Business Law Lecture Notes

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Department
Management and Organizational Studies
Course
Management and Organizational Studies 2275A/B
Professor
Philip King
Semester
Fall

Description
Lecture One 9/18/2012 5:36:00 AM What is law? The set of rules and principles guiding conduct in society  But what makes this different than rules? o Breaking the law can sacrifice their civil liberties and freedom o **The connection with the government is what makes law different than any other rule  Law is set by the state/government A set of rules proposed by the state that are enforced  Enforced o Remember the Henry Morgan abortion case  Against the law, but in front of a jury of his peers he was found not guilty, even after admitting his guilt o The store owners case  Closing on Sundays, discriminatory and unfair  But the SCC crushed him with financial fines, so much so that he was bankrupt by the end of it  The law clearly changes over time, as society values change the laws change to keep up with these changing values o Sometimes too quickly, sometimes too slowly o What the law is, and what the law should be are two different things  Incredible debate happens in the limbo between these two ideas Law theories Legal positivism  A law is a law as long as it can be enforced o Syrians killing their people o Anti abortion in the States Natural Law  Human law is just the approximation of the natural law  The moral code is out there, and we try and find it regardless if the human made laws enforce it Social Utilitarism  Measures of the law should be based on social utility  Laws have to serve the interest of society  “greatest happiness for the greatest number of people” Legal Realists  The law is arbitrary  Subject to human weakness and frailty  (What the judge had for breakfast) How to understand the law  Try and understand the policy behind the law o Why was this law enacted? What was the context  Try and think about the end-game o In the end there will be a result o Its nice to talk about the debate and the different interests  But at the end of the day, the decision has its outcomes, and we should focus on that  It isn’t a perfect system Where does the law come from  Constitution o Trumps all other laws  Any law that is in conflict with the constitution is invalid and goes away o Made of many different parts  Written (Constitution act 1867, Charter of rights and Freedoms)  Oral (British tradition, “The way things have been done”)  International Treaties o The government has to abide by our constitutional law o The government is subject to the law, and you can sue the government against the constitution  Other countries the country is above the law, and they can do anything they please o Division of power  Divides the government into two divisions that can create laws on certain subjects  Federal  Currency, trade, immigration, criminal  Provincial  Healthcare, education  Paramountcy  The Federal government law is supreme when both laws (provincial and federal) apply o Charter of Rights and Freedoms (1982)  Passed to make Canada a leader in civil liberties  Rights about discrimination, freedom of speech, immigration etc. etc.  Any law or government action that is inconsistent of this charter, fails  These freedoms and rights apply to not only citizens, but everyone in Canada, landed immigrants and the like  However, the Charter effects the government, and its actions  Private citizens are governed by the human rights code on basis of these same principles   Statutes/Legislation o Passed in the house of commons o With a majority vote, the law can become an act (after going through the sober thought of the senate) o We have to looks at these laws in context  Before and after  Where the law is going, where has it been o It isn’t a snapshot, it’s a video tape  The law tends to change significantly at times as opposed to gradual shifts over time  As different governments come into power and enact their policy objectives  Common Law/ Case Law o Decisions made by judges today set precedent  Precedent  Like cases will be treated similarly to ensure that the law is fair in its decision  Uniformity  Continuity  Fairness  Predictability  So that lawyers can predict their outcomes, and plan for the best outcomes possible  Efficient  We don’t have to reinvent the law, same case same facts then same result  The facts are never the same however  The judges determine if the facts are similar enough to follow the same precedent Lecture Two 9/18/2012 5:36:00 AM Litigation  Happens at the provincial trial court level  Trail courts o Hear evidence, testimony  Appeal courts o Only rule on matters of law, not matters of fact o Cannot appeal a finding of fact, simply the decision is made  Civil Procedure o Substantive laws define your rights and obligations o Procedural laws are the rulebook on how to access the law, how to proceed in the justice system  Jurisdiction  Where should this case be heard, which court of law  Pleadings  Filing a statement of claim with the court and physically served on the defendant  A statement of defense is the defendants rebuttal to this claim  Counterclaim: The defendant is actually owed money by the plaintiff  Discovery  Examining witnesses and evidence  Thousands of pages of testimony  Done so that in trial, lawyers can just draw attention to the problems in statements and evidence  Trial  Start with the pre-trail motions  A day before trial, the judge and lawyers from both sides argue their pretreial motions  Follows a very rigid procedure  Evidence, testimony (experts, witnesses, physical evidence) then create an argument around the rules that should be applied to the evidence given in that case  Draws attention to previous cases in order to apply precedence to the current case  Finally, both parties have their closing arguments, and the judge rules  Enforcement  You win a piece of paper which says the defendant owes you money plus cost plus interest  “cant get blood from a stone” Alternatives to litigation  Sums of money under $20,000 are typically not worth fighting in trial o Lawyer costs and court costs take up more than this, you’ll LOSE money  Monetary costs of litigation are ridiculous, it is about the money not the principle  Non monetary costs: o Closure o Broken Relationships o Daily grind of litigation  ADR o Negotiation  Voluntary talks in order to come to an agreement o Mediation  Third party who specializes in bringing people together for talks o Arbitration  Third party makes a decision on the case  Much less expensive  Much faster  Identify the risk  Evaluate the risk o What’s the risk of harm? o What is the harm caused if the risk occurs? o Steps taken depend on cost being high or low  Plan o Assume the risk, and make a plan accordingly o Avoid the risk o Minimize the risk o Shift the risk  Insurance:  A contract between the insurer and the insured  The insurer will pay if the risk occurs  Cannot insure unless you have insurable interests  9/18/2012 5:36:00 AM Strategic Planning is crucial to success  Strategic thinking, long term, short term and medium term planning  The skills and planning that we bring to business can be brought to our lives o “Where do I want to go, and how do I want to get there?” o Homework:  Take 15 minutes and plan out your life Contracts Continued: In order for a contract to be made, what needs to happen?  Consensus o An offer must be made, and there must be an acceptance of that offer by the other party  Consideration o Each party needs to be giving a form of consideration (a promise) in order for a contract to be legally binding  Intention o An intention to be legally bound, family members typically do not want to be legally bound But what else needs to happen? Capacity:  Either age or the mental competence/incompetence  Age: o You cannot have a contract with a minor (typically 18 years old, but set by the province) o However,  If a minor is entering a contract for a necessary, (food, water, shelter) then you can enter a contract with them  But only if they need this item, if it is unnecessary it is not needed for life or to survive  Mental Competence: o Insanity o Mental capabilities o Inebriated  Two part process  You must have been really drunk or under the influence in order for the contract to not be legal  As well, the other person had to know that you were drunk Legality  Public Policy o The courts will not enforce a contract that is contrary to public policy  Whether this is fair and legal in the grand scheme of the law o When conflicting legitimate interests are involved, the law gets messy  Protection of vulnerable people o If the courts can determine that one party had unequal bargaining power and used this to exert leverage onto the lesser party the courts will sometimes void a contract Duress:  One party can claim that they were under duress, and therefore be exploited from the contract o Duress:  Meaning the person was forced into the contract because they have no real practical choice but to agree  Gun to head, economic duress (forced because the business is in a bad spot) Undue Influence: o One person has a position in a special relationship that puts one person, in a position of authority, taking advantage of the other person  Unconscionability: o Governed by provincial law o Two factors required:  Substantial inequality of the contract  Homeless people, elderly, young, disadvantaged etc.  Unfair terms  Extortion There are three basic types of contracts:  Enforceable/Valid Contracts  Void Contract o The contract was never legal or never existed in the first place  Voidable Contracts o Contracts with minors typically take this route  The contract is enforceable, but one party can escape this contract by claiming that they are not bound  Unenforceable/Valid o Statute of frauds  The statute has specific rules determining what makes a contract enforceable  The difference here is that the contract is not void, it still exists but it is not enforceable in the courts  Cannot dispute what happened Misrepresentation  Misrepresentation only applies to items on a contract that are material  If the item is in fact material, then one of two things happens o If the item in question is a term:  Can sue for damages, or be granted recision o If the item in question is not a term  Then your only option is recision  (details about machines for example would not be a term)  Tort law o Was the misrepresentation made innocently or fraudulently  Innocently:  Cannot sue under tort laws  Fraudulently:  The person knowingly lied to you, then you can sue for damages under tort laws  Tort law damages can be used in addition to recision Mistake:  Mistakes need to be mutual, over an essential term of the contract in order for the courts to enforce mistake  If one person is mistaken, the courts will act reasonably o If one person is expecting more money, then if the money received is reasonable, the courts will not grant mistake  Mistake is either a mistake in the terms, or where there was a mistake in the assumptions that underlie the contract  Or, where both parties acted reasonably Remedies:  Equitable Remedies o Injunctions  Forcing a party to do something, ex. Cannot sell in the states o Specific performance  An order to perform a specific task that cannot be awarded through monetary gains o Quantum Meruit  A court order to perform a reasonable task o Recision  Returning the parties back to their original states  Principles of Equity o No damages  Only used in cases where damages would not suffice or would not be a remedy o Act Immediately o No prejudice  No one is harmed by this o Clean Hands  You come to court ready to prove that you acted morally o Discretionary  You cannot demand anything from equitable solutions, it is up to the judge whether or not you deserve it Privity to a contract  Only a party that is included in the contract can have rights and obligations to that contract o One person cannot sue if they are not included in the contract Damages for breach of contract  Damages can only be accounted if they are reasonably foreseeable from the breach of the contract  Expectation damages o Damages that one can reasonably expect from the breach of contract Termination of Contracts:  Performance o The contract is termination by completing the contract  Agreement o Term in the contract when the contract will end o A mechanism for when the contract ends (a way of figuring out when the contract ends) o Enter into a new agreement (Novation)  Frustration o Where honouring the contract becomes impossible to complete o When two parties (at no fault of their’s) cannot complete it (new laws for example) o Something not specified in the original contract  Breach (condition) o Conditions are essences of the contract o Warranties are qualities of the contract o You can still sue for damages Lecture notes 9/18/2012 5:36:00 AM For the record… We started out this class by talking about raping little boys… Tort Law  A wealth redistribution system in which we take monetary values from wrongdoers and provide compensation to those victims involved  Also a deterrent for other people to not commit tort law o Tort law is derived from case law/common law o First two torts were trespass to the person, and trespass to the property  Subdivided into two separate subcategories  Intentional Tort  Requires that the defendant intended to cause harm  If it was accidental, then this cannot be proved  Negligent Tort  A reasonable person would have known this would cause harm  The defendant ought to know better to not cause the plantiff harm  Bigger part of tort law Tort law is fault based o This means that you must prove that the other person was at fault o Without fault, tort law does not assist anyone  No fault examples:  Automobile Industry  Used to be fault based, but then switched into a no-fault base  This was because insurance companies were largely more powerful than the injured victims  Victims cannot claim future income, it is now based on current income  Workers Compensation  Again, not fault based  The government just spits out money based on a formula  If we used the fault based system, many employees wouldn’t get the compensation because it could be their own fault o The effect of tort law has distributed the costs of tort lawsuits over the course of the business  This in turn is redistributed to us, through higher prices  Essentially we all share the cost Tort Law Cont.  Tort law all comes from the cases o Burden of proof:  In tort law, the plaintiff has the burden of proof  This means that the plantiff has to prove (over 50%) that they have been wronged.  The defendant does not need to prove anything is the plaintiff has not proved their case o Damages:  You cannot sue in tort law unless you can prove damages  Exception:  Trespassing  “Per se” or without the need to prove damages The Negligence Tort Law  In order to prove a negligence case, the following must be proven for a reasonable person to forsee: o Duty of Care  You do not always owe a duty of care  For example, if you aren’t on duty but are a lifeguard, you do not need to save someone from drowning  But if you perform a rescue, you have to follow through in a reasonable manner  You owe a duty of care to people that you can reasonably see them coming into harm  “would a reasonable person see this”  Go back to the cases, always go back to the cases o Standard of Care  A defendant would have to have acted reasonable to get away from this one  Not the defendant, what a reasonable person would have done in the circumstances  A reasonable person can be a reasonable brain surgeon for example o Causation  You have to rule out every other cause for the harm that has occurred  Very difficult to prove causation  Many cases fail at this stage  “But for” test  But for me doing something, she would have been fine  Two limitations:  Damages must be of a type that are reasonably foreseeable  Remoteness o Meaning, that the damages must be fairly direct o You aren’t negligent because you are wrong, you are negligent because you didn’t do what a reasonable person would do  Because you acted unreasonable  Careless  Reckless o Not if you are careful and diligent however Types of Negligence:  Product Liability o Donaghue v. Stevenson  The first time that a manufacturer owed a duty of care to their consumer  A manufacturer owes a duty of care  Occupiers Liability o If you occupy land you owe them a duty of care  Tie down dogs, fence around a pool  If you make money by letting them on your land, you REALLY owe a duty of care  Professional Liability/Negligence o Detrimental reliance o Because of my professional ability, you relied on my opinion and it caused you harm  Alcohol Related Cases o Drinking and driving  Used to be okay, now it is completely unacceptable o A commercial host is liable for the injuries suffered because of someone who was drinking at that place of business Property Law 9/18/2012 5:36:00 AM `1Pages that we don’t have to read:  471-475  484-492 Property Law  We turn a corner in the sense of the law: o Before now, it is between two people, (you and me)  Tort, Contract etc.  Property opens the door to a set of legal relationships that is much broader than the types of law thus far  We have rights to property, whether we own them or not o The person that owns them, has the most rights to the property o Everyone else does have rights to the same property, but very limited Ex)  House  Bank has rights on the mortgage  City has rights, zoning laws  Neighbors have the right to no nuisance  Canada post has the right to come on the property to deliver mail  London Hydro has the right to come and check their hydroelectric meter o To talk meaningfully about property is to talk about rights to said property, and who has which rights  “The relationship between people with regards to the stuff”  Intensely political  Changes with the times, Obama vs. Romney for example Two types of property in the law:  Real o Land, buildings and anything attached to them  The more permanently something is attached, the more likely it is to be real property  If it would damage the property, it is probably real property  Possessory Interests  Fee Simple  Commonly known as ownership  Best possessory interest you can have in real property o However, government may be able to expropriate your land  Prior land claims, natives…  Leasehold  Contractual right to posses the land or building  Life Estate  An interest that you only have when you are alive  Non-Possesion  Easements  Gives people the right to use a piece of property o Shared driveway  Rights of way  Union gas can work on underground pipelines  London Hydro  Licenses  “I give you the right to come onto my land and collect the apples from my orchard”  Restrictive Covenants  Run with the land  Not being able to do certain things to the land o Such as you cannot have a swimming pool, satellite dish larger than x  Apply against every person who owns the land o Attached to the title o Have to be prohibitive in nature, cannot make someone do something  Condominiums  Fee simple  You own the property that is your apartment  Exclusive use  Shared use of the common areas  Cooperatives  No fee simple to anything  The right to exclusive use of your unit, but you do not own it o Mortgages  Property interest in real property  Gives the lender a right in that property  Lender gives the loan, the mortgagee secures the debt with a security (house)  Power of sale  Mortgager gains the house, and extinguishes the debt by sale of the house  Anyone can give a mortgage\  Regulate mortgage brokerage because it is a fraud riddled industry o Residential landlord and tenant  Residential is different than commercial  Why?  Because the social issues (homelessness for example) of residential property and tenant law is a serious concern  Commercial tendencies do not have these same public concerns, so it is reliant on the terms of the lease (governed by)  Residential  Possessory right, leasehold in particular for the tenant  In the landlord, the right to collect rent is personal property  Personal o Everything else  Tangible  Lost and Found  Original owner has the best claim  The person who finds the personal property has the next best claim on that personal property o When you find something on personal property, it is the owners  Quasi Personal property o Depends on the situation  Public Portion  Lost and found applies  Private portion 
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