Law Final.docx

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University of Guelph
Marketing and Consumer Studies
MCS 3040
Joseph Radocchia

Law Final Study Notes Chapter 2- The Canadian Legal System Constitutional Law- supreme law of Canada that constrains & controls how the branches of government exercise power Liberalism- political philosophy that elevates individual freedom & autonomy as its key organizing value Canadian Constitution -not contained in one document (located in variety of places-legislative & provincial, written & unwritten) -written elements include: ●Constitution Act, 1867 -divides legislative power between federal & provincial government -Federal Powers: interprovincial/international trade & commerce, postal service, currency, national defense, criminal law, navigation, residual powers -Provincial Powers: hospitals, administration of justice, property & civil rights, local matters (highways), incorporation of provincial companies -Municipal (created by provincial legislation) Powers: By-Law-laws made by municipal level of government (zoning, taxation for benefit of municipality, subdivisions, licensing) ●Charter of Rights & Freedoms-rights & freedoms guaranteed in Canada Constitutional Conventions- important rules that are NOT enforceable by court of law but that practically determine or constrain law Branches of Government Legislative Branch: -creates Statute law- formal, written laws created or enacted -Jurisdiction- power that a given level of government has to enact laws (federal, provincial, municipal) -federal legislative branch-Parliament (House of Commons & Senate (for legislation to be passed, first has to be passed by House of Commons & then approved by Senate called “the chamber of sober second thought”) -each province has law making body (NO senate or upper house) Exclusive jurisdiction- one level of government holds entirely on its own Concurrent jurisdiction- area being regulated doesn’t fall neatly into federal or provincial jurisdiction (straddles both) Paramountcy- doctrine that provides federal laws prevail when there are conflicting or inconsistent federal & provincial laws Branches of Government Executive Branch -formulates & implements policy & law (that may be directed at business) Ratify- to authorize or approve Treaty- agreement between two or more states that is governed by international law Government Policy- central ideas or principals that guide government in its work, including the kind of law it passes Formal Executive- responsible for ceremonial features of government -head of Canadian state is the Queen, represented by governor general (federal) or lieutenant (provincial) Political Executive- responsible for day-to-day operations (formulating & executing government policy, & administering all departments of government) Chief Executive of federal governments is Prime Minister (Stephen Harper) Chief Executive of provincial governments is Premier (Dalton McGuinty) Cabinet- body composed of ministers heading government departments as well as Prime Minister or Premier -often is cabinet that passes regulations providing detail; to what the senate in question has enacted Regulations- rules created by political executive that have the force of law Judicial Branch -provides rulings that resolve existing legal problems but also important of future disputes -independent from the legislative & executive branches of government Judiciary- collective references to judges Judges- appointed by federal or provincial government to adjudicate on a variety of disputes, as well as to preside over criminal proceedings Inferior Court- court with limited financial jurisdiction where judges are appointed by provincial government Small Claims Court- court that deals with claims up to specified amount Supreme Court of Canada- final court for appeals in country Federal Court of Canada- deals with some types of litigation involving federal government Canadian Charter of Rights & Freedoms -guarantee of specific rights & freedoms enshrined in Constitution & enforceable by judiciary -created in 1982 Law Final Study Notes The Charter guarantees the following freedoms and rights: Guarantees Rights & Allows reasonable limits on Charter rights – (section 1) -guarantees rights & freedoms set out in “The Charter” -Charter rights and freedoms are subject to reasonable limits prescribed by law as can be demonstrably (clearly) justified in a free and democratic society. Fundamental freedoms – section 2 -association -peaceful assembly -conscience and religion -thought, belief, opinion, and expression, including freedom of the press and other media Democratic rights – (sections 3, 4, and 5) -cover the right to vote and the maximum time between elections Mobility rights – (section 6) -guarantees Canadian citizens & permanent residents right to live & work anywhere in Canada Legal rights – (sections 7 to 14) -life, liberty, and security of the person -be free from unreasonable search or seizure -not be arbitrarily detained or imprisoned -be informed promptly of the reasons for any arrest or detention and be released if the reasons are not valid -have a lawyer, if you are arrested -a fair and public trial within a reasonable time, by an impartial tribunal, if you are charged with a crime -not give evidence against yourself -be presumed innocent -be free from cruel and unusual punishment -be granted reasonable bail if appropriate -a court-appointed interpreter Equality rights – (section 15) -ensures equal benefit and protection of the law without discrimination based on personal traits such as race, national or ethnic origin, colour, religion, sex, sexual orientation, age or mental or physical disability. Language rights – (section 16) -makes English & French the official languages of Canada. Section 23 -- gives minority language education rights in certain circumstances. The “notwithstanding clause” – section 33 -federal and provincial governments can override specific Charter rights in certain situations. They can say that a law operates “notwithstanding” (in spite of) some Charter rights. Sources of Law There are four sources of law in Canada: -constitutional convention -statute law -Royal prerogative- historical rights & privileges of the crown, including the right to conduct foreign affairs & to declare war -Common law- rules that are formulated in judgment Precedent-earlier case used to resolve current case because of its similarity (like cases should be treated alike) -lower court must follow a relevant precedent created by higher court within same jurisdiction -not all precedents are equal value- higher the court that created the precedent, the more valued the decision is -the Supreme Court of Canada –highest court, entitled to decide a case in any way it seems fit -judges are free to apply another set of rules known as equity-rules that force on what would be fair given the specific circumstances of the case as opposed to what the strict rules of common law might dictate- provide assistance to deserving person who not receive adequate help under rules of common law Classifications of Law -law can be organized in various categories: Domestic law- internal law of a given country & indicates both statue & common law -deals primarily with individuals & corporations & to a lesser extent, the state International Law- governs relationship between states & other entities with international legal statues (United Nations, World Trade Organizations) -important source is treaty law Law Final Study Notes -focuses mainly on states & international organizations Substantive Law- defines rights, duties & liabilities Procedural Law- governs procedure to enforce rights, duties & liabilities -ex. Fact that trial judges decision can be appealed to higher courts Public Law- related to or regulates the relationship between persons and government at all levels -important is its ability to constrain governmental power according to rules of fairness -Criminal Law- identifies seriously unacceptable behaviour (maintain order & security, government prosecutes those who transgress basic standards of conduct & the courts provide sanctums for that conduct (fines, imprisonment) -Tax Law- sets rules for collection of revenue for government operation -Constitutional Law- sets parameters on the exercise of powers by government -Administrative Law- rules created & appointed by those having governmental powers (boards, agencies, commissions & tribunals) -significant impact on business because much commercial activity is regulated -rules of fairness that constrains how administrative bodies exercise their activity Private Law- areas of law that concern dealings between persons (relationship between individuals) -provides rules concerning rights, liabilities, & obligations of companies & other business vehicles -Contract law- provides rules that make agreements between people binding -Tort Law- addresses legal wrong doings committed by one person against anther apart from breech of contact (may be intentional (assault) or unintentional (negligent driving)) -Property Law- sets rules that define & protect property in all forms -Company Law- provides rules concerning rights, liabilities, & obligations of companies & other business vehicles Common Law- in place in all provinces (except Quebec) -judges bound by how others interpreted code—precedents Civil Code of Quebec- rules that govern Quebec -Quebec is bound by federal law (ie. Criminal code) but has its own system of private law -judges in Quebec turn to civil code for general principles to be applied to case at hand Summary of Constitutional Law: Law Final Study Notes Chapter 4: Dispute Resolution Business Activities and Legal Disputes -business operations (internal & external) involve numerous interactions that have potential legal consequences -not always in best interest of a business to avoid all legal conflict at all costs -manage disputes with the express goals of avoiding time-consuming and expensive litigation -preserving desirable long-term commercial relationships -(ie. Motor Vehicle Accident, Bylaw Change, Delinquent Customer, Dissatisfied Customer, Damaged Goods, Problem Employees) Resolving Disputes Clarification of the Situation -first step for manager faced with apparent conflict is to investigate situation to determine nature and extent of dispute (manager should contact individuals involved in his own organization and appropriate people on other side of dispute to clarify situation before formulating approach to resolution) -objective is to resolve matter as quickly as possible (quick resolution will produce cost savings for all concerned and greater chance relationship between the two parties will not be irreparably harmed) Negotiations Process Negotiation- process of deliberation and discussion used to reach mutually acceptable resolution to dispute -tool used to effectively assess, evaluate, & develop resolutions to legal disputes on relatively informal & inexpensive basis -negotiation goal: reach fair and acceptable outcome without having to activate more formal processes (assuming no insurance issues) negotiating process to end dispute should be management’s focus -majority of disputes solved through negotiation or through other informal methods that don’t involve judges or even lawyers -success of negotiations depends on: -willingness of parties to compromise and negotiate in good faith -nature and significance of dispute -priority the parties give to its resolution -effectiveness of those involved in the negotiations -parties choose own negotiators, could be employees, lawyers, or professionals who specialise in bring parties together Alternative Dispute Resolution -when negotiations fail - impasse is reached, where neither party is prepared to compromise furthers Alternative Dispute Resolution (ADR)- a range of options for resolving disputes as an alternative to litigation -most common forms of ADR are: ●Mediator- person who helps parties to a dispute reach a compromise (helps bring parties together to clarify situation and assist them in appreciating the validity of the other’s position) ●Arbitrator- person who listens to both sides of dispute & makes ruling that is usually binding on the parties (more formal role, Binding- decision is final and enforceable in the courts (generally cannot be appealed) -no mandatory qualifications for ADR practitioners as there are for professionals (lawyers, judges) but there are training programs through universities and the private sector ADR is successful when: -parties are interested in considering each other’s position with compromise as goal -parties wish to maintain commercial relationship -need a quick solution to minor problem -litigation likely costly -dispute involves sensitive or emotionally charged issues that the parties wish to keep private or confidential ADR has worked effectively in these types of legal disputes: -commercial or contract matters (disputes about payment of goods or the quality of goods) -personal injuries (claims by a customer who slips and falls or who is injured by a defective product) -employment matters (claims of improper dismissal or discrimination) -environmental protection (application of waste storage regulations) -trade matters (difficulty with import documentation) -intellectual property (claims of patent infringement) -professional/client matters (accountant’s difficulty collecting fees or clients complain about quality of service) -partnerships (disagreement by partners on contributions of work or compensation) -real estate (dispute among adjoining landowners about a common boundary) -franchising (dispute arising from franchise agreement) International Perspective: -favours ADR for form of settlement in international commercial disputes that wish to continue to have business relationship -arbitration process has been greatly enhanced by standardised international rules and procedures -provisions for the reciprocal recognition and enforcement of the arbitral award Law Final Study Notes ADR Pros Cons ●Parties control the process, timing and selection of ●does not always produce resolution resulting in costly trial facilitator ●long term concern of ADR might result in diminished openness and accountability of the ●usually faster and cheaper than litigation legal system Litigation Process -should not be undertaken without an understanding of its potentially adverse consequences -disputes may last years -seriously harm commercial relationships -no guarantee of success -significant investment of money, time, and commitment -process slow, expensive and risk ridden -deployed when all feasible methods have failed -commercial litigation arises when one business makes a deliberate decision to take legal action against another Crucial Set of Rules Governs Litigation Process Class action- lawsuit launched by one person who represents a large group Limitation Period- the time period specified by legislation for commencing legal action (limitation period which is missed usually means the legal right to sue is lost) Stages of a Lawsuit: Pleadings- formal documents concerning basis of the lawsuit Claim formal document that initiates ligation by plaintiff against defendant Defence- the defendants formal response to the plaintiffs allegations Counterclaim- claim by the defendants against the plaintiff Discovery-process of disclosing evidence to support the claims in a lawsuit Trial- formal hearing before a judge that results in binding decision Burden of Proof- obligations of the plaintiff to prove its case Evidence- proof presented in court to support claim Decision- judgment of the court that specifies which party is successful and why Costs- legal expenses the judge orders the loser to pay the winner Enforcement of Judgement- once lawsuit is won, the winner must collect money owing Appeals- trial loser may appeal the decision to the next level of court -usually on points of law not on facts -no new evidence presented -ultimately the Supreme Court of Canada may hear the appeal after the provincial court of appeal International Perspective: ●Litigation in the US: -more litigious society -more lawyers per capita (Americans tend to make use of legal services) -contingency fees more common -more civil jury cases (punitive damages more common) -no partial recovery of legal costs by successful party Chapter 6: Forming Contractual Relations Legal Ingredients of a Contract Law Final Study Notes 1. OFFER promise to enter into contract on specified terms, as soon as the offer is accepted only a complete offer can form the basis of a contract INVITATION TO TREAT- an expression of willingness to do business STANDARD FORM CONTRACT -a ‘take it or leave it contract’ -customer agrees to a standard set of terms which favors the other side -the law expects people to take care of themselves. -critical to read and understand the contract before signing it The Parties to a Contract: OFFEROR-- the person who makes an OFFER OFFEREE-- the person to whom an OFFER is made Termination of an Offer AN OFFER MAY BE TERMINATED BY: Revocation: withdrawal of an OFFER Lapse: expiration of an OFFER after a specified or reasonable period Rejection: the refusal to accept an OFFER Counteroffer: turning down an OFFER and proposing a new one in its place Death or Insanity REVOCATION: -the OFFEROR can revoke an OFFER at any time before acceptance upon notifying the OFFEREE of withdrawal -upon revocation the OFFER ceases to exist -option Agreements – an agreement, where, in exchange for payment, an OFFEROR is obligated to keep an OFFER open for a specified time. It is a separate contract which may or may not lead to the acceptance of the OFFER. Revocation in the Context of a Tendering Contract -specialized set of rules governing the tendering process -call for tenders is an offer of a preliminary contract Law Final Study Notes -tender and the owner obligated to follow the rules governing the tender selection process -everyone who submits a tender is accepting the offer of a contract to govern the relationship between parties LAPSE: -offer may expire on a specified date -offer ends and can no longer be accepted -if no expiry date is specified, then it remains open for a reasonable time -reasonable time depends on the circumstances of the case REJECTION-- offer is automatically terminated if rejected by offeree COUNTEROFFER-- a form of rejection it is a rejection of original offer and a proposal of a new offer in its place DEATH OR INSANITY: -offer generally dies if the offeror or offeree dies -as a general rule, someone who becomes insane would not be bound 2. ACCEPTANCE -an unqualified willingness to enter into a contract on the terms in the offer -communication – unconditional assent to the offer in its entirety – for example, personally, in writing, or by fax, e-mail, or telephone, or by conduct COMMUNICATION OF ACCEPTANCE -if a method of acceptance is specified then this method is mandatory -if not specified, then in any manner that is reasonable in the circumstances -acceptance can be indicated by conduct (see Landmark Case, Carlill v. Carbolic Smoke Ball Co., on page 129) Electronic Business Contracts ELECTRONIC CONTRACTING: -governed by the same rules as all contracts -separate agreement between electronic trading partners solves this problem Uniform Electronic Commerce Act (UECA) -removes barriers to electronic commerce -basis for provincial and federal electronic commerce legislation -provides that acceptance of an offer can be made electronically Uniform Electronic Commerce Act is divided into 3 parts: 1. basic functional equivalency rules 2. special rules for formation and operation of contracts 3. special provisions for carriage of goods OFFER – may be expressed electronically ACCEPTANCE – may be expressed electronically COMMUNICATION OF ACCEPTANCE – UECA doesn’t specify when an Acceptance becomes effective 3. CONSIDERATION -a price must be paid for a promise -each party must give something of value for receiving something of value from the other -may be other than money, goods for example, as long as something of value -gratuitous promise – a promise for which no consideration – no contract Promises Enforceable without Consideration PROMISE UNDER SEAL -once a Seal is affixed it is evidence of serious intent and acknowledgement that the contract is enforceable (Contracts of Guarantee) -no further consideration is necessary PROMISSORY ESTOPPEL -someone who relies on a gratuitous promise may be able to enforce it -usable only as a defence to legal claims made by the promise-breaker -necessary factors – reliance on another’s promise to change your position, and you are above reproach Law Final Study Notes PARTIAL PAYMENT OF A DEBT -at common law a gratuitous promise to accept a lesser amount left the creditor free to sue for the balance -in some provinces, creditor can’t sue for balance once lesser amount has been accepted 4. INTENTION TO CONTRACT -promise at issue must have been intended to be a contractual one -if a business relationship, intention is presumed by the courts -family arrangements - common law presumes promises are non-contractual but presumption is subject to rebuttal CHAPTER #7 – The Terms of a Contract: The Content of a Contract: promises made by one party to another through offer and acceptance. Express Terms: provision of a contract that states a promise explicitly. - important essential terms (price,quantity..etcexpressed to each party (parties must be careful not to make assumptions about any aspect of the transaction) Judical Interpretation of Express Terms Vague or Ambiguous: Even if a term is expressed it may be hard to interpret because the language is vague or ambiguous. (drafter bears the risk of any unclear language) Rules of Construction: Guiding principles for interpreting or “constructing” the terms of a contract. - Courts required to enforce contract as it is written & rely primarily on ordinary meaning of words. Implied Terms: provision not expressly included but is necessary to give effect to the party’s intention –judge does this when he’s satisfied that not all terms the parties intended to include were included. Courts will imply terms based on: 1. Business Efficacy: judge is entitled to imply necessary terms the make the contract workable. The law requires parties to a contract exercise their rights under that agreement honestly, fairly & in good faith. Bad Faith: party without reasonable justification acts in relation to the contract in a manner where the result would be to substantially cancel out the bargained objective. 2. Customs in Trade of the Transaction: - Relying on trade customs to imply term is rarely successful, since must be prove custom is so notorious that the contract in question must be presumed to contain such an implied term. - Need to ensure that all important terms in a contract are expressly recited. 3. Previous Dealings with the Parties: - it may be possible to imply that their current contract contains the same terms. - Risk Management: parties should clarify the basis of the contract each time. 4. Statutory Requirements: implies certain terms are a mandatory part of every contract for sale of goods unless specifically excluded by parties. Entire Contract Clause: term in a contract in which the parties agree that their contract is complete as written. Contractual Quantum Meruit: awarding 1 party reasonable sum for goods / services provided under contract. Contracts take three forms : Entirely Oral (convo.) Entirely Written Both Oral and Written Parol Evidence Rule: rule that limits evidence a party can introduce concerning the contents of the contract. - Parol means “oral” or “spoken” - Or any evidence that is outside the written agreement. - forbids outside evidence as to the terms of a contract when language of written contract is clear. * one must be careful not to rely on oral assurances made by the other party. Because a court may decline it. Parol Evidence Rule works if: - If there is a alleged problem going into the formation of the contract. - If the contract was intended to be part written and part oral. - If promise to be enforced is contained in separate oral agreement, the rule does not apply. - If the language in the contract is ambiguous. Using Contractual Terms to Manage Risk: Changed Circumstances: may occur that prevent party from performing contractual obligations or make performance much more expensive than anticipated. -terms are settled at time of acceptance–everything’s enforceable, unless contrary clause is included -parties should try to build flexibility into arrangements. Law Final Study Notes Conditional Agreements: when party wants to incur contractual obligations but under certain circumstances Conditions Subsequent: An event or circumstance that, when it occurs, brings an existing contract to end. Condition Precedent: even that, until it occurs, suspends parties obligations to perform contractual obligations. Limitation of Liability Clause: limits liability for breach to something less than would otherwise be recoverable. Exemption Clause: identifies events causing loss for which there is no liability. Liquidated Damages Clause: specifies how much 1 party must pay the other in event of breach. CHAPTER #8 – Non-Enforcement Contracts: The Importance of Enforcing: Legal Doctrines that are exceptions to the general rule that a contract: - unequal relationship between two parties - Misrepresentation or important mistakes concerning the contract - A defect within the contract itself Voidable Contract: in certain circumstances, an aggrieved party can choose to keep in force or bring to an end. Void Contract: involving a defect so substantial that it is of no force or effect. 1/Contracts Based on Unequal Relationships: Legal Capacity: ability to make binding contracts -law assumes parties have this to form contracts. Minors: Age of Majority: the age at which a person becomes an adult for legal purposes. Mental Incapacity: both must understand the nature and consequences of the contract (mentally ill, intoxicated by drugs or alcohol, and if the party was aware of their state, they may be able to avoid the contract) Duress contracts made as a result of one of the parties being threatened with physical harm are not enforceable. Economic Duress: threat of economic harm that coerces party into contract (party financially pressures other) Undue Influence: Unfair manipulation that compromises someone’s free will, it operates in 2 circumstances: 1. Actual Pressure: One party has asserted unfair influence on the other. Ie. Forcing an elderly person to sign over estate in return for care. 2. Presumed Pressure: the relationship that already exists between the parties presume the unfair manipulation of this agreement. Unconscionable contract: unfair contract formed when 1 party takes advantage of the weaknesses in the other - Proof of inequitably between the parties (unsophisticated, poorly educated) - Proof of careless bargain / proof of exploitation. (terms greatly advantage one party over other) 2/Misrepresentations and Important Mistakes Misrepresentation: A false statement of fact that causes someone to enter a contract. - Contract law allows the party who has relied on a misrepresentation to have to contract cancelled. Rescission: The remedy that results in the parties being returned to their pre-contractual positions. To count as misrepresentation it must be proven that the statement is: - False, clear and unambiguous - Material to contract; it must be significant to the decision of whether or not to enter into a contract - One that actually induces the aggrieved party to enter into the contract - Concerned with fact, not opinion, unless speaker claims to have special knowledge or expertise in relation to an opinion. 3 Categories: 1. Fraudulent Misrepresentation: deliberate intent to mislead or makes the statement recklessly without knowing or believing that it is true. 2. Negligent Misrepresentation: makes the statement carelessly or negligently 3. Innocent Misrepresetation: misrepresented a fact. By process of elimination the misrep. Is innocent. Remedies for Misrepresentation: If misrepresentation is fraudulent or negligent, damages in tort can be awarded in addition to the remedy of rescission. For Innocent it is just a rescission in contract. Mistake: An error made by one or both parties that seriously undermines a contract. Common Mistake: Both parties to the agreement share the same fundamental mistake. Law Final Study Notes 3/Contracts Based on Defects: Illegality: a contract will be unenforceable if it: - Is contrary to a specific statute and/or - Violates public policy Illegal Contract: A contract that cannot be enforced because it is contrary to legislation or public policy. 1. The Criminal Code: Forbids loans at a rate of interest considered “Criminal” –rate exceeding 60% /year 2. The Federal Competition Act: invalidates range of commercial transactions that unduly restrict competition. 3. Real Estate and Business Brokers Act: unlicensed realtor can’t maintain & action of services rendered Public Policy: The community’s common sense and common conscience. Non-solicitation Clause: A clause forbidding contact with the business’s customers. Non- competition Clause: A clause forbidding competition for a certain period of time. Statute of Frauds: to prevent fraud and perjury by requiring written proof of certain kinds of contracts. 1. Contracts of Guarantee: promise to pay debt to someone else, if person default on the obligation (SHOULD BE IN WRITING) 2. Contracts not to be Performed within a Year: difficulty of proving promises that were possibly made in the distant past. 3. Contracts Dealing with Land: Leases and sales. 4. Contracts for Sale of Goods: sale of goods contracts above specified amount must be in writing to be enforceable by courts. CHAPTER #9 – Termination and Enforcement of Contracts 1/ Termination through Performance Vicarious Performance: Performance of contractual obligations through others 2/Termination By Agreement: parties may agree that contracts become unfavorable for 1 or both parties and must decide to: - Enter into a whole new contract Novation: substitution of parties in a contract or the replacement of one contract with another. - Vary Certain terms of contract - End the Contract - Substitute a Party Transfer of Contractual Rights wants to end involvement by passing it on to someone else (all parties must agree) Assignment: The transfer of a right by an assignor to an assignee 3/ Termination by Frustration: Frustration: unexpected event or change that makes performance functionally impossible or illegal. The person claiming frustration must establish: (all must be demonstrated) - was dramatic and unforeseen - was a matter that neither party has assumed the risk of occurring - arose without being either party’s fault - makes performance of the contract functionally impossible or illegal. 4/ Breach Of Contract: Virtually every breach of contract gives the innocent party the right to a remedy. Condition: important term that, if breached, gives innocent party right to terminate contract & claim damages. Warranty: minor term that, if breached, gives the innocent the right to claim damages only. Innominate Term: cannot easily be classified as either a condition of warranty. Fundamental Breach: affects the foundation of the contract. (Exemption and Limitation of Liability Clause) Anticipatory Breach: A breach that occurs before the date for performance. Enforcement of Contracts: plaintiff is obligated to demonstrate. the following, on the Balance of Probabilities: Proof that there is a better then 50% chance that the circumstances are as the plaintiff contends. Privity of Contract: plaintiff establ
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