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Management and Organizational Studies
Management and Organizational Studies 2275A/B
Bill Irwin

MOS2257-Lecture 8 Law doesn't care if contract is fair – only if voluntary (then assumed to be fair) Biggest influences on labour landscape (safety net) -unions tend to have much more favourable term for workers • if acted collectively they could withhold labour • first dealt with unions with violence -involvement of women in politics • align efforts with laws governing work place (health and safety, child labour, discrimination) -development of middle class • now had disposable income -> developed a social conscious • government responded to them by introducing laws that favoured them Still contractual? -yes but the freedom to contract has been modified • government has imposed more laws (how ever much money but not below, how ever many vacay days but must be... etc) • everything about contracts applies to employment -> every employment is contractual How do you know when you have an employment relationship? (why care) • vicarious liability • all laws (parental, vacay) apply to employees • accounting matters- detect pay and report to government – if not then can give a gross amount • look at all factors into consideration – does it look more like individual contract? ◦ Control test ▪ who exercises control over how work done *risk of loss, tools used ◦ organization test ▪ asks how important to organization e.g. Plumber who fixes (controls how done/completed – need sink fixed, does not use my name &where eat lunch) , and legal assistance (i control work done – how to file things, introduce as organization & works all time & business card) • sometimes could go either way – make changes e.g. CEO hiring Essential Elements • agreement to pay money to employee • work loyally for employer Each province has statue (law) and federal government (for banks etc.) that describes the min. employment standards • wages, overtime, working conditions, notice of termination • work and safety laws • social safety net – welfare, workers comp, health care • laws against discrimination and harassment – goes beyond work place (human rights codes) ◦ hiring, firing, promotion and discipline decisions on basis of age, disability (obligation to accommodate), sex etc. ◦ Harassment (sexual) – tends to go hand and hand, and under-reported ◦ do right thing – (1) cause right thing to do morally, (2) illegal, (3) right thing for business -overt – morals is business termination of employment • for causes ◦ nothing else – finished ◦ substantial issues (theft, never comes), termination for fundamental breach • without cause ◦ collective bargaining agreement (CBA) – reverse order of seniority ◦ No CBA– terminate without reason (not discriminate) – don't have to communicate obligations: ▪ ESA (statutory): notice/pay 1 week/yr max 8 + *easier for employee – free quick & easy • payroll 2.5 million or more – entitled to severance = 1 week/yr (@ termination) ▪ Case Law: reasonable notice of termination or pay (implied) • 2-4 weeks/yr *can't sue under both Labour Relation Laws Unions • way of life now – rights protected by law • process is clear -> union able to persuade majority in bargaining unit -> unit becomes bargaining agent by voting or persuade ◦ membership voluntarily but doesn't matter if member or not Collective bargaining agreement (CBA) • last for 1 yr @ least • no strikes or lock outs – illegal if so -Send most disputes to arbitration -unions do what ever (law greatly in favour) Moss 2275- Lecture 9 3 types of legal sole, partnership and cooperation (legal form ppl use to carry on biz) the rest are contractual relationships History • all biz was from sole (legally biz and individual are same thing) • ppl found benefits with more ppl – partnership *legally not separate ◦ safety in #s (dealing outside of market), diversification of risk, increase resources • industrial revolution -> king create cooperation ◦ separate legal entities ◦ matter of law not fact Walk in bank & borrow million -> talk to Tina (loan manager) -> agree on terms -> sign loan agreement -> later that day bank manager calls & Tina didn't have authority to do more than 1/2 -> you say she had apparent authority Agency • relationship between agent (Tina), principle (bank) and third party (me) *exception to privety • when agent has authority ◦ actual (1.2 mil) or apparent (@ least a mil – comes from principle's actions or words) – limited to a reasonable person in rd circumstances in 3 party would conclude (cause mangers said talk to Tina.. diff if teller just signed) ◦ e.g. I'm apples agent and i cant enter into contract between you and apple for ipad mini for 100$ ▪ no apparent authority cause apple didn't do or say anything – comes not from agent from -Bank could have said talk to Tina she has only up to half mil, or sign on door/desk = actual and apparent now same -If Tina exceeds apparent authority -> NOT binding on bank (exceeded authority) -But if bank wants it with 3 party and Tina both knowing exceeded authority -> bank has option to take it (radification) • Ratification ◦ words or deeds (acting as if bound/accepting agreement) • when principle is anonymous -> apparent authority = NONE (only can be actual) -don't tell who i am but Bill go and get this agreement -> you only have 1 mil -> they agree for two mil • NO contract cause didn't act within ◦ 3 party sue agent for negligence ( tort of negligence misrepresentation) rd -agent doesn't tell 3 party acting as agent (ford doesn't want farmers to know buying land so once sell to you well but from you) -> enter into contract then ford changes mind • you still have with farmers 3 parties -> can sue ford for breaching agreement Duty agent owes to principle • duty of care – test what reasonable person foresee risk of harm ◦ reasonably ◦ fiduciary -> (highest duty) act in best interest of principle ▪ no secrets, can't compete, no conflict of interest, act honestly and in good faith ▪ contract – honour terms When is principle vicariously liable? • Within scope of their authority • if agent is employee (bank is for Tina) Partnership • declaratory law (whether intended or not) – Factual ◦ two or more ppl (cooperation count) ◦ carrying on ppl together (3 factors = share in capitalizing? Share in profit & losses? Share in decision?) ▪ written doesn't count as much ◦ view to profit • default rules subject to change • 1. every partner is agent of the partnership • 2. every partner is jointly and severely liable for partnership debts girl goes and borrows mil from bank but debtors all voted not to – how much can bank come to him? • Million - doesn’t matter he is only 2% or she didn’t have actual authority cause she has apparent – binds all ◦ he can try to get 98% from us not to bank though • risky LLP • limited liability partnerships ◦ available only to lawyers and accounts ◦ peculiar – partner not reliable for negligence of someone else if not involved (the personal assets) LP • limited partnership ◦ @ least one general partner & @ least one limited partner (silent) ◦ limited to what they put in as long as they don't participate ◦ why set up on? ▪ Taxes commercial development -> million in debt from bank, million from investitures -> cash flow yr one spend million (lose) -> yr two loose million (no revenue) -> yr three break even -> yr four make million -> yr five make million Cooperation – yr one two three dentist get no value, in yr four they will get one million (can carry forward loss), yr five million LP- yr one dentist get 4 hundred thousand (apply loss to other income) , yr two same, yr 3 nothing, yr 4 & 5 six hundred • risk and timing better • used when losses followed by income (flow through investments) MOS2257-Lecture 10 simple cooperate structure to complex in strategic way 1. creditor protection 2. distribute income effectively 3. maximize proceeds Holding company get income into hands of kids.. why? Taxed and low marginal rate • want them to be beatifically owners but not in control so we can.. ◦ create a holding company -> transaction that takes place @ fair market value -> have husband transfer 5 mill & get 5 mill in exchange for 5 mil class A redeemable (hold co now owns all opco) -> value of holdco = 0 -> now issue shares without share issue benefit ◦ then set up family trust (one or more trustees hold prorpoty for one or more beneficence) -> holdco issues shares to family trust and ip does same -> family trust must borrow money in deal unconnected to husband and wife • CCPC : has to be Canadian controlled, private • QSBC: earns all or most from active business income in Canada (90% or more) CAN'T be investment ◦ if company is both of these than each shareholder can sell shares up to 750 thousand capital gain tax free • benefits? Save money on taxes, ongoing and event of sale, while keep cash away from operating company st nd rd • costs? 1 Upfront costs 20 thousand in legal, 30 thou in accounting – 2 cost of complexity – 3 potential might not work/ (benefits might not be as significant (values might decline, kids may not need any money, don't end up selling biz) • moral? Capital gain exemption only works cause rich Corporations • separate legal entity e.g. Mr Salman is sole proprietor, owns assets, he is same as biz -> he wants to incorporate so incorporates A.S Co. -> shareholders are him, his wife and five kids -> in order to transfer biz to company he enters into contracts (company will purchase assets in exchange company will give shares, money an promissory note (if not pay you can repossess those assets) -> company now has biz & incurred debts (a/p) -> problem: ran into financial difficulty -> cuz note is succure and trade debt is not, Mr. Salman takes back collatry and not can’t pay trade creditors -> trade creditors sue mr salman • always have one of 6 suffix • owned by one or more s/h (who don't own assets) – limited to original investment • own assets they use to carry on biz • carry on biz through agents (managers aka officers & directors) ◦ directors are elected by shareholders ◦ officers are appointed by directors ◦ duties own to corporations ▪ fiduciary: honest, good faith, act in best interest ▪ duty of care/competence: act reasonable ▪ contractual: employment ◦ duties to s/h ▪ nothing • large and small corporations are same • legal relationship to lender & borrower = contractual – rights and obligations are • legal to s/h and corporation = proprietary • rights of s/h ◦ elect directors ◦ receive financial info (to base choice) • three remedies ◦ ask court for wind-up (dissolve and divide assets) ◦ derivative action (you ask court for permission to sue j&t ◦ oppressive remedy – statutory - MOS 2257- Lecture 11 – These three regulate the market place, impact biz transactions (contractual) – Modify freedom to enter contract to protect vulnerable ppl so don't withdraw – Sale of GoodsActivities – SGA • before this law was simple (buyer beware) – didn't work taken advantage of -invisible hand not work • consumers sometimes don't have ability to make informed decisions, or choose between, or pay price • applies to every transaction that is sales of goods ◦ has to be a sale (not lease, license or gift) require ownerships tittle transfer from seller and buyer and exchange of $ ◦ goods are tangible personal properties (not intellectual, intangible, real properties) E.g. G vs white spot – g goes in and orders eggs and gets poisoning and sues for damages under SGA -manager says he didn't buy goods, its a service -> court says its most sale of goods -> so SGAapplies E.g women highers painter to paint specific picture, he paints and she hangs up, after while it is defective -she claims she has SGA -> he says it was a service -> court says primarily contract of service • when faced with both service and good.. what is it primarily • Big (air plan) or small (chocolate ball) • Biz transactions and consumer transactions ◦ parties of SGA transaction can modify the provisions or exclude ◦ difference is the purpose of use (household, personal or domestic = consumer) e.g. Go to Canadian tire to buy coffee maker, the clause in contract says SGA is excluded to but in biz coffee room -SGA is excluded cause for biz e.g. Buy coffee maker for home and enter into same contract -SGA does apply •
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