Law Final Notes.docx

16 Pages

Accounting & Financial Management
Course Code
AFM 231
Darren Charters

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Chapter 12: Other Torts  Occupier : someone who has control over land or the buildings on that land , a business conducting business in a building is an occupier even if they are only leasing  Occupier’s liability , occupier’s have liability to anyone entering the land or property, determined by the classification that the person is ; trespasser , licensee , invitee or contractual entrant  Contractual entrant : someone who has paid for the right to enter ( museum goers) , duty owed to them by the occupier is to make sure premises are safe  Invitee : someone whose presence benefits the occupier ( customer at a store) , occupier has a duty to warn of unusual danger  Licensee : someone permitted to enter for the benefit of the license , not necessarily giving a benefit to occupier but you are not objecting to them being there , occupier has a duty to warm them of unusual danger  Trespasser: someone who goes into the occupier’s land without invitation, presence is unknown and objected by the occupier , occupier is liable for any act done with deliberate intention of doing harm to the trespasser , owes duty of acting with common humanity towards trespasser Tort of nuisance  Conflicts between neighbors due to land use is a common example, this tort allows you to attain your right to enjoy the benefits of your land uninterrupted by the actions of others  In order to test , their actions must have interrupted with your enjoyment , and only applicable if it is long term , must be significant and unreasonable Tort of trespass to property or chattels  Protects you from wrongful interference; refers to trespassing / the act of coming onto another’s property without express or implied consent , leaving an object on someone’s property without their permission or having someone on your land that won’t leave when asked to  This tort is actionable without proof of harm or damage , usually results in an injunction to not allow that person on your property False imprisonment  Detained without lawful justification , physically restraining someone or coercing them psychologically to stay ,you must have reasonable grounds to have detained someone and proof of the crime in order to have a defense Assault and battery  Assault is the threat of imminent harm and battery is the actual physical contact that is harmful or offensive  Deceit : caused from misrepresentations ( fraudulent or said with reckless disregard), leading to losses  Passing off : one person represents their goods as being those of someone else’s , to prove : need to have the existence of goodwill within the product, a misrepresentation causing the public to be deceived , and to have cause actual or potential damage to the plaintiff  Interference with contractual relations : someone inciting you to break an existing contract with another party , can get damages and an injunction  Defamation : the utterance of a false statement that harms another’s reputation ( slander is written , label is oral form) defense : if the statement is true or if statement is qualified privilege : its relevant and not malicious, communicated to a party that has a legitimate interest in knowing it , absolute privilege : freedom of speech or the comment is fair and there is no malice and it is concerned with public interest and is a factually based opinion that could be held by others  Injurious or malicious falsehood : statements about goods and services provided by a person , need to prove statement is false and was uttered with improper motive Chapter 13: Agency Law  The relationship between 2 people that lets one ( that agent) affect the legal relationship of another ( the principal ) , these contracts are as legally binding as if the principal had entered into themselves  Done because the agent usually has more expertise than the principal , and is doing business on their behalf  Law of agency is derived from common law and tort , can be entered into through contract or conduct , if through a contract , the principal authorizes agent to act on their behalf in return for a fee  Authority is what determines whether a contract exists between the principal and the third party , if the agent makes a contract within their apparent or actual authority the contract is legally binding for the principal  Actual authority : written or oral granted by principal , can be express or implied ( needed to do the job)  Apparent authority : ostensible authority that the third party would reasonably believe that the agent has given the conduct of the principal  Agency by estoppel : the actions of the principal lead the third party to believe that an agency relationship exists  The onus of telling the third party that an agency relationship is going to be terminated falls upon the principal , as well as the limit of the agent’s authority , this helps the principal not to be bound by contracts outside of the agents actual authority but with their apparent authority  Agency by ratification : a person represents themselves as another’s agent even though this is not true , the relationship is created when the principal accepts the contract entered into on their behalf , you are not liable for the contract because it was the agent’s misrepresentations that lead to the contract , a contract can be ratified if ; the principal does it within a reasonable time , if they have the capacity to do so and if the agent identified the principal when entering into the contract  Duties of an agent : they must perform in accordance with the principal’s instructions or what is required within the industry , agent has a fiduciary relationship duty to the principal ( utmost good faith) , cannot personally profit by virtue of your position , or have conflict of interests , also have a duty for full disclosure , cannot use the principal’s resources for your own monetary gain  Duties of the principal : pay the agent , reimburse for sundry expenses, and assist the agent when need be  Contract liability : principal is liable for contract if it is within apparent or actual authority , if the outside party did not know the limit to the actual authority  If the agent acts without authority they can be liable for breach of warranty of authority to outsiders ( no contract present between outsider and agent or agent and principal)  Agent can incur liability if they contract on behalf of an undisclosed principal , the outsiders don’t know that an agency relationship exists , even so the principal is still liable for contract if the agent was acting within apparent or actual authority  If agent represents themselves as the principal the agent is liable , the principal can sue for breach of contract if the agent exceeds authority , agent is personally liable for any torts they committed even if they were working for the principal , if the agent is acting within apparent or actual authority then the principal is liable for any torts the agent committed Chapter 14: Business forms and arrangements  Sole proprietorship: any obligation of the business is a personal obligation of the proprietor, breach of contact = proprietor being sued , unlimited liability , profit sharing : all profits are the proprietor’s, limited life span= lifespan of proprietor , quick and simple decision making , hard to be good at everything , limited access to capital , personal taxes, the business is not transferable  Partnership : two or more people pooling their resources together , no legal existence , not legal relationship , governed by partnership legislation , contract and agency law , each partner has unlimited liability , joint liability : liability is shared but each person can be fully liable for the full obligation , partners decide how profit is shared ( decide with partnership agreement , default is equal distribution ) , decision making takes longer but better since two heads are better than one, higher sources of capital that sole proprietorship, not easily transferable , a partnership exists when 2 or more people are in business with a shared view of making profit , courts value what the relationship looks like, not necessarily what is written , partners become one another’s agents owing each other fiduciary duties, joint and several liability : you can collect in full from one or parts from each partner, terminated when the venture that the partnership was created for is over or when a partner leaves the partnership is dissolved( death , bankruptcy and insanity are also reasons)  Limited partnership : a partnership where at least one partner has unlimited liability and the others have limited ( only liable up to your contribution, not allowed to have a say in management if you manage you become a general partner) requires a formal written agreement  Limited liability partnership: used for professionals who can’ t incorporate , each partner has unlimited liability for what they do but limited for what other partners do , need to have llp in business name  Corporation : separate legal entity that assumes its own obligations , no taking away of personal assets of shareholders or directors unless a personal guarantee was given, corporation is sued and the corporation’s assets are at risk , limited liability to shareholders , profit sharing through dividends ( at corp discretion) , sources of capital; debt or equity , taxation is high own separate tax rate for corporations, transferability is high through shares , unlimited lifespan unless dissolved by court or corporation surrenders legal status , lots of steps and documents to become incorporated  Franchise : contractual agreement between a manufacturer or a wholesaler and an independent business , you buy the rights to operate a unit of the franchise , usually uses standard form contracts , business must have goodwill , no fiduciary duties owed  Joint venture : two or more businesses that work together on project share profits and losses and management functions , have fiduciary duties to one another  Strategic alliance : 2 or more corporations come together to do research or for some purpose , contract based  Distributorship / dealership : contract based , manufacturer provides products and dealer agrees to carry item , NOT AGENCY  Sale agency : distributor allows others to sell on their behalf , agency relationship therefore fiduciary duties are due  Product licensing : the trademark owner grants another the right to manufacture or distribute products with the trademark , contractual based , seller gets royalties Chapter 15 : Corporate Form : Organization Matters  A corporation can be created under federal( can do business across provinces) or provincial ( only in the province you registered in )legislation  Share structure: classes of shares, preferred and common, if you issue to the public this makes you a widely held. public corporation and are subject to securities regulation , privately held or closely held corporations don’t need to meet securities regulation only meet the definition of a corporation, they have lower taxes than public ( a restriction of transfer of shares, a limit of 50 shareholders, and no invitation for the public to buy shares) , provision to an agreement of shareholders in order to transfer shares to someone else  Right of first refusal : the person leaving has to offer the shares to the reaming shareholders before asking anyone new to take them  Picking a corporation name is subject to trademark , tort and corporation law , it must be distinct , and not similar to other names , include inc or ltd in it , a shelf company / number company are readily available corporation names that can be actively engaged in business  Steps to incorporating : need the articles of incorporation, provide the name , class and number of shares and any transfer restrictions , once all has been submitted the corporation is issued a certificate of incorporation making it a legal entity  Selling shares to the public requires a prospectus , information about the company and its directors , making sure of full disclosure so public can make decisions , required to disclose material events  Can’t trade on non public info or tell info to other people ( tippee) , if you are caught for this insider trading or tipping you can be liable in criminal and civil court Chapter 16 : Corporate Form : Operational Matters  Identification theory : a corporation is liable even when it’s a person committing the tort or crime because the person was the corporation’s directing mind and will , the conduct of director = conduct of the corporation  Vicarious liability : an employee who is not a director or the directing mind and will commits a tort  Regulatory offences : goes against public interest ( occupational health and safety m employment standards, environment stuff ) , called statutory breach  Directors have specific powers to declare dividends , call shareholder meetings , issue shares but they do not carry out management actions , they appoint officers who carry out these duties  Officers and directors have fiduciary duty and a duty of competence , they must act in the best interests of the corporation  Fiduciary duty seen in :  Self dealing contracts : contract between the corporation and a director/ officer, conflict of interest ensues , not allowed unless you disclose the contract in writing and the director or officer whose interest are conflict can’t vote on the contract , and it is reasonable , otherwise courts will cancel it  Corporate opportunities : project that the corporation can take if the wish to , only bad if the directors is motivated not to take the project since they want it for themselves , test to see how high the position of the director is , the nature of the opportunity , the time between the opportunity being offered and when it was accepted  Duty of competence : requires officer to exercise the care and diligence of a reasonable person in a comparable situation  Officers / directors are liable for torts :only if their conduct was extreme and not justifiable , usually the corporation will be liable if the officer was acting in a way to accomplish their duties  Liability in contract : occurs when directors contract on their own behalf and on the company’s behalf , or they guarantee the performance of the company  If directors don’t comply with the duties imposed by statues they can be personally fined ( does not apply to officers)  Indemnification: the corporation pays any litigation expense related to officers or directors involving lawsuits with the corporation  Lifting the corporate veil : a corporation is considered to not separate from its shareholders only lifted when the corporate form has been used a shield  Shareholder rights , right to vote , right to information and financial rights , preferred have no voting right where common shares do , there must be at least one class of voting shareholders, proxies can exercise the right of a shareholder to vote if they can’t attend the meeting  Right to info such as financial statements and records  Preemptive rights : right to buy new stock before its offered to potential shareholders , so shareholders can maintain the same level of power/control  Remedies for unsatisfied shareholders : sell your shares  Dissent or appraised rights : if you are a minority shareholder , and don’t agree with a fundamental change that will be put in place you have the right to ask the corporation to buy your shares from you at a fair price  Derivate action : something a minority shareholder believes that the directors will not put in place unless the shareholders puts forth the action , the shareholder must be acting in good faith and in the best interest of the corporation  Oppression remedy : the court pays damages to shareholders who were treated unfairly , directors not acting in good faith or conflicts of interest or not enough disclosure can cause this  Shareholders can use a shareholder’s agreement in order to resolve disputes and avoid litigation , these agreements define the relationship of shareholders and the corporation , how it should be managed , how shares will be transferred and how disputes will be resolved  A unanimous shareholder agreement : restricts the power that directors have in managing the corporation , puts more responsibility onto shareholders, and therefore they can be sued  Directors are responsible for paying back money to the corporation if them issuing dividends causes the corporation to become insolvent  A corporation can be terminated through not following reporting requirements , or filling out a winding up act , treating shareholders bad or a corporation lapse ( not filling annual reports)or bankruptcy p.403 good summary Chapter 17: Personal Property  Real property is land and whatever is attached to it its legal rights as well  Personal property : anything that’s not real property including tangible ( property that is concrete or material “chattels” not attached to land or building ), or intangible ( policies , a/r, “choses in a actions”)  Possession without ownership : you will eventually return the thing to the owner , includes leases , licenses , helps meet the business meets of the parties involved  If you own something you are responsible for its care, if you are in possession of something you have to take reasonable car of it and pay any applicable charges, must return in the same condition you got it in  Bailment : temporary transfer of possession of persona property from the owner ( bailor) to another person ( bailee ) , ownership is with the bailor , possession is with the bailee  Bailments for value : involve payment for use of the property or service and it benfits both parties  Gratuitous bailment : there is no compensation , and it depends on the situation as to who benefits, only one of bailee or bailor benefits  Bailment contracts set out who is responsible for buying insurance what remedies will be available if the contract is not performed and the price paid for the services  for carriers and innkeepers they are 100% liable for damage to the property in their possession even if it wasn’t their fault or if they acted with diligence and
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