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Midterm

AFM231 Study Guide - Midterm Guide: Misrepresentation, Punitive Damages, Unconscionability


Department
Accounting & Financial Management
Course Code
AFM231
Professor
Darren Charters
Study Guide
Midterm

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Chapter 1: The Legal Environment
Business law defines the general rules of commerce, protects business ideas, lets people
chose their level of risk , makes sure that losses are attributed to those responsible for them
Law- a set of rules and principles that guide the conduct of society done by protecting people
and their property , laws not only set the rules to be followed but also seek to make those that
break them accountable
Breach of contract- not complying with contractual rights
Contract law provides a way for both parties to have a binding agreement, creating security
and certainty , enforcing expectations while facilitating relationships
Litigation process of suing one another, it is best to try to avoid proving yourself right in court ,
try to preserve the relationship before involving the law
The Canadian Legal System demands that both the process for determining liability and the
rules or laws applied in that process are free from bias and fair
The law has the following goals : protection ( in the case of copy rights) , facilitation ( contract
law), and dispute resolution (arbitration , mediation , litigation)
Steps to Resolution
Mediation parties dispute with the help of a neutral party to reach a resolution
Arbitration a neutral party makes a binding decision that resolves the dispute
Both of these help parties to come to a resolution without involving the courts
Chapter 2: The Canadian Legal System
The Canadian Legal System is separated into three branches :
Legislative - creates laws , know as statute law ( Criminal Code)
Executive - implements government laws, issues the approval before a statute law is created
Judicial- adjudicates disputes, independent from legislative and executive branches, composed
of both federal and provincial judges
Levels of the Court
Trial- superior ( federal) criminal proceedings , inferior (provincial)
Intermediate appeal
Final appeal
Small claims court-handles claims only under a certain amount in Ontario its $10,000
Supreme Court handles appeals from provincials courts
Federal Court- only deals with cases where one of the parties id the federal government or one
of its agencies
Constitutional Law Supreme law of Canada that controls how the other branches exercise
power
Canadian Constitution is made up of the Constitution Act and the Canadian Charter of Rights
and Freedoms , also include some decisions by judges
Constitution Act divides legislative power to federal and provincial government
Canadian Charter of Rights- identifies which freedoms are guaranteed in Canada

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Constitutional Conventions- are not in the Canadian constitution , they cannot be enforced in a
court of law , they are a code of ethics that govern political processes
How a law is passed in federal government
Passed by the House of Commons
Approved by Senate
Judges must determine if a law meets the requirements of the Canadian Charter of rights
(Section 2(fundamental freedoms; speech, religion) and Section 15 (equal benefit without
discrimination)), the charter is no absolute the government can restrict a right as long they
justify it
Four sources of Laws:
Constitutional ,Statue, royal prerogative (rights and privileges of the crown, right to declare war)
and common law ( precedent created by judges decisions from similar cases , the lower court
follows the higher court precedent, Supreme Court being the highest therefore they can decide
as they may)
Equity may be used instead of following common law but it will only help those with clean hands
Jurisdiction:
Each level of government has jurisdiction to pass law within their authority , we have jurisdiction
in Canada since we are a federal state , this dictates that power must be split between central
and national authority
Federal Government gets its jurisdiction from section 91 of the Constitution , they then pass
some power to Territorial Governments
Provincial Government gets its jurisdiction from section 92 of the Constitution , they then pass
some of this to Municipal Governments(bylaws)
Concurrent Jurisdiction - jurisdiction shared between two levels of government ( health care is
an example; federal and provincial levels)
Paramountcy when there are conflicting provincial and federal laws , federal laws always
prevail
Domestic Law :The internal law of a country ( statute and common law)
International Law: Governs relations between states and other entities
Substantive Law : defines right , duties and liabilities
Procedural Law : the law governing the procedure to enforce rights , duties and liabilities
Public Law : regulate the relationship between people and the government ( criminal law , tax
law)
Private Law : concerns the relationship between people ( tort law, contract law)
Chapter 4: Dispute Resolution
Negotiation : inexpensive , informal , compromise and no technical rules , their success depends
on the parties willingness to compromise and the significance of the dispute
Mediation and arbitration : both involve an independent person with expertise in solving
disputes , the mediator does not decide or judge the outcome , arbitration is more formal ,

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hearing both sides and making a ruling after both sides have explained their situation , they
form a binding / final decision that can’t be appealed
Both of these methods work well when the parties are willing to compromise , also when
litigation is too costly , or the information regarding the dispute must be kept confidential
Litigation : costly ,in terms of time and money spent , last resort after all feasible methods have
been tried ,commercial litigation involves businesses suing other business
These are resolved by using statue laws or common law ( substantive law)
Once the claim is in the civil justice system , it is dictated by procedural rules ( what documents
need to be filled out and when )
A class action suit is one filled by one individual on behalf of a group of people
Limitation periods : dictate the amount of time you can wait before filing a suit , in Ontario its
two years after the incident
Stages of a Law Suit
Pleadings : formal exchanges of documents that outline the basis of the suit , including
allegations supporting the claim , outlines key points the plaintiff will prove at court , defendant
has 20 days to respond to allegations , if no response you admit to the claim ( plaintiff
automatically wins) if the defendant wants to fight back they respond with a defense or can sue
the plaintiff with a counter claim
Discovery : both parties prove the facts , revealing evidence , there is no time limit , lets you
test the strength of the opposing parties , seeing your strength and weaknesses leads parties to
come to a compromise through mediation , this is the last possible time to do this , if mediation
isn’t chosen then the case moves to pretrial then trial
Trial and Decision : usually only a judge is present , the burden of proof falls on the plaintiff ,
introduces the evidence according to the balance of probabilities ( if it is more than 50% likely
the plaintiff is entitled to their claim ) , the defendant tries to prove the facts otherwise ,once all
things are agreed upon ,the judge makes a decision ( contains the judge’s resolution and
justification often citing common law cases ) , if you lose the case you pay your legal fees , the
amount of the claim plus the other parties fees
Enforcement: judgment debtor party who was enforced to pay a certain amount , if they don’t
pay the amount ,the court is entitled to seize and sell assets belonging to the debtor to get the
damages , this goes to a certain extent so the party isn’t left destitute
Appeals : if a party does not wish to accept the decision made by the trial , the case moves up to
the next court hierarchy / level , you must appeal within a 30 day period , this grants you the
ability to argue against the laws or common law cases that were used to justify the judge’s
decision
A Respondent is the person who is defending the appeal , the appellant is the party who makes
the appeal
The appeal court reaches the decision of confirm the previous court’s decision , varying it ,
reversing it or ordering another trial
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