plaintiff in order to place at least some of the responsibility for the loss on that party. Here are 3 options...: |
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Defenses to a negligence action: (2) |
1) Contributory negligence 2) Voluntary assumption of risk |
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1) Contributory negligence |
Refers to unreasonable conduct by the plaintiff that contributed- or partially caused- the injuries that were suffered. (So both of them may have been negligent.) |
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2) Voluntary assumption of risk |
The defence that no liability exists as the plaintiff agreed to accept the risk inherent in the activity. (rare defence - hard to fulfil) |
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Negligent misrepresentation (or negligent misstatement) |
When negligence takes the form of words. (It is professionals, such as accountants, lawyers, engineers, who are most likely to commit the tort of negligent misstatement by giving bad advice or providing the client with an incompetent report.) |
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Specific torts: (4) |
1. Product liability 2. Misrepresentation 3. Occupier's liability 4. Nuisance |
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1. Product liability |
The design of a product needs to meet reasonable care. |
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2. Misrepresentation |
We explicitly create a situation where the 3rd party will be induced on a material consideration to engage in the relationship. It will cause harm or damages. Ex) Saying there isn't gluten in something when there really is and a celiac is seriously affected. |
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3. Occupier's liability |
The liability that occupier's have to anyone who enters onto their land or property. Ex) If someone is trespassing, we have a duty not to hunt the trespasser. |
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4. Nuisance |
When someone is abusing your right to enjoyment of a property. Ex) When someone is playing loud music that you can't stand. |
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Contracts (Chap 5) |
Contracts involve Offer and Acceptance. |
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Offer |
- A promise on specific terms allowing an individual to execute an acceptance. - The offer must be ascertainable in time and material, in order for individuals to make a decision. If it's not precise enough, the offer does not exist. -The offer must generate a reasonable knowledge of the elements. You must be able to say precisely what you're purchasing. (price and quantity) |
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Acceptance |
- When you actually make an unqualified answer to the promise. The terms you were offered are the ones you accept. * A qualified acceptance is when someone says, "Yes, but under these circumstances..." - Acceptances are not absolute because there are other things that need to be decided. Ex) wrapping can be decided later - Acceptance must be communicated in order to be enforceable. |
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Acceptance... |
* Whoever communicated the first acceptance will get it. That's why you want the person to have a confirmation of the acceptance for the deal to be enforceable. (So say, did you get my email where I accepted your offer? Good.) |
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How do we communicate acceptance? |
1. Verbal communication (but always get in writing 2. By mail (date of acceptance is date of the postage) 3. Electronic means (always make sure to get a confirmation that they received your acceptance. It's not valid until it's confirmed.) |
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Consideration |
The amount you're willing to pay for the promise |
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Legal Capacity |
The capacity to express a clear legal consent. (Are you able to understand the consequences of the decisions you're making?) Ex) Old woman @ Sen's game who didn't know how to use her debit card. |
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A void contract |
A contract that is so defective that it cannot be enforced. So the elements of the contract have to bring people back to their original position. (Restitute back the goods.) Ex) If you buy something that was stolen. You have to give the stuff back because it's illegal. |
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Economic duress |
The threat of economic harm that coerces the will of the other party and results in a contract. Ex) Bloodline is a story about a wealthy family who used their power to force people into business |
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Undue influence |
Unfair manipulation that compromises your free will. 2 types: actual (you have no choice) and presumed (if you don't sign, you're expecting consequences). Ex) When the church tells people to donate for Easter. |
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Misrepresentation |
False statement of fact that causes someone to enter into an agreement. The statement must be of a material nature - something substantially important. If it's just a detail, it won't change anything. Ex) Nutrition info on Rice Krispies. |
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Mistake |
An error made by one of the parties or both parties regarding the purpose of the contract. A serious element that involves the relationship. |
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More on mistakes... |
If we have a contract that is subject to a mistake, then the mistake allows us to declare the contract voidable. In this case, we will try to correct the situation. Ex) If I accidentally put 100 instead of 2100 as the price of the car. (10,000 intead of 11,000 isn't enough of a mistake.) |
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Illegal contract Example? |
A contract that is not permitted under the legislation because it is contrary to the law or public policy. Ex) To serve someone with a loan, and have more than 60% interest. |
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Public policy Example? |
Defines what is immoral and what violates our fundamental values. Ex) People who come over from Asia to Western Canada and aren't paid for work - this violates our public policy. |
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Non-solicitation clause Example? |
A clause forbidding contact with the business' customers. Ex) I cannot purchase a business in the same field within the next 5 years, in the same vicinity. |
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Non-competition clause |
A clause forbidding competition for a certain period of time. |
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Guarantee Example? |
A promise to pay the debt of someone else, should that person default on the obligation. Ex) Car loans from banks; they'll always get 2 signatures. |
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How do we terminate contracts? |
1. Performance
2. Agreement 3. Frustration |
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1. Termination by performance |
To terminate a contract because you have executed the tasks. It is permissible to use employees to vicariously perform a contract in question, as long as personal performance by the particular contracting individual is not an express or implied term of a contract. Ex) Accountant delegating work to others in the firm. |
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2. Termination by agreement |
Parties may enter into an agreement that becomes unfavourable for one or both of them. In response, they may decide to: a) ... b) ... c) ... |
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a) Termination by novation Example? |
Enter into a whole new contract. It is the substitution of parties in a contract, or the replacement of one contract with another. Ex) When you want to leave your lease, you get a new tenant to make a new lease with the landlord. |
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b) Termination by assignment Example? |
When one party transfers a contractual right to someone else. (The transfer of a right from an assignor to an assignee.) Ex) Future Shop sold their credit card to Desjardins. That's an assignment. |
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c) Novelty agreement Example? |
Rewrite the agreement and redefine the obligations of the parties. You may terminate some obligations and create some new ones.
Ex) Every week you're supposed to do task A and B. So we'll decide to terminate task A and create task C. |
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3. Termination by frustration |
Termination of a contract by an unexpected event or change that makes performance functionally impossible or illegal.
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Property |
Consists of rights and interests in anything of value that can be owned. The law of property provides for the protection of those rights and interests.
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2 types of property |
1. Real 2. Personal (tangible and intangible) |
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1. Real Property |
Refers to land and anything attached to it. All other forms of property are included under personal property.
Or: land or real estate, including buildings, fixtures, and the associated legal rights. |
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2. Personal Property |
All property (other than land and what is attached to land) that can be identified by it's mobility. a) Tangible: property in physical form b) Intangible: value comes from legal rights |
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What constitutes a fixture, or a real property? |
When fixtures are permanently attached to the building, they're real property. It's a matter of reasonableness. How easily removable it is. |
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There are 3 types of interest in land: |
1. Fee simple 2. tenancy in common 3. Joint tenancy |
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1. Fee simple |
The legal interest in real property that is closest to full ownership. (When you buy a property, you'll want this.) Ex) You buy a property, and you want to make sure you have a clear title that doesn't have to be shared with anyone else. You own the land and can dispose of it in any way you see fit. |
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2. Tenancy in common |
Co-ownership whereby each owner of an undivided interest can dispose of that interest. This means that they can deal with their own section in any way they see fit and without having to consult the co-owner. Ex) I have a piece of land in tenancy in common with my sister. She can sell her portion without my consent. Freedom to do what you want. Downside: they can sell their portion at any time too. |
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3. Joint tenancy |
Co-ownership whereby the survivor inherits the undivided interest of the deceased. Ex) I have a piece of land with my wife. I die. She takes over for me, with full ownership. Downside: what if you don't like the person who will get your share? |
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The difference between possession and ownership: 1 of 4 |
1. Ownership allows you to have a right to title (that you don't have in possession.) Possession is only the use of it. |
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The difference between possession and ownership: 2 of 4 |
If you have title, you can secure a lean on the asset. A lean is a right that someone has over the assets to repossess the good. Ex) if you borrowed $ for a car, and you don't pay it back, they have a lean on the car which means they can just take it back and sell it to someone else. |
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The difference between possession and ownership: 3 of 4 |
Ownership - you have a duty to make sure that there's no harm caused to the user. Possession - you have to take reasonable care in the usage. Ex) one of the propellers on my snowblower is going to break. Someone borrows it and the blade flies in their face. |
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The difference between possession and ownership: 4 of 4 |
When you're in possession, reasonable usage allows actions to occur without liability. Ex) if the bulb on the projector burns out, that's reasonable usage. Standing on it to turn the light on isn't reasonable usage. |
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Bailment |
Temporary transfer of possession of personal property from one person to another. Ex) Valet parking - someone else is taking care of your car. |
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Bailment (extra info) |
As soon as the valet guy takes my keys, if there's damage, he's liable. Unless they waive the liability, and I am aware, then he is not liable. But you have to be made aware of it for it to be enforceable. |
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Bailor |
the owner of property who transfers possession in a bailment. |
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Bailee |
The person who receives possession in a bailment. |
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Gratuitous bailment |
Bailment that involves no payment. Ex) Lending a ladder to your neighbour. |
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Gratuitous bailment - extra info |
The question of who benefits from a gratuitous bailment is particularly important, since the answer helps later to determine the bailer's responsibility for the property. Ex) If you snow plow your neighbour's driveway and a screw flies through their window, you're not liable for this because you were just trying to help. Unless you demonstrated negligence. Ex) You borrow their mower to do your lawn. Now you're liable because it was for your benefit. |
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Bailments - liabilities (2) |
When you're dealing with a bailment, whoever is in possession generates reasonable liabilities. (If you're the owner of a good, you have the obligation of meeting the standards.) 1. Repairs 2. Transportation |
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1. Repairs |
Car repairs. If you bring your car for repairs, the repair shop always has a lean on your vehicle until the fees are paid. (If you don't pay him, after awhile he can auction off your car and pay himself back for the repairs.) |
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2. Transportation |
If you transport goods, there's a lean on the goods. That's why the truckers have a right to be paid before they release the goods. If they're dealing with big companies, they'll often pay later because they're trusted, but if they're small, they'll probably want to be paid first. |
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Terms of contracts - (2) |
1. Expressed 2. Implied |
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1. Express term |
The term is spelled out, either verbally or in writing. Ex) Employment contract. if your employer promised you ABC, make sure you get it. |
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2. Implied term |
A provision that is not expressly included in a contract but that is necessary to give effect to the parties' intention. |
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Rules of construction |
Guiding principles for interpreting or "constructing" the terms of a contract. - It can be very difficult to predict how a court will interpret any given contract because the guiding principles for interpreting or "constructing" the terms of a contract are often conflicting. The court won't just look at the words, but also the intention of the parties within the contract. If it's not clear, we'll use the common sense approach. What does the word mean? |
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Courts will imply terms based on the grounds listed below: (4) |
1. Incoterms 2. Customs of the trade 3. Previous dealings 4. Statutory requirements |
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1. Incoterms |
A set of rules which define the responsibilities of sellers and buyers for the delivery of goods under sales contracts. (It cuts down on the time spent on contracts so you don't have to redefine every term and stuff.) |
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2. Customs of the trade |
Ex) What is a 2X4? It's not really a 2X4. |
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3. Previous dealings |
We've done that before, so we're just continuing on that process. Repeating past examples. |
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4. Statutory requirements |
An important source of terms implied by the statute is found in provincial sale-of-goods legislation, which is largely uniform across the country. Ex) Find appropriate interest rate in the legislation if it is not provided for. |
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last word on implying terms: |
The court ordinarily will not imply terms when the parties have agreed that their contract is complete as written. The clearest way parties can signal this intention is through an entire contract clause. |
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Clauses we find in contracts: 7 |
1. Entire contract clause 2. Quantum meruit 3. Parole evidence rule 4. Condition precedent 5. Condition subsequent 6. Limitation of liability 7. Exemption clause |
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1. Entire contract clause |
A term in a contract in which the parties agree that their contract is complete as written. |
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2. Quantum Meruit |
It's the reasonable price we pay for the goods and services we will receive. |
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3. Parole evidence rule |
A rule that limits the evidence a party can introduce concerning the contents of the contract. - The rule forbids outside evidence as to the terms of a contract when the language of the written contract is clear and the document is intended to be the sole source of contractual content. - Entire contract clauses are used to ensure application of the parole evidence rule to the contract in question |
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4. Condition precedent |
Where an event or circumstance needs to happen before we can perform our obligations Ex) I need to get my finances before I get my property. |
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5. Condition subsequent |
An event occurs after or during the execution of the obligation. Ex) if the employee's sales drop below a certain amount, the contract automatically comes to an end. |
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6. Limitation of liability clause |
A term of a contract that limits liability for breach to something less than would otherwise be recoverable. Ex) Kitchen appliances - they often say they're only liable for the amount you purchased it for, unless you can demonstrate gross negligence on their behalf. Ex 2) You're skiing or bungee jumping - they'll make you sign a limited liability clause. |
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7. Exemption clause |
We identify events for which there is no liability. Ex) In the insurance contracts we analyzed, there were tons of exemption clauses. |
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Specifics of issues of interest in land (9) |
1. Easement 2. Restrictive covenant 3. Right of first refusal 4. Mortgage 5. Redemption inequity 6. Forfeiture 7. Deficiency 8. Exclusive possession 9. Distress |
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1. Easement |
The right to use land of another for a particular purpose only. Ex) A landowner may give a neighbour the right to drive across his land to access her own. |
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2. Restrictive covenant |
A restriction on the use of land as specified in the title document Ex) In Ottawa we can't have clotheslines. Also, where we put our barbecues and fences. |
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3. Right of first refusal |
Often when there is a deal or transaction, you'll grant a right of first refusal to the purchaser. So the purchaser has the right to buy that piece, and you might extend that right to buy other pieces. Ex) Down King Edward, whenever there is a property for sale, they'll offer it to UofO first. |
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4. Mortgage |
Legally a credit arrangement where the title to land is the security for the loan. (So title is the key element. It's an issue of title.) |
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5. Redemption inequity |
When there is the equity of redemption, this is when the institution will gain the legal title on land upon repayment of the debt. When you don't pay, they will seize the title of land. |
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6. Forfeiture |
When the bank seizes the assets. The execution of these equity of redemptions. Ex) When people can't pay, there's forfeiture. |
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7. Deficiency |
The difference between the foreclosure value and the value of the house. |
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8. Exclusive possession |
The tenant's right to control land during the term of a lease. - In ownership, you can do whatever you want since there are no limitations. It's a matter of what the city by-laws prevent you from doing. - In tenancy, you're entitled to do w/e you want, as long as it's in accordance with the agreement. |
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9. Distress |
The landlord will pay himself with the personal properties of the tenant when there is nonpayment of rent. |
