AFM 231 Complete Course Notes 1 (before midterm) Reading notes summarized from the course textbook, with key terms highlighted for each chapter

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Accounting & Financial Management
AFM 231
Darren Charters

Canadian Business & the Law Chapter 1 - The Legal Environment of Business Law in the Business Environment Business Law is a set of established rules that governs commercial relationships, including the enforcement of ghts: - Denes general rules of commerce - Protects business ideas and more tangible ideas and more tangible forms of property - Provides mechanisms that allow business people to select their desired degree of participation and exposure to business risk - Seeks to ensure that losses are suffered by those who are responsible for them - Allows for planning by ensuring compliance with commitments Law: The set of rules and principles guiding conduct in society The law protects members of society by setting rules with penalties in order to encourage compliance and it seeks to make those break the law accountable for their misconduct The law protects businesses by setting penalties and ensuring accountability. It also ensures that losses are paid for the parties responsible for creating them. For example, if a law gives negligent advice to a client, that client can sue the rm for losses associated with the advice Breach of Contract: Failure to comply with a contractual promise (e.g., a supplier failing to deliver a product under contract) Contract Law: Rules that make agreements binding and therefore facilitate planning and the enforcement of expectations. Allows business enterprises to plan for the future and enforce their expectations The law functions primarily to prevent disputes and facilitate relationships; it provides a denition and context to doing business The law creates certainty in business relationships within commercial interactions Litigation: The process involved when one person sues another A contract provides a legal backdrop to any business relationship. The business relationship determines whether or not strict legal rights should be insisted upon. It is usually better for a business relationship to be understanding and allowing, rather than to sue. When a business comes across a legal conict, the rst logical step is for the parties to try to come to a resolution by themselves to produce a formalized agreement. Mediation and arbitration should be the next steps to avoid litigation Mediation: The process in which the disputing parties come to a resolution with the assistance of a neutral person Arbitration: The process in which a neutral party makes a decision in order to resolve a dispute Ultimately, a legal system should provide a just, fair, and reasonable method of resolving a dispute. The law should be able to determine liability in accordance with certain principles and processes that are regarded as just Liability: Legal responsibility for the event or loss that has occurred Suing: The process of instituting formal legal proceedings against someone to enforce a right Canadian Business & the Law The Canadian legal system demands that both the process for determining liability and the rules or laws that are applied in that process are fair and free from bias Part of the judges job is to be as objective as possible, determine what the actual argument of the parties was as well as the law governing the matter VALUES OF THE CANADIAN LEGAL SYSTEM Broad application The same law applies to everyone Fair and impartial judges The law is to be applied by someone who is free from bias Consistency The law must deal with similar cases in similar ways Accessibility The law must be accessible and understandable Constancy Any change in the law must be gradual so that the rules remain reasonably certain and predictable Flexibility The law must keep up with developments in business and society and must be able to change with the times Reasonableness The law must set standards of behaviour that are defensible Enforcement The law must be capable of enforcement. People who believe that have been wronged must have a forum at which their complaints can be heard and redressed The goal of justice is achieved when the legal question is assessed by an objective, impartial, and neutral judge who applies laws that are fair and transparent Canadian Business & the Law Chapter 2 - The Canadian Legal System Introduction Liberalism: A political philosophy that raises individual freedom and autonomy and its key organizing value. The Canadian legal system tries to follow this philosophy Constitutional law: The body of law governing the individual-state relationship, including the permissible scope of legislative power. It supplies the basic legal structure for Canadian society, providing for such manners as: branches of government, creation of legislation, rules constraining what kinds of law governments can put in place and the sources of law Government policy: The central ideas of principles that guide government in its work, including the kinds of laws it passes Businesses need to be aware of government operations because governments enact many rules that affect them Legislative Bodies in Canada Federal Also known as Parliament; has 2 bodies: the House of Commons and the Senate The House of Commons is made up of representatives elected from across Canada and part of their job is to pass legislation, which then the Senate must approve of before it can become law The Senate is made up of appointed members Provincial Each province has its own law making body, no Senate or upper house Municipal Each municipality has a city council which exercises powers given to them by their province The Legislative Branch of Government Legislative branch: Creates statute law (e.g., The Criminal Code of Canada). 3 levels of government that make statute law: Federal, Provincial, and Municipal. Statute law: Formal, written laws created or enacted by the legislative branch of government Constitution Act 1867: Dictates whether each level of government can make a given law or not; each level of government has the jurisdiction to pass laws within its proper authority Jurisdiction: The power that a given level of government has to enact laws Canadian Business & the Law The Federal government has the power (jurisdiction) over criminal law and to identify new ones; because of our constitution, the Provincial government does not have jurisdiction over criminal law and if they were to try it would be unconstitutional and no court would enforce it Constitution Act 1867: Section 91: Areas in which the Federal government can enact laws (i.e., trade & commerce, postal service, currency, criminal law, banking) Section 92: Areas in which the Provincial government can enact laws (i.e., hospitals, property and civil rights within the province) Municipal governments have no constitutionally recognized powers. However, they have jurisdiction to make laws as permitted by the relevant provincial government. Exclusive jurisdiction: Jurisdiction that one level of government holds entirely on its own and is not shared with another level Concurrent jurisdiction: Jurisdiction that is shared between levels of government Paramountcy: A doctrine that makes the federal legislation supreme over the provincial legislation (makes provincial law inoperative when there are conicting federal and provincial laws) Paramountcy is limited when a person obeys the stricter of the two laws, thereby comply with both laws. In this paramountcy would not apply and both laws would operate fully Business is affected by all levels of government, but is most affected by the provincial and municipal governments. Regulation of business is generally a provincial matter because the provinces have jurisdiction over property and civil rights. Municipalities have jurisdiction to legislate in an broad variety of matters. Bylaw: Laws made by the municipal level of government The Executive Branch of Government Ratify: To authorize or approve Treaty: An agreement between two or more states that is governed by international law The executive branch of government has a formal, ceremonial function as well as a political one. As a ceremonial function, the executive branch supplies the head of the Canadian state, The Queen. Formal executive: The branch of government responsible for the ceremonial features of government The formal executive also has a signicant role in the legislative process, since the executive branch of government, represented by the governor general (the Queens federal representative) or lieutenant governor (the Queens provincial representative) issues approval as the nal step in creating statute law. Political executive: The branch of government responsible for day-to-day operations (formulating and executing government policy, administering all departments of government) The political executive level of government is also the level that businesses typically lobby to gain favorable treatment with policy formation
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