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Midterm

AFM231 Study Guide - Midterm Guide: Canadian Business, Neutral Party, Political Philosophy


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

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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 fights:
- Defines 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 firm 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 definition 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 conflict, the first 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

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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 judge’s 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

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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
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