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LAW 122 Final: Brief Exam Review

Law and Business
Course Code
LAW 122
Peter Wilson
Study Guide

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LAW122 Course review for exam
Solving legal questions
- What are the facts?
o Understand facts and determine relevance of legal points
- What are the relevant legal issues?
o What do we want to determine (ex. contract been enforced or has tort been
- Ex. Negligence test
o Did they owe duty of care?
Owe duty of care to anyone who might be affected by your actions
o Did you act outside a reasonable standard of care?
o Was there causation?
Was there reasonable loss or injury?
Basic forms of business org
- Sole proprietorship
o One owner (undertake business in own name)
Business is you and you are the business
o All money is yours
o Easiest to start and operate
o Simplest
o Might have to get municipal licence (ex. can’t just open a restaurant wherever you
o Problem: you personally liable for all liabilities, personal torts, debts and breaches
of contract (all your assets are at risk)
- Partnerships
o Two or more people (no limit)
o Objective has to be making money (whether or not it makes money is a separate
Can’t be charity or non-profit org
o Not a separate legal person

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o Don’t have to have partnership agreement or any particular formality (unless the
use of particular name)
Problem with not having one is that you may go into business with one or
more people without thinking what the structure is
And without you intending it the law may see that as a partnership because
of the way you conduct the business with the way it meets the criteria
without you formally calling yourselves a partnership
o Partnership terminates when one person leaves or wants to call it off
o General
Each partner is liable even if it wasn’t everyone’s faults
Partner cannot be employee of partnership
All benefits and liabilities of partnership accrue to the partners (joint and
several and personal liability)
OPA (Ontario partnership act) has general rules determining if partnership
exists (without a partnership agreement the OPA sets out default rules so if
you don’t want certain rules you must have an agreement)
Act creates mandatory code governing liability of partnerships (ex.
partner makes a decision without you, you’re stuck with it)
Liable for an unlimited extent for actions of other partners
o Limited
Liability of at least one of the partners is limited or restricted to its
investment in partnership
whatever the partner invests in the partnership, that’s what they are liable
for (ex. party invests $100000, they can only be liable for $100000)
no role in management, control or decision making of partnership but they
have access to financial info and you can offer opinions as to what they
should do
most limited partners are there for the investment (passive investors) (have
no interest in having active role in partnership)
must be registered (can’t begin to operate until it is registered in Business
Names Act)

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can’t use limited partners name in name of partnership
not all partners can be limited partners
o Limited liability
Restricted to certain professions (ex. lawyers, chartered accountants)
whose governing body permits limited liability partnerships (government
of ON allows lawyers to be limited liability partners)
Partner is not personally liable for the debts of liabilities of the limited
liability partnership from the wrongful or negligent acts or omissions of
another partner
unless the partner should have known or knew the act was criminal or
fraudulent and did not take steps to prevent it
doesn’t apply from debts or liabilities from partner’s own acts
- Corporation
o Most common form
o Can incorporate business provincially or federally (Canada business corporations
act or Ontario business corporations act)
If it is going to be an Ontario business, you would incorporate under
OBCA but if it operates outside of Ontario and you have hopes of
expanding business it would be incorporated under CBCA
o Corporation is separate legal person
Unlike partnerships and sole proprietorship
Debts and liabilities are no longer just yours but to the whole corporation
Now money belongs to corporation instead of person so you can’t just go
in and take money out like in a sole proprietorship
Declare dividends on your shares which will allow you to get
money but not all money so that the corporation can remain
You can become president of corporation which will allow you to
pay yourself a salary
o Corporation carries on business, incurs liabilities and generated revenue, profits
and losses
Not shareholders, officers or directors
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