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LAW122 - CHAPTER 1-4 NOTES.docx

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Law and Business
LAW 122
Jane Monro

CHAPTER 1: RISK MANAGEMENT AND SOURCES OF LAW Why do business people study law? *Risk Management, Business Opportunities and Ethics Goal of business is to make money Knowledge of Law leads to greater risk management, reduces potential costs, increases potential profits All Business Choices have Legal Consequences Legal Education Plays a Critical Role in Risk Management What Is Risk Management? (Pg. 2-5) The process of identifying, evaluating, and responding to the possibility of harmful events *3 steps to Risk Management: Identification: recognition of legal risks can we be held liable for doing something wrong? Evaluation: assessment of legal risks what are the chances of something going wrong? Response: reaction to legal risks what are we going to do about it? *Forms/Strategies of risk management: - Avoidance: elimination of risk (not sell certain product or service ex; cars with exploding fuel tanks) Reduction: minimization of risk (wiping floor if wet) Shifting: make the risk someone elses problem (purchase insurance for car accident) Acceptance: choose to live with the risk (lucrative contact) *Examples of Risk Management: Risk shifting: make the risk someone elses problem Insurance: liability insurance ; property insurance Exclusion and Limitation clauses: contractual terms that exclude liability for certain types of acts / losses, or that limit the amount of compensation available Incorporation: limited liability: directors and shareholders are not usually liable for debts of the company The Nature of LawWhat is a Law ? (Pg. 6-7) *Law - a rule that can be enforced by the courts All laws are rules but not all rules are laws (games and sports rules are not law) *Legal Obligation vs. Moral Obligation (raises ethical considerations as well) Moral wrongs are informally sanctioned (loss of friendships or damaged reputation) Legal wrongs are formally sanctioned (imprisonment or payment of damages) Civil Law and Common Law (Pg. 7) Jurisdiction refers to the area that the court has power - Power can be restricted to a geographical area, or kind of case *Civil law jurisdictions: Trace their history to ancient Rome, e.g. France, and the province of Quebec in Canada civil codes *Common law jurisdictions: Trace their history to England, e.g. Australia, New Zealand, most of Canada Judge made laws Some types of laws are the same across Canada, e.g. criminal laws and constitutional laws. A Map of the LawThe Legal System (Pg. 7-11) *Public Law: matters of public concern (concerned with governments and the ways in which they deal with their citizens) Divided into: Constitutional, Administrative, Criminal, Tax Constitutional law - rules governing basic operation of law and politics Administrative law - rules governing creation and operation of agencies, boards, tribunals, and commissions that exercise delegated authority Criminal law - rules governing wrongs against society crimes in the business world company can now be convicted under the Criminal Code on the basis of acts performed by directors, officers, managers, partners, employees and agents Tax law - rules regarding collection of money for public spending *Private law: matters of private concern (concerned with regulating matters between private persons) Government can also be subject to private law (ie. Gov enters into contract to purchase products) Divided into: Torts, Contracts, and Property (course focuses on torts and contracts) Tort law - rules governing wrongs against persons Contract law - rules governing creation and enforcement of agreements Property law - rules governing acquisition, use, and disposition of property - Different Areas of Law Can Overlap (a punch can be a crime and a tort) Sources of Law (Pg. 12-23) *Three Main Sources of Law: The Constitution, Legislation, The Courts *The Constitution: - Most important source of law, highest source of law - Provides basic rules for legal and political systems - Difficult to amend , amending formula requires consent of both: Parliament Two-thirds of all provinces with at least 50% of population - Creates the basic rules for Canadian society - Every other law must be compatible with it. (section 52 - no legislation or court decision is allowed to contradict it) ; Constitution is extremely difficult to change Federalism - Canada is a federal country - Two constitutionally recognized levels of government - Federal government - Represents entire country - Parliament Senate (appointed) House of Commons (elected) Prime Minister (leader with most members in Commons) - Provincial (territorial) government - Represents province (or territory) - No Senate - Legislature (elected) - Premier (leader of party forming government) Division of Powers: 2 levels of government Federal and Provincial; 2 sets of laws Division of powers states the areas in which each level of government can create laws (see summary on pg 13 of text) Topics divided into federal or provincial authority federal: crime, bankruptcy, copyright, etc (section 91) provincial: property, civil rights, etc (section 92) Federal government holds residual power topics not otherwise allocated (e.g. telecommunications) Doctrine of Federal Paramountcy determines which law is pre-eminent if there is a conflict between a federal statute and a provincial statute Ultra vires legislation created outside scope of governments authority no force or effect (section 52) Charter of Rights and Freedoms: Protects rights and freedoms for persons (i.e. businesses as well as human beings) from actions of government part of Constitution since 1982 Rights and freedoms commonly affecting business: freedom of religion section 2 freedom of expression section 2 freedom of mobility section 6 right to equality section 15 prohibited grounds of discrimination include race, sex and religion, but not poverty Interests not protected by Charter: economic and property interests Irwin Toy Case (violation of freedom of expression, but justified under section 1) Sections guaranteeing freedoms and rights: 2 (fundamental freedoms ie. religion, press, speech); 6 (mobility); 15 (equality ie. race, ethnicity, colour, religion, sex, age and now sexual preference.) Charter is subject to restrictions: section 32 (only applies to complaints about Government behaviour); section 1 (rights and freedoms are subject to reasonable limits). It is occasionally acceptable to violate a persons rights (RIDE Program) section 33 (notwithstanding clause). Allows govt to enforce a law notwithstanding the fact that it violates the Charter of Rights and Freedom Laws that are inconsistent with the Charter are of no force and effect Limitations on Charter Rights: Charter only applies to government action not (directly) applicable against private businesses Charter may apply in favour of private business some provisions are limited to any individual some provisions are available to any person Charter rights subject to reasonable limitations balance individual rights and community interest Charter subject to notwithstanding clause government can override some rights and freedoms Charter Remedies: section 52: Constitution as supreme law law inconsistent with Charter of no force or effect section 24: enforcement of rights and freedoms judge may award any appropriate remedy declaration injunction striking down severance, reading down, or reading in damages Charter Dialogue: parliamentary supremacy democratic society Members of Parliament are elected and accountable judges are appointed and unaccountable ultimate authority should rest with parliament Charter dialogue Parliament creates laws through legislation courts identify Charter violations Parliament may respond by amending or enacting laws to conform with Charter *Legislation - Second source of law; laws created by Parliament or legislature statutes, regulations, by-laws, etc - Legislative process: introduced as bill majority support through series of readings finalized by royal assent First reading (formal introduction), second reading (discussion, then sent to committee), third reading (final debate and vote); after three readings sent to senate for repeat of process; finally given royal assent - Subordinate legislation: created under Parliaments or legislatures authority example of municipality province creates municipality province gives municipality power to pass by-laws *Courts - Third source of law; rules that the courts actually create function of courts interpret and apply Constitution interpret and apply legislation create and apply common law (judge-mad
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