AFM 231 - Final Exam Study Notes.docx

18 Pages

Accounting & Financial Management
Course Code
AFM 231
Sally Gunz

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Other Torts (Chapter 12, Lec 12) Occupier‟s Liability: Occupier owes people on the property a duty of care, law is the same as negligence for everyone but trespassers Occupier – Someone who has some degree of control over land or buildings on that land (eg. Someone conducting business on the property, owner, tenant, or temporary service provider) Contractual entrant – Someone who has contracted and paid for the right to enter the premise (eg. People at an exhibit) Invitee – Someone whose presence is of benefit to the occupier (eg. Customer, delivery, or service personnel) Licensee – Someone permitted to enter for their own benefit (eg. Guests at a party) Trespasser – Eg. Burglar. Must act with “at least the duty of acting with common humanity” *Duty of care higher for children. If you know kids break onto your property (eg. A factory where they can get hurt) must put up a fence. Nuisance Intentional or unintentional actions on one neighbour‟s land that causes harm on another‟s land. Must be significant and unreasonable, not temporary, and if it is not for the public good - Eg. I burn old things, the fumes go onto your property and cause you harm - Eg. Construction NOT NUISANCE (since it is temporary) - Eg. View or light blocked by a building NOT NUISANCE Bylaws usually regulate nuisance, so legislation plays an important role in striking a balance Trespass Entering a property without permission, or entering with permission but not leaving when asked, or leave an object on the property without permission - Injunction most common solution in most cases Business-Customer Torts False imprisonment through physically restraining someone or making them stay through psychological means (making them think they are restrained) Shop owners don‟t have the right to detain people unless they have physical proof of theft or fraud or other offence Right to liberty and reputation > Right to property Assault and Battery Assault – The threat of imminent physical harm by disturbing someone‟s sense of security Battery – Actual physical contact or violation of that bodily security Eg. Security guard apprehending a suspected shoplifter or to kick someone out The contact need not cause actual harm, but it must be harmful or offensive - Most common remedy is damages Passing Off (Important) When one person represents their goods or services as being those of another Get a “free ride” on someone else‟s business‟ reputation - Eg. Coca cola brings out a new lemonade to compete with a long-standing lemonade company o Long-standing coca cola company gave Coca Cola an injunction since Coca Cola‟s product is so similar in packaging which may confuse consumers o This saves Coca Cola on advertising costs since consumers will buy by mistake o Must prove goodwill (ability to attract buyers through the look of the product or its name), misrepresentation, and potential or actual damages suffered - Company will also seek an injunction forbidding continuing production/selling Interference with Contractual Relations Eg. An employee for a company has a 3 year contract, and I try and persuade the employee to break the contract and work for me instead Defamation Saying a false statement to more than one person of fact or opinion in public that harms another’s reputation If the defendant can prove the statement is true, then he has a complete defence - Defamation is the tort, but charge is under libel or slander - Slander – Oral defamation - Libel – Written defamation Eg. Mead vs. Ross case (page 186) – Ross advertised a product to be superior to all competitors and claimed specific benefits from the product. Although Mead‟s product was not specifically mentioned in the advertisements, it was implied that Ross‟ product is better than Mead‟s. If Mead can prove that Ross‟ product isn‟t as it was advertised to be, it would be defamation. Insurance (Chapter 28, Lecture 13) It is almost always possible to get insurance Transfers risk to the insurance company - Sometimes it is not worth having insurance (eg. Risk is too low) Insurance industry regulated by federal government Policy (insurance policy) is the name of the contract The Loss – The event that is being insured or covered (eg. Fire, life, negligence) Deductible – The amount of the loss the insured pays that is not covered by insurance Premium – What you pay for the policy Insurance contracts are known as contracts of utmost good faith - The insured has a duty to disclose all information relevant to the risk (ongoing duty), otherwise the insurance company can choose not to honor the policy o Eg. ABC is asked to disclose “Have you ever experienced a fire”, and only discloses the event that happened in 2002 even though fire also happened in 2001  The insurance company can also deny a claim that is irrelevant to fires (eg. A vandalism claim) o Eg. If I decide to leave a building vacant in the near future, I must update insurer Insurable Interest The insurance policy must be made for something that benefits me (item or event) - Prevents insuring objects that I can purposely destroy to file insurance claim - Eg. If starting a small business that requires specific individuals for success, should take out life insurance on those individuals Indemnity Insured will not profit from loss; insured can at most come out even Coinsurance clause – A clause stating a specified minimum portion of the value of the property that must be insured for in order to fully claim from the losses [NOT TESTED] - If this clause is in place and the insured carries less insurance than the amount specified, the insurer will only pay for a portion of the losses (eg. 80%) - Eg. Building value = $500 Minimum Insurance Required = $500 Insured amount = $300 Coinsurance Clause = 80% Amount of loss = $100 Insurer must pay Actual Loss ($100) = $75 Subrogation The right of the insurer to recover the amount paid on a claim from a third party that caused a loss - If factory burns down caused by next door‟s practices (negligent practices), and you have insurance on the factory o Insurance company will “step into your shoes” and sue next door‟s negligent practices in your name o Requirements:  You must cooperate  You must do nothing to harm their right to sue  Eg. Don‟t take the blame for a car accident, otherwise the right to sue is lost o In fact, most cases are sued by insurance company - The insurance company has the right to rebuild, repair, or replace what is damaged, as well as the right to salvage (sell recovered stolen goods) to minimize its costs - Forfeiture Rule – Cannot collect from insurance if you caused the loss (criminal act) The Policy Rider – Adds to or alters the standard coverage and is part of the policy from the beginning - Eg. Adding additional coverage or temporary insurance to cover a public event Endorsement – A change to the policy and its coverage Policies often have exclusion clauses, such as fire policies excluding coverage for a building that has been left vacant for more than 30 days. Afterwards, fires are not covered by policy. Different types of policies: Auto Insurance – Required by law in order to pay for damages Occupier’s Liability Insurance – Building owners are liable for injuries people suffer on their premise it the building owner did not ensure the premise is safe Comprehensive General Liability (CGL) Insurance – If a company sells a defective product that causes its customer to suffer a loss, CGL insurance will cover for the loss - Does not cover for losses suffered directly by the company (Eg. If the customer realizes the product is defective and refuses to accept the product, causing a loss in revenue) *Errors and Omissions Insurance – If people who meet the standard of the reasonably competent person give advice (engineers to customers) and the advice is negligent and causes losses, E&O insurance covers all costs relating to this if prompt notice is given to insurer - Directors and Officers (D&O) Insurance insures directors & officers who face losses from E&O relating to operating the company - Recap: negligence is the tort law covering unintentional harm Property Insurance – Either to insure for replacement value of property or for the property‟s cash value. The former gives more coverage, but higher premium Business Interruption Loss Insurance – Covers losses from interruption of operations (from a fire) Environmental Impairment Insurance – Covers costs in regards to environment protection Key-person Life Insurance *No Fault Insurance – Instead of suing a negligent party, you claim from your own insurer - Eg. Can only claim car accident damage from insurance company, not other party Agency Most often agents enter into contracts for you The Agency Relationship Involves Principal, the Agent, and a 3 party with whom the agent deals - The agent enters into a contract on behalf of the principal and deals with a 3 partyd Agent vs. Employees - Agents (can be employees) have the authority to enter the organization into a contract - Employees who cannot enter into contracts are not agents Principle – Agent Relationships - Mostly created by express agreement (Principal appoints Agent to do X) - By estoppel – Principal allows 3 party to believe B is an agent Estoppel example: A person (A) continuously acts on behalf of another person (B) to buy fabric. The fabric supplier does not know the limit of A‟s authority, so when A purchases beyond his express authority and B failed to tell the supplier of A‟s authority beforehand, the transaction cannot be cancelled. (If A‟s authority is purchases up to $25,000 and he makes a purchase of $100,000) Estoppel example: Bob introduces a prospective employee Joe to a client Ted as his VP of Marketing. If Ted does not know that Joe does not get hired and Joe acts as Bob‟s agent in engaging in a marketing related business deal, Bob is liable for the contract that Joe engages in. The third party was led to believe that Joe has the authority to make the decisions even though he did not. By Ratification – A friend of mine really wants something and I come across the item; I can enter into an agreement on behalf of my friend to purchase the item as soon as I tell my friend rd and the 3 party acknowledges and agrees to this [not important] Responsibilities of Principal, Agent, and 3 Party 3 party performs the arrangement as if agent is the third party Principal is responsible for Agent‟s contracts and torts (vicarious liability, principal is liable) Fiduciary Duty – Principal and Agent must act on the best interest of each other since one can greatly harm the other (not like ordinary contracts) rd Agency agreements usually ended explicitly, or when contracted task is finished. Must tell 3 party otherwise agency by estoppel may occur Power of Attorney Giving someone the authority to do anything you are authorized to do - Eg. Sell a house, clear out a bank account, almost anything - Can restrict the power of attorney to a specific transaction Often given in anticipation of loss of capacity, since you may not be able to perform many tasks upon loss of capacity - This power is commonly abused. If dealing with someone given the P of A, ensure transactions are based on the best interest of the principal Employment Law Employment vs. Labor law Labour Law refers to a unionised environment, [which may not be as important now since we now have strong labor protection and workplace safety rules and min. wages] Employment Law refers to laws applying to employment relationships Employee vs. Contractor - Employment relationship – a contractual relationship; employees get paid in exchange for work/service o Employee is provided with equipment (computer), control, training o Experience paid holidays, paid over-time, income tax deduction, paid vacations - Independent contractor – works for themselves and lends services to businesses o No vicarious liability for contractors o Contractors are not controlled, have their own equipment Bona fide Occupational Requirement (BFOR) A defence that allows for a particular group of people to be hired when it is done in good faith and for a legitimate business reason - Eg. Hiring people who speak English well for a call center in Canada Systemic Discrimination – Rules, practices, and policies that lead to discrimination - Eg. Pilots had to be a certain height; discriminated against women Duty to Accommodate The duty of an employer to adjust the rules, practices and requirements to meet the needs of an individual who would otherwise be subjected to unlawful discrimination - May arise at hiring, but often happen after they are employed - If the employer can accommodate the individual without undue hardship, arrangements should be made for that employee to do their work - Eg. Employee becomes disabled Legislations Governs the workplace and provides workers with certain rights Workplace Safety Legislation - Gives workers right to participate in safety issues, know about workplace hazards, and right to refuse unsafe work Workers compensation provides for injured workers Employment standards governs conditions of employment (overtime, min wage, vacation) Prevent harassment, discrimination, pay inequity, privacy - Discrimination by employees to other employees makes employer liable (vicarious liability) Privacy Testing or monitoring employees activities is allowed if it maintains a safe workplace - Eg. Drug/alcohol testing Video camera surveillance allowed if it helps to avoid vandalism, theft, trespassing, not to monitor employees Email monitoring allowed only after given consent by employee, or if employees have the expectation that it may be intercepted through company policies Termination of Employment US – Employer can terminate employment anytime with or without grounds Canada – Employment ends when contract ends, when there is „just cause‟ (can dismiss without notice because of serious misconduct, incompetence, habitual neglect of duty), without grounds as long as there is reasonable notice of the termination (notice periods and/or pay reasonable compensation), and constructive dismissal Constructive dismissal – If employer changes an important part of employment contract without employee‟s consent, the employee can quit and sue under constructive dismissal - Eg. Decreasing the salary/demotion without just cause, unacceptable/unethical practices by employer, abusive behaviour and threats of dismissal by employer - Eg. Geographical transfers NOT considered; often provided for in the contract Improper termination – Sue for damages from breach of contract, employee has a duty to mitigate [look for another job to decrease the losses] Fiduciary Relationships Duties you owe someone in a fiduciary relationship (eg. Teacher and student) go beyond contractual duties - One person relies and trust another, reliance on skill, knowledge and advice In terms of business, fiduciary relatio
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