Commercial Law Lecture Notes (2001)

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Business And Administration
John Harrison

27.330 Commercial Law (September December 2001) (Prof. John Harrison) Law A set of rules come together with a set of sanctions for those who dont follow A set of rules & principles guiding conduct in society A code of behaviour Help keep the order Necessary for protection of persons and property Gives govt power to act for the benefit of society Business Law set of established rules governing commercial relationships, including the enforcement of rights (must follow rules) Commercial relationships business 2 business; business to customer; etc. *law of nature cant be broken *law of man not supposed to be broken if is, consequences Knowledge of law is a business asset assists owners and managers in reaching goals Business Law General rules of commerce Protects business ideas, tangible forms Ensures losses are borne by those responsible Ensures compliance with commitments WHAT IS CIVIL LAW? Has 2 different meanings, it depends on the context 1. Refers to private law (see notes on Substantive and Procedural Law) 2. Refers to the Civil Law System of Law (see notes on Civil Law system) Domestic Law internal law of given country (statute law, common law) International Law governs relations b/w states, countries and other entities Substantive Law and Procedural Law 1. SUBSTANTIVE LAW the rights, duties & liabilities that each person has in society The right to own property/enter into a contract The duty of avoiding injuring people carelessly 2 types of substantive law (public and private) a) public law is concerned with conduct of government and relations between government and people criminal law (government made laws) sets out how public is supposed to behave (government vs. the accused) (not person vs person) constitutional law fundamental law of a nation or state (i.e. the levels of government, judges -all about the government ie: how many levels (1 or 2) and which sublevels will they have) administrative law boards/commissions (government forms these bodies and delegates authority to these groups) b) private law is the rules that govern relations between private persons or groups ie: suing each other for wills, estates, property law (fabric of business law) 1 is sometimes referred to as civil law (individuals rather than government) 2. PROCEDURAL LAW is the law that deals with protection and enforcement of substantive law rights and duties. (e.g. Someone breaches a contract what is the process?) WHAT IS COMMON LAW? Has three possible meanings 1. Common Law System of Law (what the majority of Canada uses.) Law based primarily on the decisions of judges 2. Distinction between common law and statute law Common law case law (the law made by judges) State laws laws made by legislatures. Statute/Act is the legislation made in the government 3. Making a distinction between common law and law of equity Common Law started in England with Case Law, its very ridged Equity Laws laws of fairness; however, started becoming ridged specific rules must be followed in the courts discretion CIVIL LAW SYSTEM OF LAW Oldest of the two systems (6 century) Justinian wanted a comprehensive CODE (civil code) a book with everything in it. However, if it isnt in the code they can look at what past judges did. Dont have to follow previous judgements, however they normally do b/c otherwise there is inconsistencies however, downfall is if 2 identical cases arent in code, will judges come to same independent decision Napoleon re-vamped the code This system was adopted in Canada only in Quebec for private law (not federal), it is used in other countries though Rarely has a jury COMMON LAW SYSTEM OF LAW Used all over Canada except QB (QB only for private law) & in most English speaking world Brief history: Originated in the UK 1066AD Landowners made individual rules and common law took away power Made the law common throughout all UK colonies back then Today it is still used in all UK colonies still; however, each has made small modifications Principles of Stare Decisis (Theory of Precedent) Stare Decisis Latin Term (*MUST KNOW*), means to stand by previous decisions It is about following already decided judicial cases (basis of our system) Judges can make law, they dont have to follow a code Principles of Stare Decisis Past Judges decision is generally a binding precedent for courts lower in the judicial hierarchy Usually a 3 tiered system must follow judgements from higher courts Past judges decision is only binding precedent on courts in the same jurisdiction (province) or judicial system (Canada vs USA) however can share info and use same decisions Supreme Court of Canada (SCC) Binding Not binding (persuasive) Saskatchewan Court of Appeal (SKCA) Manitoba Court of Appeal (MBCA) 2 Saskatchewan Trial Court Manitoba Trial Court Non-binding decisions can be persuasive Same facts in MBCA as in SKTC; therefore, if there is no binding precedent, you can persuade judges to follow that ruling. Not everything a judge says is deciding a case is binding on judges later cases. Ratio decidendi (reason of deciding) is BINDING, the reasons that explain why the judge made the decision they did (why who won, who didnt) part of binding on lower courts Orbiter dicta (by the way) is NOT BINDING, is everything else the judge says other than the ratio decidendi the other stuff which isnt necessary to say for the case Not always easy to separate the two, as judges have own ideas Examples: 1. FACTS Person B steals As diamonds. Person B sells diamonds to Person C. A sues C for diamonds back. Goes to judge at Court of Appeal who says I find in favour of A, b/c a thief take on title, therefore cannot pass the title to purchasers. Also, Our decision would be the same if B had found the diamonds not stolen them The first stmt is the ratio decidendi (in italics) The second statement is the orbiter dicta (could be persuasive, but not binding) 2. FACTS Same facts as in A, however different reasons Judge in Court of Appeal says I find in favour of A, b/c thief takes not title. And person A took reasonable care of the diamonds, had he been careless, then I would allow a good faith purchaser for value to keep them. The ratio is not clear its ambiguous 3. Sometimes lawyers think they have found a ratio that they think will fit; however, the judge may do something called NARROWING THE RATIO (distinguishing the facts). FACTS Person A sells diamonds to Person B. Person B sells the diamonds to Percon C who is a good faith purchaser. A sues diamonds from C b/c B paid with a cheque that bounces, meanwhile B sold them to C and has disappeared (Cheques can bounce intentionally or unintentionally) The judge says whenever one of 2 innocent persons must suffer due to the actions of a third party the person who enabled the loss must take the loss A & C are innocent, however, A enabled the loss, therefore C wins. 4. FACTS Person A carelessly leaves a precious object in a public area. Person B (who knows it was As object) finds it and sells it to person C. (C is an innocent third party.) C argues previous ruling is binding. HOWEVER, judge says earlier case must be considered in light of the facts, the earlier judge was thinking of a theft situation, therefore the ratio is when someone volunterily parts with their goods. The judge as has NARROWED THE RATIO a distinction has been made. if one of two innocent people has to suffer due to a third, the person who enabled the loss has to take loss Distinguishing the Facts pointing out that cases are different therefore judge doesnt have to rule based on previous case Judge rarely brings up previous case up to the lawyers The Supreme court can change their rulings they can over-rule previous rulings (not governed by ratio and orbiter) though they are usually reluctant would change b/c know society and values change over time, therefore reasonings for rulings change too If there are more judges involved in case, complications arise, such as judges agree in favour of someone, yet for all different reasons Traditional Reasons for Stare Decisis (the 3 Cs) 1. Certainty gives a degree of certainty
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