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LAW 122

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Ryerson University
Law and Business
LAW 122
Heidi Francis

CHAPTER ONE : Risk Management and Sources of Law Risk Management Why Study Law as Business Students ? Goal of business is to make money Knowledge of Law leads to greater risk management, reduces potential costs, increases potential profits All Business Choices have Legal Consequences Legal Education Plays a Critical Role in Risk Management What Is Risk Management ? The process of identifying, evaluating, and responding to the possibility of harmful events 3 steps to Risk Management: identification: recognition of legal risks can we be held liable for doing something wrong? evaluation: assessment of legal risks what are the chances of something going wrong? response: reaction to legal risks what are we going to do about it? Risk Management (contd) Nearly every business decision creates some risk Risk Strategies: Avoidance - not engage in risky business activity (not sell certain product or service ie. cars with exploding fuel tanks) Reduction - reduce occurrence of risk by modifying business practices (wiping floor if wet) Shifting shift risk to another party through contract or through insurance policy (purchase insurance for car accident) Acceptance sometimes appropriate for business to accept the risk (lucrative contract) Examples of Risk Management: Insurance: liability insurance ; property insurance Exclusion and Limitation clauses: contractual terms that exclude liability for certain types of acts / losses, or that limit the amount of compensation available Incorporation: limited liability: directors and shareholders are not usually liable for debts of the company Intro To Legal System What is a Law ? A rule that can be enforced by the courts all laws are rules but not all rules are laws ie. rule against handling soccer ball is not law Legal Obligation vs. Moral Obligation (raises ethical considerations as well) moral wrongs are informally sanctioned - loss of friendships or damaged reputation legal wrongs are formally sanctioned - imprisonment or payment of damages The Legal System Public Law and Private Law Public Law concerned with governments and the ways in which they deal with their citizens Divided into: Constitutional, Administrative, Criminal, and Tax. Private Law - concerned with regulating matters between private persons Government can also be subject to private law (ie. Gov enters into contract to purchase products) Divided into: Torts, Contracts, and Property (course focuses on torts and contracts) LAW 122 1 Different Areas of Law Can Overlap (a punch can be a crime and a tort) Map of the Law Sources of Law Three Main Sources of Law: The Constitution, Legislation, The Courts 1. The Constitution: Most important source of law Creates the basic rules for Canadian society Every other law must be compatible with it. (section 52 - no legislation or court decision is allowed to contradict it) ; Constitution is extremely difficult to change Division of Powers: 2 levels of government Federal and Provincial; 2 sets of laws Division of powers states the areas in which each level of government can create laws (see summary on pg 13 of text) Charter of Rights and Freedoms: in 1982 the Charter was written into the Constitution to protect basic rights and freedoms Protects rights and freedoms for persons (i.e. businesses as well as human beings) from actions of government Irwin Toy Case (violation of freedom of expression, but justified under section 1) Sections guaranteeing freedoms and rights: 2 (fundamental freedoms ie. religion, press, speech); 6 (mobility); 15 (equality ie. race, ethnicity, colour, religion, sex, age and now sexual preference.) dCharter is subject to restrictions: section 32 (only applies to complaints about Government behaviour); section 1 (rights and freedoms are subject to reasonable limits). It is occasionally acceptable to violate a persons rights (RIDE Program) Section 33 (notwithstanding clause). Allows govt to enforce a law notwithstanding the fact that it violates the Charter of Rights and Freedom Laws that are inconsistent with the Charter are of no force and effect 2. Legislation second source of law; law that is created by Parliament or legislature Legislative process: first reading (formal introduction), second reading (discussion, then sent to committee), third reading (final debate and vote); after three readings sent to senate for repeat of process; finally given royal assent LAW 122 2 3. Courts Third source of law; rules that the courts actually create Historically rules developed through common law courts, and another set of rules developed through equity courts Common Law rules that are created by judges (use of precedents and interpretation of legislation) Equity fairness (monetary damages vs. specific performance) LAW 122 3 CHAPTER TWO: Litigation and Alternative Dispute Resolution the litigation system the court system administrative tribunals alternative dispute resolution The Litigation Process Litigation is the system of resolving disputes in court Risks of litigation: expensive time consuming unpredictable frequently fatal to business relationships Litigation is rare very few cases are decided by judges in court Most disputes are settled out of court; we rarely hear about those details Who Can Sue ? General Rule : Any person or corporation can sue or be sued person who lacks legal capacity can sue or be sued but must act through a representative (ie. child or adult with mental disability) statutory authority required to sue government Class Actions: Purpose: multiple claims against single defendant joined together in one action suing on behalf of large group of claimants; allows small individuals to take on large organizations small claimants able to share costs of litigation against large defendant (ie. product liability, mass torts, workplace discrim.) Class Action Requirements: Common Issues: must be common issues amongst the various members of the class Representative Plaintiff: must represent the interests of the class members Notification: must have plan for notifying potential class members (ie. notices in newspapers) as members of that class are bound by the decision Preferable Procedure: class action is the preferable way of dealing with the claims Certification: courts decision to allow the class action to proceed (allows the claims to be joined together as a class action) Legal Representation: 1. Self Representation: right to represent yourself usually advisable only in simple matters 2. Lawyers: required to have graduated from Law School, articled, passed bar Law Society regulates the profession Law Society establishes and applies Codes of Conduct and investigates/punishes misconduct Other advantages: lawyers must carry professional liability insurance communications are confidential and privileged LAW 122 4
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