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MCS 3040 (111)
Lecture 10

MCS 3040 Lecture 10: MCS3040_ W10

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Department
Marketing and Consumer Studies
Course
MCS 3040
Professor
Joe Radocchia
Semester
Fall

Description
November 21 st Week 10 Midterm  Covers chapters 5-7 [Contract Law]; 20-22 [Employment and Liability law]  Same type of questions can be expected  Class after midterm Chapter 13 Law of Agency  Finds its origins on both Contract law and Tort law  The relationship between a principle, and his or her agent o Principle is the individual gets somebody else, the agent to act on their behalf o The agent, can, depending on the amount and authority the person gives the agent, can act on the principles behalf o Principal gives instruction, directions, authority to the agent to act on its behalf  Primarily based on a contractual relationship  Principal pays agent to represent them  If you are in a business focusing on partnerships [like lawyers commonly are]; or example of homeowner and real estate agent – principal and agent  Agent has contractual obligations, making sure that they preform the acts them are required to  Tort Law – held responsible for its actions [agent] – performed in an appropriate manner, taken negligence into mind  There are fiduciary obligations too – a trust like duty [what it means] o Relationship between agent and principal o Agent can’t put their own interests before the principals  Agent acting on principals’ behalf, is communicating with third parties  The law has distinguished this notion of authority o 1. Actual authority  Principal has told the agent what they can actually do, on acting on their behalf o 2. Apparent or Implied Authority  Authority where the third party may reasonably understand/assume that the agent does have the power to bind the principal, when in fact they don’t, but act in a way that the agent does  Even if the principle didn’t give the agent the actual authority may still bind with the third party  Example – lawyer in Law firm with 10 lawyer partners o Each person is an agent in the partnership o All agreed that the law firm needs new telephone communications – task you to go get 3 quotes to get the best offers for the next meeting o You’re actual authority – go out and get 3 quotes o Not given the power to get a contract o Go for lunch with a friend – who is a Bell rep. – tells you that they’ll get you a great deal – lets sign the contract now – influences you to sign – 5 year contract for the firm o Next day – at the meeting you bring up that you got a contract available o Would the law firm partners be responsible, are they bound by the contract Joe entered with Bell?  No – Bell knew didn’t have the authority to do that – knew that you were only supposed to get 3 quotes  Firm has no obligation to uphold that contract o Is there still a contract tho?  Yes – Joe  Same Example – Same info, just don’t say that you need only 3 quotes o You say you’re a Bell rep; same story – sign contract o Is the law firm bound by the contract?  Yes – because the third party didn’t know the extent of Joe’s authority – that as a partner in a law firm, is may be apparent that he has authority – didn’t state the extent of authority  Law firm is stuck with a contract that they may not like  It was reasonable for the Bell rep to understand that you had authority  Case; Mercantile Credit Union v Garrod o G and Perkins are partners, and own a auto repair/body shop o In their contract it states that all they do is fix cars – and cannot sell cars o P – does the day to day work; G is the financial partner more o P – sells a car to a customer, where that customer sells a car to MCU  Purposely sold a stolen car to a customer, and takes off with the money o MCU wants to be payed back, suing G, as the left over partner o G – said he had no knowledge, didn’t permit them to do so, and hadn’t know he was going to do that o Court – it was reasonable for MCU to come to the conclusion that some auto shops sell cars o G had to repay MCU the value of the vehicle Agency by Estoppel – related to Principle Agency  Prevented from backing away  If the agent, acts in a way that is reasonably understood to be a rep of someone else, the principle took no steps to prevent that from happening, knew or ought to know that the agent was representing them, or make it clear that the agent had no power - may be stuck the consequence of the agents behaviour Agency by Ratification  An established principle and agent relationship exists  Example – Real Estate agent for Bank Teller in Guelph o Find a house in this area and in this price range o Agent out hunting for houses; only 1 house available in the 3 areas wanted – 4 offers on the table  Tries to call bank manger – puts an offer on the behalf of the bank manager o Next day, gets in contact – agent tells bank manager that he went ahead an binded the deal because of meeting all the circumstance/criteria  Bank manager ratifies yes, that the agent did have the authority to do so Chapter 14/15 Business Organizations  3 different ways you could conduct a business/run it in Canada o 1. Sole proprietorship o 2. Partnership o 3.Corporation Sole Proprietorships  Owner; have all the liability and the risk; business is not divisible from the person [same person] – no difference  There’s no piece of legislation that governs/creates sole proprietorships – no frame work  Created by judge made law, as well as how one may run their business – tort and contract law – has no formal legislation to running it  Easiest, simplest, and least expensive way to run a business  Taxation may be a benefit [or not] – will be in the lowest tax bracket – lower than a corporate tax bracket, depending on the profit you’re making o More money one makes, the more money one is taxed  Make all the decisions – advantage; but also may be a disadvantage, as you have no one to help you run the business and make decisions with you  Profit – all yours  Employses – can have, but liable for their actions  Only person running the business – downside  Unlimited liability – biggest downside  How do you raise money – comes out of your own pocket - downside  Example – Running hotdog stand dwtn Guelph o Get a permit; make sure that you can get the hotdog stand at whatever location o Have a licence to do it o Food permit – that the food you want to sell is allowed o Need to do a ‘name check’ – can’t infringe on the use of someone else’s name  ALL GOOD CHECKS o Business has been slow – hasn’t been stocking up with hotdogs, uses expired hotdogs  Get sick – food poisoning – had to see a number of doctors, etc. o Who would you sue?  Joe, because he is the business – since he is the business, he is liable, he is exposed – one and the same with the business Partnership  2 or more individuals carrying on business for the view to make profit - owners to a business  An agreement between 2 – can be written or oral – advised to be written o Partnership Act – must be created in pursuant to into a partnership  Is every business transaction/involvement necessary in making a partnership?  When partners purchase things together, you own it together – steps and decisions must be made collectively as to what has to be done with it  Co-ownership – where 2 or more individuals buy land, for the purpose of making profit, but may deal with the land as they choose [with their own halves]  Joint and Several Liability – responsible for each other actions [DOWNSIDE]  Example. Joe and Suzy Law Firm o Joe – represent people who get into car accidents  Married – all assets with partner o Suzy – criminal defence lawyer  Not married – holds all her won assets o Joe misses the limitation date for a lawsuit o Who would you sue? – both  2$ million of damages – each have 1$ million from insurance for mistakes made  Suzy has 500,000 in assets – has to all go to the plaintiff o How does one limit their downside? – enter into a limited liability partnership – LLP on letterhead, meaning that each partner is responsible for their own mistakes, therefore can’t go after other partners and sue them o As partners you have the duty of good faith – in disclaiming that one’s assets are all in their spouse’s name  Example. Problem or not? Does it need to be disclosed? o Joe – decides to do wills; out of his house, on the weekend o Does he need to disclose to Suzy that he is doing that?  Yes; in a partnership; in the same type of work [legal work]  People may go after Joe and Suzy, and she has to know  Work can interfere into the partnership  Owe the duty of good faith to one’s partner  Gaining capital, into the market place – pro  Partnership Act – need to have an agreement; need to have a name for the partnership; can have unequal partnership* [by default it is 50/50 if not stat
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