MGT393: LEGAL ENVIRONMENT OF BUSINESS I
MIDTERM REVISION NOTES
Why study law?
o Can affect success and failure of business
Impacts decisions made by businesses
o Legal consequences affect profits and losses
o Manage legal risk
Identification: recognition of legal risks
Evaluation: assessment of legal risks
Response: reaction to legal risks
Risk avoidance: elimination of risk
Risk reduction: minimization of risk
Risk shifting: make the risk someone else's problem
Risk acceptance: choose to live with the risk
What is law?
o Rules that govern an individual in a given society (which is DYNAMIC)
o Should be consistent, predictable, certain
Substantive (rights and duties that each person has in society)
Procedural (law that deals with the protection and enforcement of substantive rights and
Substantive law is "what" the law is and procedural law deals with "how" the law is enforced.
Sources of Law:
o Constitution (includes charter)
o Statutes (laws made by government)
Criminal Code of Canada, Income Tax Act
o Common law (English Common Law - judge-made law following precedents
stare decisis: to stand by previous decisions
Purpose: certainty, predictability, continuity, consistency, cases distinguished on their facts.
o Municipalities pass by-laws, not statutes (they are corporations without shareholders)
Page 1 of 11 Court Structure:
SCC (Supreme Court of Canada) - appellate court only, decision binds ALL courts in Canada, 9
o OCA (Ontario Court of Appeals) - first court of appeal, 3 judges, error of law or error of fact
Superior Court of Justice - trials take place
Note: ON courts are bound by decisions made in the SCC, but consider decisions made in other
provincial courts to be highly persuasive. ON courts also consider decisions made in HoL (House of Lords
- highest court of appeal in England) to be persuasive.
Role of the courts:
Determine the validity of legislation
o Interpret legislation
o Protect civil liberties (human rights)
Resolve disputes between private parties
o Develop case law
Overview of Civil Procedures:
Statement of Claim
Plaintiff prepares it; legally significant facts, court issues it.
You make a statement of claim which sets out the facts, the nature of the claim, the damages
incurred and their cost, the legal fees to be paid or that has been incurred, and the interest
you are entitled to for the money you put in court proceedings.
o Serve Statement of Claim
Plaintiff serves it on all defendants
o Statement of Defense
Defendant prepares it and serves it on plaintiff. Defendant normally has 30 days to issue this
after a Statement of Claim has been issued. If it is not claimed within the given period, the
plaintiff can go back to court, claim that the case has not been defended and request the
judge for a Summary of Judgement
Pleadings: all the paperwork leading up to the trial
Counterclaim: plaintiff sends defendant a Statement of Claim, defendant sends back
Statement of Defense and a Statement of Claim, suing the plaintiff.
Cross-claim: Multiple defendants - start making claims against each other
3rd party claim: another party sends a claim (usually insurance companies)
o Affidavit of documents
Examination for discovery: asking questions outside of court
Discovery of document
Discovery of ______
o Setting down for trial
o Pre-trial conference
Judge directs the parties to attend a pre-trial conference before a judge or court officer to
attempt to settle the case or narrow the issues.
Plaintiff and defendant make opening statements. Plaintiff's witnesses are examined and
cross-examined. Defendant's witnesses are examined and cross-examined. Plaintiff and
defendant make closing arguments.
Page 2 of 11 Limitation period: period within which action must be started
Traditional: 6 years for contract and 2 years for tort.
Modern: 2 years for contract and tort.
Late claim is generally unenforceable.
o Limitations Act:
No limitation for criminal offense
7-15 days if its government-related
2 years if its contract or tort law
The limitation is imposed from when you KNOW about the violation
Note: if plaintiff is under 18 years of age or is suffering from mental illness, he/she needs to have a litigation
guardian who is above 18 years of age and is not suffering from any mental disability.
Alternative Dispute Resolution (ADR): dispute resolution outside of court.
Disadvantages of litigation: slow, expensive, unpredictable, adversarial, public
o Advantages of ADR: quicker, cheaper, controlled, cooperative, private
o Types of ADR: negotiation, mediation and arbitration
Class Actions: multiple claims against single defendant joined together in one action
o Small claimants are able to share costs of litigation against large defendant
Common issues among all class members
Representative plaintiff who will act in interests of all members of the class
Notification to all potential member