MCS 3040 Midterm: Business and Consumer Law Midterm 1

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University of Guelph
Marketing and Consumer Studies
MCS 3040
Joe Radocchia

Business and Consumer Law Midterm 1: Chapters 1-4 & 10-12 Chapter 1- Knowledge of the Law as a Business Asset Law in the Business Environment  The law impacts virtually every aspect of society, including the business environment  The law affects most business decisions-from development of the basic business idea through to its implementation, and all the attendant matters in between, including financing, hiring, production, marketing, and sales.  Business Law: A set of established rules governing commercial relationships, including the enforcement of rights. o Defines general rules of commerce o Protects business ideas and more tangible forms of property o Provides mechanisms that permit businesspeople to select their desired degree of participation and exposure to risk in business ventures. o Seeks to ensure losses are borne by those who are responsible for them. o Facilitates planning by ensuring compliance with commitments. Rules and Principles of Law  Business Law: The set of rules and principles guiding conduct in society: o Protecting persons and their property o Facilitating interactions o Providing mechanisms for dispute resolution  Contract Law – rules that make agreements binding, and facilitate planning and enforcement of expectations  Breach of Contract – failure to comply with a contractual promise Protecting Persons and Their Property  The most familiar purpose of the law is to provide protection.  Those who violate the Criminal Code of Canada—such as by breaking into another person’s house, assaulting someone, or committing a commercial fraud—are subject to criminal sanctions, such as fines or imprisonment. Mechanisms for Dispute Resolution  Whether a conflict can or even should be resolved outside the formal legal system depends on the circumstances.  Solutions to a legal dispute exist at various levels of formality. The first logical step is for the parties to try to come to a negotiated resolution between themselves and produce, if necessary, a formalized settlement agreement that resolves a dispute.  Mediation – a process through which parties to a dispute try to reach a resolution with the assistance of a neutral person  Arbitration – a process through which a neutral person makes a decision (usually binding)  Litigation – the process involved when one person sues another  Negotiation – Parties try to come to a negotiated resolution between themselves Business Application of the Law  Law and Business Ethics o Business Ethics – moral principles and values that seek to determine right and wrong in the business world. o Business ethics require entrepreneurs to conform to principles of commercial morality, fairness, and honesty. o Legal Risk Management Plan – A comprehensive action plan for dealing with the legal risks involved in operating a business Chapter 2 – The Canadian Legal System Canadian Legal System  the machinery that comprises and governs the legislative, executive and judicial branches of government Constitutional Law  the supreme law of Canada—is charged with ascertaining and enforcing limits on the exercise of power by the branches of government. It is also charged with upholding “the values of a nation.” Government policy  the central ideas or principles that guide government in its work, including the kind of laws it passes Liberalism  a political philosophy that elevates individual freedom and autonomy as its key organizing value The Canadian Constitution  Written elements include the Constitution Act of 1867 and the Canadian Charter of Rights and Freedoms  Constitutional conventions – important rules that are not enforceable by a court of law but that practically determine or constrain how a given power is exercised  Constitution provides for the three branches of government  The three levels of government—the federal, provincial, and municipal levels—make legislation in Canada. Parliament, the federal legislative branch, comprises the House of Commons and the Senate. For legislation to become law, it must first be passed by the House of Commons and then approved by the Senate. The Canadian Legal System  Legislative branch – passes laws that impact on business operations  Executive branch – generates and implements government policies that may be directed at business  Judicial branch – provides rulings that resolve existing legal problems but also impact on future disputes; independent from the legislative and executive branches of government The Legislative Branch  Legislative Branch – the branch of government that creates statute law  Statute Law – formal, written laws created or enacted by the legislative branch of government  Jurisdiction – the power that a given level of government has to enact laws Constitution Act, 1867  Formerly the BNA Act  Set up by courts  Contains the “Division of Powers” Exclusive Federal Jurisdiction (S.91), Such as: o Currency, national defence, criminal law, banking, postal service S.91 – Federal Powers S.92 Provincial Powers  Interprovincial/international trade & commerce  Hospitals  Postal service  Property and Civil Right  Currency  Administration of Justice  National Defence  Local Matters (e.g. highways)  Criminal Law  Incorporation of provincial  Navigation and Shipping companies  Residual Powers Municipal Government Legislation  Municipal Government o created by provincial legislation o bylaw – a law made by the municipal level of government o Examples:  Zoning, taxation for the benefit of the municipality, subdivision, licensing Statute Law and Jurisdiction  exclusive jurisdiction – that one level of government holds entirely on its own  concurrent jurisdiction – the area being regulated does not fall neatly into federal or provincial jurisdiction but straddles them  Paramountcy – doctrine that provides that federal laws prevail when there are conflicting or inconsistent federal and provincial laws Executive Branch of Government  Formal Executive – branch of government responsible for the ceremonial features of the government  Political Executive – branch of government responsible for day-to-day operations, including formulating and executing government policy, as well as administering all government departments  Cabinet – a body composed of all ministers heading government departments, as well as the prime minister or premier  Regulations – rules created by the political executive that have the force of law; provide detail as to what the statute in question has enacted Judicial Branch of Government Judicial Branch  Judiciary – a collective reference to judges  Judges – those appointed by federal and provincial governments to adjudicate disputes and preside over criminal proceedings  Disputes – can be divorce, custody of children, breach of contract, car accidents, disputes over wills, and other wrongful acts causing damage or injury The System of Courts  Inferior Court – a court with limited financial jurisdiction whose judges are appointed by the provincial government  Small Claims Court – a court that deals with claims up to a specified amount. o Limit is $25,000 in Ontario  Superior Court – a court with unlimited financial jurisdiction whose judges are appointed by the federal government  Supreme Court of Canada – The final court for appeals in the country  Usually of national concern or significance  Federal Court of Canada – The court that deals with some types of litigation involving the federal government Canadian Charter of Rights and Freedoms Charter of Rights and Freedoms  A guarantee of specific rights and freedoms enshrined in the Constitution and enforceable by the judiciary  Created in 1982 the Charter is intended as a judicially enforceable guarantee that the government will act consistently with the values associated with a liberal democratic state  Powerful constitutional document that provides protection from improper or oppressive government conduct  Section 32 of the Charter prohibits government and government alone from violating any of the rights or freedoms recited  Violation of rights in the private sector, such as through employment discrimination, is a matter for provincial and federal human rights codes Fundamental Freedoms S.2 Everyone has the following fundamental freedoms: a) Freedom of conscience and religion; b) Freedom of thought, belief, opinion, and expression, including freedom of the press and other media of communication; c) Freedom of peaceful assembly; and d) Freedom of association Equality Rights S.15 (1) Every individual is equal before and under the law and has the right to the equal protection…without discrimination based on: a) National or ethnic origin b) Colour c) Race d) Religion e) Sex f) Age g) Mental or physical disability Restrictions In The Charter  S. 1 – … guarantees the rights and freedoms set out in [the Charter] subject only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society  S. 33 – Parliament or the legislature of a province may expressly declare in an Act …that the Act …shall operate notwithstanding a provision included in section 2 or sections 7 to 15 of this Charter Sources of Law  Royal Prerogative – historical rights and privileges of the Crown, including the right to conduct foreign affairs and to declare war  Common Law – rules that are formulated in judgments  Precedent – an earlier case used to resolve a current case because of its similarity  Equity – rules that focus on what would be fair given the specific circumstances of the case, as opposed to what the strict rules of common law might dictate Classifications of the Law EXAMPLES OF PUBLIC LAW  Criminal law  Tax Law  Constitutional Law  Administrative Law EXAMPLES OF PRIVATE LAW  Contract Law  Tort Law  Property Law  Company Law  Quebec Civil Code – the rules of private law that govern Quebec Administrative Law and Business  rules created and applied by those having governmental powers such as boards, agencies, commissions, and tribunals  significant impact on business because much commercial activity is regulated by these bodies Chapter 3 – Managing Legal Risks Assessing the Legal Environment Legal Risk – A business risk with legal implications Legal Risk Management Plan – Comprehensive action plan for dealing with the legal risks involved in operating a business  consider both the preventative and reactive approach  must deal intelligently with legal environment  mistakes can be costly in terms of expense of legal services and damage claims  distracting in terms of time and effort  harmful in terms of relationships and reputation Two Basis Approach  preventative approach - requires a thorough evaluation of the risk associated with the business’s activities in order to minimize their impact  emphasis is on compliance with legal requirements and anticipation of changes in legal environment  reactive approach - strategy to deal with legal problems that may materialize Creating a Risk Management Plan Four-Step process to create a plan: 1. Identify the legal risks 2. Evaluate the risks 3. Divide a legal risk management plan 4. Implement the plan (1) Identify the Legal Risks  Asses Functional Areas o Likely risk in marketing, production, human resources & information systems  Review Business Decisions o Likely risk in financial arrangements, standard form contracts, ownership and use of land and in decisions affecting personnel Creating a Risk Management Plan  Examine Business Relationships o Both internal and external relationships, identifying both long-term and short-term relationships and the risks, both long-term and short-term, involved in those relationships (2) Evaluate the Risks  Asses the probability of loss o Is there a high probability that an event will occur causing loss?  Retain the risk o Absorb losses through self-insurance, policy deductibles or non-insurance (3) Devise A Risk Management Plan  Avoid or eliminate the risk o If the risk of loss is too great, or undesirable result outweighs the benefit of the activity, avoid the risk  Reduce the risk o Undertake steps to lessen risk: e.g. credit checks, maintaining property, hiring professionals  Transfer the risk o Shift the risk to someone else through a contract o Can use indemnity, exemption of liability, waiver of liability, and limitation of liability clause in a contract  Retain the risk o Absorb losses through self-insurance, policy deductibles or non-insurance (4) Implement the Plan  Carry out the plan o devise guidelines and appropriately educate those with responsibility o clearly define responsibility for carrying out the plan  Monitor and revise the plan o determine effectiveness of plan and revise as necessary o plan must be revised as necessary Summary Creating a Risk Management Plan Interacting with the Legal Environment Reacting When Prevention Fails  Prevention of loss is primary goal of risk management  Some risk cannot be avoided  business has an effective way of addressing risk when problems materialize When To Seek Legal Advice  too often – expensive and time-consuming  too rarely – risk of letting problems become worse  appropriateness depends on circumstances  delegate one manager as contact person How To Choose A Lawyer  expertise in your business area  nature and type of legal work required  allocated budget  personality fit  discuss your business requirements  business associates, friends and law societies for references Choosing A Lawyer  Lawyer – a person who is legally qualified to practice law  Law firm – a partnership formed by lawyers  in-house counsel – if your external legal costs become significant, you may consider a Corporate Law Department  hire the necessary expertise as employee lawyer  may satisfy your need for a ‘specialist’ who can be close to your business Chapter 4 – Dispute Resolution Business Activities and Legal Disputes How Business Activities May Lead to Legal Disputes 1. Motor vehicle accident 2. Bylaw changes 3. Delinquent customers 4. Dissatisfied customers 5. Damaged goods 6. Problem employees  not always in the 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 Resolving Disputes Resolving Disputes By:  Negotiation  Alternative Dispute Resolution  The Litigation Process Negotiation: A Process of Deliberation and Discussion Used to Reach a Mutually Acceptable Resolution to a Dispute  Success depends on: o Willingness to compromise o Nature and significance of dispute o Priority parties give to dispute resolution o Effectiveness of those involved in negotiations Alternative Dispute Resolution(ADR): A Range of Options for Resolving Disputes as an Alternative to Litigation  Mediator – a person who helps the parties to a dispute reach a compromise  Arbitrator – a person who listens to both sides of a dispute and makes a ruling that is usually binding on the parties  Binding – final and enforceable in the courts International Perspective  favored form of settlement in international commercial disputes that wish to continue a business relationship  arbitration process has been greatly enhanced by standardized international rules and procedures  provisions for the reciprocal recognition and enf
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