RSM225 Final Compressed Notes.docx

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Department
Rotman Commerce
Course
RSM225H1
Professor
Dan Shear
Semester
Fall

Description
CH. 3: General Partnerships (“GPP”) - Creation: (1) Partnership Act (“PP Act”): GPP arises automatically if 4 requirements met: 1. 2 or more legal entities (e.g. individuals, corporations) 2. carrying on a business typically ongoing transactions, not just isolated transaction(s) activecommercialenterprise(e.g.manufacturing,accountingpractice),notpassiveinvestment distinguished from co-ownership: co-owning securities or property for investment income does not constitute “carrying on a business” 3. jointly operating the same business together distinguished from co-marketing/promotion between separate businesses (e.g. Shopper’s Drug Mart and Swiss Chalet each offering coupons for the other’s business) distinguished from merely sharing premises or assets (e.g. several accountants sharing same office premises and photocopier/fax to reduce overhead cost) distinguished from employer/employee relationship 4. to make and share profits 1. sharing revenues and sharing costs (since profit = revenues minus costs) sharing only revenues or costs does not qualify to create GPP (2) Indicators of GPP: PP Act Rules:  PP Act Rules may be helpful where not clear whether requirement (2) or (3) above is met  sharing profit is considered strong indication of GPP  sharing profit + managing the business is even stronger indication of GPP  but sharing profit for the following reasons is no indication for or against existence of GPP:  to repay debt (i.e. debt paid only from profits)  remuneration of employee/agent  part of purchase price for business (3) Relevance of Parties Agreeing Whether They are Partners:  what parties call themselves or agree upon re: being partners (or not partners) is irrelevant to whether or not they are partners (4) Apparent Partner/Partner by Estoppel:  does not create GPP but creates personal liability as if you were partner of a GPP  applies where A represents him/herself to be, or allows him/herself to be represented as, B’s partner  if a third party gives money or credit to B in reliance on that representation, A is personally liable for repayment of that money or credit (if B cannot repay) General Partnerships (“GPP”) - Consequences: (1) Personal Liability:  each partner liable for ALL debts of GPP incurred while he/she was a partner (to extent GPP cannot pay)  includes debts arising under contracts  includes debts resulting from torts committed by partners or employees in course of carrying on the GPP business (e.g. theft of client funds, negligence)  remain liable for those debts even after cease to be a partner (2) “Fiduciary Duties” of Partners to Each Other:  information: make available to the other partners any information you have or learn, in your capacity as partner, that is relevant to the GPP’s business  personal benefits: turn over to the GPP any benefits you receive, without the consent of the other partners, from:  any transaction involving the GPP, or  using GPP property, name or business connections for your own purposes, or  taking personal advantage of a business opportunity offered to the GPP  competing:  not carry on a business that competes with the business of the GPP without the consent of the other partners  turn over to the GPP any benefits you receive from carrying on a competing business without the consent of the other partners (3) Implied Terms:  every GPP has a “partnership agreement” because PP Act sets out basic terms (“implied terms”) that applies to all GPPs  each of the implied terms can be changed by the partners if they agree to something else  implied terms:  profits/losses  shared equally among partners  capital contribution  same from each partner  mgmt of GPP business  each partner can participate  disagreements re: GPP business  majority (of partners) decides  change in GPP business  all partners must consent  admitting new partner  all partners must consent  GPP books/records  each partner can see and copy  assigning partner’s share in the GPP  recipient only gets your share of profits  no right to manage or inspect GPP books  termination of GPP  if duration of GPP is “indefinite” (no fixed end date), any partner can terminate GPP at any time upon notice to the other partners  GPP terminates automatically on death, bankruptcy or insolvency of any partner General Partnerships (“GPP”) - Termination: (1) PP Act Implied Terms: see implied terms above (2) Illegality: GPP terminates automatically if GPP business becomes illegal (or if it becomes illegal to carry on that type of business in partnership) (3) Court Order: a partner can seek court order to terminate GPP: where another partner is mentally incompetent where another partner becomes permanently unable to perform his/her GPP obligations where another partner has done something that likely harms the GPP business where another partner breaches his/her GPP obligations or acts in such a way that it is not feasible for the other partners to carry on the GPP business in partnership with that partner where it is “just and equitable” under the circumstances to terminate the GPP Limited Liability Partnerships (“LLP”): (1) Creation of Limited Liability Partnership:  formed when all partners enter into written agreement that states that: (1) partnership will be LLP, and (2) PP Act will govern that agreement (in B.C., LPP formed when required form of registration statement is filed with registrar of companies)  name must end with “LLP” or “Limited Liability Partnership” (or French equivalent)  currently only available in certain provinces – e.g. Ontario, Alberta, Saskatchewan  currentlyonlyavailableforcertaintypesofprofessions–inOnt.:lawfirms,accountingfirms (2) Partner’s Liability in Limited Liability Partnership: a partner is not personally liable for negligence of other partners but still personally liable for his/her own negligence LLP is still liable for negligence of any of its partners while they were carrying out LLP business a partner is not personally liable for negligence of LLP’s employees UNLESS those employees were under that partner’s direct supervision or control CH. 4A: BUSINESS ORGANIZATIONS: CORPORATIONS – NATURE AND FORMATION Typical Operation of a Corporation: Shareholders: Elect Directors Shhs have no right to manage (unless have “Unanimous Shh Agmt”) Directors: Legally Responsible for Overall Management (unless Unanimous Shh Agmt) Appoint Officers Officers: Senior Management (President, Secretary, etc.) Hire Managers Managers: Hire Employees Relationship of Corporation to Owner(s): (1) Owner Liability: 1. no personal liability for corp’s debts 2. rare exception: “piercing the corporate veil” - if owner(s) fraudulently led 3rd party to believe 3rd party was dealing with owner(s) personally and not with a corpn 3. contrast GPP (p’ners 100% personally liable for GPP debts) (2) Transferring Ownership: 4. purchaser of shares has full rights as shh 5. contrast GPP (purchaser of GPP interest only gets seller’s share of profits – no right to manage GPP or see GPP books unless p’ners had agreed differently before purchase) (3) Owner’s Right to Manage: 6. shh does not have right to manage (in his/her capacity as “shh”) 7. exception: “unanimous shareholders agreement” where shhs assume some or all of directors’ management rights and powers 8. contrast GPP (each p’ner may manage, unless p’ners agree differently) (4) Owner’s Duty of Good Faith: 9. shhs have no duty to corp. or the other shhs (unless “unanimous shhs agreement”) 10.contrast GPP (each p’ner has “fiduciary duties” to the other p’ners) (5) Surviving Owner’s Death/Bankruptcy: 11.corp. does not dissolve on shh’s death/bankruptcy 12.contrast GPP (GPP dissolveson death/b’cyof a p’ner – unless p’ners agreed differently) Formation of Corporation: (1) Registration: 13.forming a corporation includes filing of prescribed documents with government (2) Types of Corporations: 14.corporations can be created under the laws of a province or under the federal laws of Canada 15.each jurisdiction has slightly different requirements 16.federal corporations must have government clearance of corporate name (unless numbered company) 17.clearance withheld if name too similar to existing corporate name or registered business name (whether federal or provincial) or existing registered trade-mark 18.provincial corporations generally do not require this clearance, but will not allow corporate name that is the same as an existing corporate name or registered business name (3) Specific Incorporation Requirements: 19.for federal corporations, file registration documents called “Articles of Incorporation” and “Form 2 Information Regarding the Registered Office and the Board of Directors” 20.for Ontario corporations, file registration document called “Articles of Incorporation” 21.for B.C. corporations, file registration document called “Incorporation Application” (which includes articles) and incorporators enter into “incorporation agreement” “Public” vs. “Private” Corporations: (1) Overview: 1. corporations are considered to be “public” or “offering” corporations unless they meet the applicable “private corporation” exemption requirements 2. the exemption requirements are specific to each province 3. the requirements have nothing to do with where corporation was incorporated 4. instead, they are based on where shares of corporation are being issued or offered 5. “public” corporations can also qualify for other exemptions for a particular issuance of shares 6. e.g. issuing shares to employees, senior officers, directors or consultants of corporation (2) “Private” Corporation Exemption (Provinces Other Than Ontario): 7. must meet 3 requirements (which must be put into articles of incorporation): maximum 50 shhs cannot offer shares to the “public” some restriction on transferring shares (typically: need approval of directors) (3) “Private” Corporation Exemption (Ontario): 8. must meet 3 requirements (do not have to be put into articles of inc’n but see (2) below): maximum 35 shhs (excluding: directors or officers, and employees or consultants of corpn who only own shares of corpn issued as compensation by corpn) restriction on transferring shares – require approval of directors or shhs (restriction must be put into articles of incorporation or agreement among shhs) total proceeds from all share issuances does not exceed $3 million (4) Consequences of Being “Public” Corporation: 9. unless corpn meets applicable “private” requirements above (or another exemption in respect of a particular issuance of shares): 10.cannot legally issue shares without prospectus 11.only persons registered/licensed with securities commission can sell corpn’s shares “Professional Corporations”: (1) Applicable Professions (Ontario): 12.includes CA’s, CGA’s, lawyers, veterinarians, social workers (2) Ownership Restriction: 13.all of the shhs of the corporation must be licensed to practice in that profession (3) Liability of Owners: 14. re: negligence or misconduct towards clients: the owner who commits that negligence/misconduct is 100% personally liable to client, to the extent that the corporation does not have enough assets to pay any judgment obtained by the client 15. i.e. that owner is jointly and severally liable with corporation 16. but otherwise get same protection as “normal” corporation (4) Surviving Owner’s Death/Bankruptcy: 17.professional corp. does not dissolve on owner’s death or bankruptcy Corporate “Securities”: Shares and Bonds: (1) Shares: 18.represent ownership 19.can have different “classes” of shares with different rights 20.rights are set out in articles of inc’n 21.often have common shares and preferred shares 22.common shares with right to vote for directors (and therefore represent “control” of corporation) 23.preferred shares with no right to vote but right to certain dividends before any dividends paid to common shares 24.rights that can be included: 25.right to vote (typically: right to vote for directors) 26.right to dividends 27.sharing in remaining assets on dissolution of corporation (after creditors paid) (2) Bonds: 28.form of debt (typically longer term – e.g. 10 – 30 years) 29.can include right to convert debt to shares CORPORATIONS – “INTERNAL AFFAIRS” Directors: (1) Management: 30.legally responsible for overall management of corp. (unless “unanimous shh agmt”) 31.appoint officers (President, Secretary, etc.) 32.determine whether/when to pay dividends to shhs (dividends declared solely in discretion of directors – shhs cannot force directors to do so) 33.determine whether to issue new shares (+ how many, what class(es), what price, etc.) 34.determine when shh meetings will be held (shhs can also do this – see below) (2) Legal Requirements: 35.must have one or more directors 36.for Ontario corpns, a majority of directors must be resident Cdns. (if 1 director, s/he must be resident Cdn.; if 2 directors, one of the two must be resident Cdn.) 37.directors must be individuals 18 or older, not bankrupt, not mentally incompetent (3) “First Directors”: 38.articles of incorporation must name one or more “first directors” 39.first directors typically issue shares to initial shh(s) (no shs issued by articles of incorporation, so corpn has no shhs at time of incorporation) 40.first director(s) hold that position up to first shh meeting (or first shh resolution appointing director(s)) 41.“first director(s)” cannot resign until successor(s) appointed (4) Appointment and Removal: 42.shhs appoint (and remove) directors (other than first directors) rd 43.term of office for directors: determined by shhs but max. length is until 3 annual shhs meeting following appointment (or until shhs replace director, if later) 44.directors must consent in writing to being director 45.# of directors set out in articles of incorporation (either specific number or range) 46.if articles set out range (minimum and maximum #): 47.actual number determined by shhs – or shhs can pass resolution allowing directors to set number (within the min/max range) (5) Conducting Business: 48.“quorum” required to conduct business 49.typically must have majority of directors, but articles or by-laws can specify differently (but never < 2/5) 50.if only have 1 or 2 directors in total, quorum is all directors (6) Director’s Duties: 51.directors have legal duties to corp. (unlike shhs) – unless “unanimous shh agmt”) 52.directors do not owe such duties to shhs 53.duties: reasonable care and skill 1. basically “subjective” test – based on the individual’s education, experience, etc. “fiduciary duties”: 1. act in best interests of corp. 2. if “conflict of interest”, disclose, not vote 3. no competing business unless permitted by corp. 4. not take “corporate opportunities” unless opp's. rejected by corp.  applies where learn about opportunity in role as director of corp, or by using corp information “insider trading” (basic rules – may have additional rules if “public” corporation):  “insider” includes a director or officer of a corpn who knows confidential info that, if generally known, would likely affect the value of the shares of that corpn rd rd  “insider trading” involves insider buying from or selling to a 3 party any shares of that corpn – unless 3 party knew or should have known that confidential info or insider reasonably believed that the info had been generally disclosed rd  insider liable for any loss suffered by 3 party and must turn over any profits to corp. (loss or profit measured by any insider gain attributable to knowing the confidential info) Shareholders: (1) Rights: 5. Vote: right to vote (if have voting shares): 6. articles of incorporation set out classes of shs and rights of each class 7. “vote” is usually for electing directors 8. unlessarticlesofincorporationprovidedifferently,onevotepershare;majorityvotewins 9. Oppression Remedy: right to seek “oppression remedy” where treated very unfairly: 1. arises where there is any corporate conduct (e.g. by directors) that is oppressive or unfairly prejudicial to, or that unfairly disregards, the interests of any shh (or director) 2. can go to court and ask for appropriate relief (e.g. buy shh’s shs, compensate for harm)  shh might also be able to use oppression remedy where director(s) breach their duties to corpn – argue result is that shh being treated very unfairly Derivative Action: right to seek “derivative action” (go to court and ask for this): used where directors will not allow corp. to bring/prosecute/defend a lawsuit 3 requirements: 1. directors will not bring, diligently pursue or defend lawsuit; 2. applicant acting in good faith; and 3. appears to be in corpn’s interests to bring, pursue or defend lawsuit court relief can include: 1. authorizing applicant (e.g. shh) to bring, prosecute or defend lawsuit in the name of, and on behalf of, corp. 2. ordering any amounts won in the lawsuit to be paid to present or former shhs of corp. (including applicant) rather than corp. itself Annual F/S: right to annual financial statements (audited unless all shhs waive audit for that year) Appointment of Inspector: bring application to court for appointment of inspector: must show likely that serious mismanagement by directors or officers inspector’s report made public, copy given to shhs (useful information for exercising other shh rights) Appraisal Remedy: require corpn to buy shh’s shares (at fair price) if any of the following “fundamental” changes occur: change in any restrictions on issue, transfer or ownership of shs of corpn change in any restriction on business corpn may carry on (any such restrictions would be set out in articles of incorpn) amalgamating or merging with another corporation continuing corporation under another jurisdiction as if it had been incorporated under the laws of that other jurisdiction e.g. incorporate as federal corporation and then later continue as Ontario corporation selling, leasing or exchanging substantially all of assets of corpn carrying out a “squeeze-out” or “going-private” transaction squeeze-out: transaction by “private” corpn (requiring amendment to articles of incn) that results in ownership of class of shs being terminated: without consent of shhs of that class of shs, and without giving them other shs of corpn with equivalent value and equal or greater rights and privileges going-private: similar to “squeeze-out” but involving “public” corpn Winding up: seek court order winding up the corporation court has discretion whether to give such an order typically not given where corporation prosperous or fairly large can be useful where there is a deadlock Shareholders meetings: corporation must hold at least one annual shhs meeting each meeting must be held within 15 months of previous annual meeting and not more than 6 months after corpn’s fiscal year end shhs are entitled to copies of financial statements before such annual meetings shh(s) having at least 5% of the voting shares may also call meeting of shhs such meeting(s) are in addition to annual meeting when calling such meeting, must state purpose(s) for having such meeting (2) Unanimous Shareholders Agreement: 3. normal rule: shhs have no right to manage corp. 4. exception: all shhs can sign “unanimous shh agmt” that gives shhs the powers of the directors to manage corp. 5. to the extent that the shhs take over powers of directors: 6. directors no longer have those powers or any associated directors’ duties or liabilities relating to those powers 7. shhs have those directors’ duties and liabilities CH. 4C: CORPORATIONS: EXTERNAL RESPONSIBILITIES Agency/Indoor Management Rule: 1. corp. can be liable for acts of its agents - even if agents act outside of actual authority 2. so long as everything appears to be proper, and not reasonable to suspect lackof authority Pre-incorporation Contracts: 1. can make written contract(s) on behalf of a corporation not yet incorporated 2. corporation must subsequently adopt that contract – or person signing will be personally bound by that contract 3. topreventabuse,otherpartytocontractcanaskcourtto make individualandcorpnjointlyliable(unlesscontract expresslysaysindividualnotpersonallyliable) Protection of Creditors: (1) Maintenance of Capital Test: applies re: declaring and paying dividends directors become personally if pay dividends where reasonable grounds to believe that either: corp. is (or after payment would be) unable to pay debts as they become due, or realizable value of assets is (or after payment would be) less than total liabilities plus stated capital in other words, dividends must be paid out of profits/retained earnings, not out of capital rationale: paying divs out of profits/retained earnings would result in a return of capital to shhs - (2) Solvency Test: applies re: declaring and paying dividends, or where corporation re-purchasing any of its previously issued shares directors become personally liable if: o corpnis(orafterpayment would be) unabletopaydebtsastheybecome due,or o realizable value of assets is(or after payment would be) less than total liabilities (3) Consequences of Violating Tests: if tests violated, directors personally liable to corpn for repayment of dividends, and corpn can require recipients of dividends to repay them (4) Winding Up: if corpn wound up, assets liquidated order of payment: (i) creditors; (ii) preferred shhs (see arts of incn - usually what preferred shhs paid for preferred shares); (iii) common shareholders Securities Laws: unless qualify for “private” exemption or another exemption, licensing with Securities Commission required for: 4. corpns issuing its shares to the public 5. persons selling/trading in shares for others see also Ch. 4A Business Organizations: Corporations – Nature and Formation under “Public” vs. “Private” Corporations prospectus: 1. must be given when offering shares to the public 2. containsfulldisclosureofmaterialinformationaboutcorpnandsharesbeingoffered 3. includes audited financial statements 4. ongoing public disclosure required re: events materially affecting value of shares “Criminal” Liability of Corporation (and Directors/Officers): (1) Overview: corpns. can commit criminal offences  directors and senior officers may also be guilty (personally): 5. if they direct, authorize, assent to, acquiesce in or participate in commission of the offence, or 6. if they were required to take reasonable care to prevent the corpn from committing the offence, and fail to do so (2) “Due Diligence” Defence: applies where directors or senior officers charged personally for criminal offences committed by corporation 4 requirements for defence to succeed: 1. -maintained reasonable system to ensure compliance (taking into account industry standards) 2. system included compliance monitoring and reporting 3. reviewedcompliancereportstoensurecorpnpromptlyaddressinganynon-compliance 4. acted promptly to improve system when got notice that compliance system failed 1. directors and officers entitled to rely on reasonable compliance system until become aware that system is defective 2. defence applies to laws that make director/officer liable if “knew or should have known” corporation committing offence (3) Penalties if Convicted: penalties may include: 3. fine (for corporation and for directors/officers) 4. jail (for directors or senior officers – see above) 5. court ordering corporation to cease offending conduct 6. court ordering corporation to be dissolved (not common) CH. 5: TORTS: NEGLIGENCE Overview: 1. “civil” not “criminal” liability (although can have criminal “negligence”) 2. involves accidental not intentional conduct (i.e. dt did not deliberately harm pf) 3. involves “careless” conduct that harms someone else General Negligence: Required Analysis: 4. need to carry out “4 + 3 Step Analysis” 5. 4-step analysis (to establish negligence): must prove 4 things: 1. duty of care: defendant must have owed “duty of care” to plaintiff 1. i.e. duty to take care not to harm plaintiff 2. test: defendant will owe duty of care to plaintiff if plaintiff was “reasonably foreseeable” to defendant at time defendant harmed plaintiff 3. i.e. if defendant could “reasonably foresee” someone possibly being where plaintiff was at that time, who might be harmed by defendant’s conduct 4. duty of care does NOT judge defendant’s conduct 5. standard of care: defendant’s conduct must have fallen below required “standard of care” 6. standard of care: what a “reasonable person” would have done th 7. “50 percentile” person 8. if expert or claiming expertise: what a “reasonable person with that expertise” would have done 9. if professional or claim to be professional: what a “reasonable person in that profession” would have done 10. consider standards of that profession (e.g. professional code of conduct, rules/guidelines for particular work in that field) 11. physical causation: defendant’s conduct must have “physically caused” plaintiff’s harm 12. directly or indirectly caused the harm 13. harm must not be too “remote” from defendant’s conduct (i.e. not too far removed in the chain of causation, or too far away in time) 14. foreseeable harm: type of harm must have been “reasonably foreseeable” 15. look at general type of harm – (i) physical/bodily injury, (ii) emotional injury, (iii) property damage, (iv) economic loss 16. if general type of harm reasonably foreseeable, defendant liable for full extent of that type of harm (exception: “thin skull principle”) 17.3-step analysis: if establish negligence, must consider who else (in addition to defendant) may share legal responsibility: 18. plaintiff’s“contributorynegligence”:wasplaintiffalsocarelessinawaythatcontributedtoplaintiff’sharm? 19. if yes, court will allocate to plaintiff a % of the overall responsibility for plaintiff’s harm 20. e.g. if court found plaintiff 10% responsible and defendant 90% responsible, then plaintiff could only recover 90% of the damages (i.e. only recover the defendant’s %) 21. other defendants: was anyone else also negligent in a way that contributed to plaintiff’s harm? 22. need to carry out 4-step analysis for any other possible defendants 23. just identify any other possible defendants here, then perform separate 4 + 3-step analysis on each of them 24. if other(s) also negligent, court will allocate to such other person(s) a % of the overall responsibility for plaintiff’s harm 25. vicarious liability: was defendant an employee “doing his/her job” at time defendant negligent? 26. employersare “vicariously liable” for negligence of employees where employee’s negligent conduct occurred “in the normal course of the employment” Special Categories of Negligence: Overview: 27.3-step analysis same for all categories of negligence 28.for each of the special categories of negligence, there are some differences in 4-step analysis 29.other types of negligence include: (i) hazardous activities, (ii) product liability, (iii) occupier’s liability and (iv) negligent misrepresentation Special Categories of Negligence: Hazardous Activities: 30.differences from general negligence: element (2): (2) defendant’s conduct fell below required “standard of care” 31. normal standard: “reasonable” care 32. but: standard becomes higher if activity or product is potentially hazardous or dangerous – if highly hazardous/dangerous, std is using “all possible care” Special Categories of Negligence: Product Liability: 33.involves 2 types of situations:  defective products  product warnings (re: potential dangers in use of a product) 34.situation (A) (defective products): differences from general negligence: elements (1) and (2): (1) defendant owed plaintiff a “duty of care”: 35. normally: defendant only owes duty of care to those defendant could have “reasonably foreseen” as possibly being harmed by defendant’s conduct 36. but: mfgrs automatically owe dutyof care to ultimate consumers of their product 37. and: distributors/retailers automatically owe duty of care to ultimate consumers of the product IF distributor/retailer had “reasonable opportunity to inspect” product before selling it 38. leading case: Donoghue v. Stevenson (snail in bottle) (2) defendant’s conduct fell below required “standard of care”: 39. std of care for mfgrs: take reasonable care to prevent defective products from entering distribution system 40. std of care for distributors/retailers: take reasonable care to avoid selling defective products 41. normally: plaintiff must prove defendant’s conduct fell below required standard of care 42. but for mfgrs: if product defective, “res ipsa loquitur”(the facts speak for themselves) applies – i.e. law presumes mfgr’s conduct fell below required standard of care 43. in such a case, mfgr must prove it did meet required standard of care (reverse of normal requirement for plaintiff to prove defendant did not meet required std of care) 44.situation(B)(productwarnings):differencesfromgeneralnegligence:elements(1)and(2)and(3): (1) defendant owed plaintiff a “duty of care”: 45. normally: defendant only owes duty of care to those defendant could have “reasonably foreseen” as possibly being harmed by defendant’s conduct 46. but: mfgrs automatically owe dutyof care to ultimate consumers of their product (2) defendant’s conduct fell below required “standard of care”: 47. std of care for mfgrs: take reasonable care to properly warn ultimate consumer of any potential dangers in use of that product 48. reasonable care includes acting reasonably in determining whether there are any dangers in use of product, and acting reasonably in issuing warnings 49. obligation to warn applies even if product already placed on market before dangers detected (3) defendant’s conduct “physically caused” plaintiff’s harm: 50. “physical causation”: defendant’s conduct (failure to properly warn) directly or indirectly caused plaintiff’s harm (because plaintiff would not have used product, or would not have used it in the way plaintiff did, if properly warned) Special Categories of Negligence: Occupier’s Liability: 51. involves situations where someone is harmed by “hazard(s)” on another’s premises 52. “occupiers”: those who possess and occupy the premises 53. includes owners and tenants 2 general categories of plaintiffs: “licensees”and“invitees”(enteringpremiseswithexpressor impliedpermission) “trespassers” (entering premises with no permission, either express or implied) 54. differences from general negligence: elements (1) and (2): 55. defendant owed plaintiff a “duty of care” 56. occupiers automatically owe duty of care to invitees/licenseesand to trespassers 57. defendant’s conduct fell below required “standard of care” 58. standard of care re: invitees/licensees: avoid having hazards on premises that defendant knew about or should have known about 59. standard of care re: trespassers: not deliberately set hazards on premises Special Categories of Negligence: Negligent Misrepresentation: 60.involves careless misrepresentation of fact or careless advice/opinion 61.contrast fraudulent misrepresentation (see Ch. 6 Torts: Other Torts) 62.differences from general negligence: elements (1) and (3) plus preliminary step before going to 4 + 3-step analysis preliminary step: 63. did plaintiff suffer any type of harm (from misrep) besides economic loss? 64. if yes, go to 4 + 3-step analysis 65. if plaintiff suffered only economic loss, was defendant a professional or expert in subject matter of misrepresentation? 66. if yes, go to 4 + 3-step analysis 67. if no, stop analysis at this point – defendant cannot be liable for negligent misrepresentation (1) defendant owed plaintiff a “duty of care” 68. neg. misrep.: defendant owes duty of care to those category(ies) of users that defendant actually knew might rely on the advice/info for same purposes(s) for which advice/info was prepared or given by defendant (3) defendant’s conduct “physically caused” plaintiff’s harm 69. neg. misrep.: “causation” becomes reliance - plaintiff must have relied on the misrepresentation and suffered harm as a result of that reliance CH. 6: TORTS: OTHER TORTS Fraudulent Misrepresentation: (1) Requirements: 1. 5 required elements: (1) representation of “fact” (vs. opinion) (2) representation false (3) “knowledge” of falseness (know or believe rep is false, or assert rep as true without any idea whether it is really true or false) (4) intend reliance on representation (5) plaintiff relies on representation and suffers harm as a result (2) Fraudulent vs. Negligent Misrepresentation: 2. if defendant knew or believed representation was false – consider only fraudulent misrep 3. if defendant believed representation was true – consider only negligent misrep 4. if defendant asserted representation as true but had no idea whether rep was true or false – consider both fraudulent and negligent misrep Defamation: (1) Requirements: 5. public statement damaging someone’s reputation 6. statement may be verbal (“slander”) or written down in some way (“libel”) (2) Defences:  truth – no defamation if statement is entirely true and not misleading  “editorial privilege” - commenting for “good faith” purpose + honest belief that your public statement(s) are true Nuisance: (1) Overview: 7. basically involves “environmental” interference (typically “environmental” pollution) 8. “environment” includes: air, water, land, noise, vibration (2) Requirements: 9. must prove: “environmental” interference to your enjoyment of your property; plus interfering to “unreasonable degree” (based on “local community standard” – i.e. beyond what local community already tolerating) (3) Remedies: injunction (court order to stop the interfering activity); and/or damages (to compensate for reduction in enjoyment of property) Assault and Battery: (1) Assault: 10. involves creating reasonable fear of imminent physical contact/harm without consent 11. can be separate tort from battery (2) Battery: 12. involves making direct or indirect physical contact without consent 13. law may find “implied” consent in some circumstances (based on common sense) Trespass: 14. involves going onto someone else’s property without their consent (express or implied) 15. occupier can use “reasonable” force to remove trespasser False Imprisonment: 16. involves detaining someone without their consent (extreme case – kidnapping) 17. defences: (1) crime committed + reasonable belief plaintiff did it (2) (police only) reasonable belief crime committed Malicious Prosecution: 18. involves charging someone with crime when have no honest belief that they committed that crime CH. 7: TORTS: PROFESSIONAL LIABILITY Overview: Ways professional can be legally liable to their patient/client: breach of contract breach of fiduciary duty general negligence negligent or fraudulent misrepresentation breach of duty to obtain informed consent (“medical practitioners” only) Contract: When hire professional for a fee, make contract with him/her (even if unaware of it) Unless professional and patient/client agree otherwise, professional has “implied” contractual duty to perform services with reasonable care Failure to fulfil this duty amounts to breach of contract Fiduciary Duties: professional has “fiduciary duties” to patient/client similar to fiduciary duties owed by partners, directors duties include: must put patient/client’s interests first must avoid + disclose any conflict of interest must not take client business opportunities or use patient/client info without patient/client’s consent Tort: General Negligence: professional can be liable to patient/client for careless treatment (e.g. dentist careless in drilling tooth) use general negligence analysis (see Ch. 5 Torts: Negligence) Tort: Misrepresentation: (1) Negligent Misrepresentation: professional can be liable to patient/client for careless misrepresentation of fact or for careless advice use negligent misrepresentation analysis (see Ch. 5 Torts: Negligence) (2) Fraudulent Misrepresentation: professional can be liable to patient/client for deliberate misrepresentation of fact or for deliberately wrong advice use fraudulent misrepresentation analysis (see Ch. 6 Torts: Other Torts) Liability of Medical Practitioners: (1) Overview: like other professionals, medical practitioners can be liable for all of the above in addition, can be liable for breach of duty to obtain informed consent from patient (2) Duty to Obtain Informed Consent: 4 requirements (similar to general negligence analysis): (1) duty of care: dt must have owed duty of care to pf (a) medical practitioners automatically owe duty to patient re: obtaining informed consent (2) std of care: dt’s conduct must have fallen below required std of care std of care: reasonable care to obtain informed consent to proposed treatment consent is “informed” if dt used reasonable care to advise pf (patient) of all risks of that treatment that a reasonable doctor would advise patient about (3) causation: a “reasonable patient” (not necessarily the pf!) would not have consented to that treatment if dt had met above std of care in informing patient of risks of proposed treatment (4) foreseeable harm: type(s) of harm suffered by pf (due to not being informed about certain risk(s) that dt should have informed patient about) must have been reasonably foreseeable result of not being so informed (3) Battery: arises where treatment involving physical contact with patient is carried out without patient’s consent if patient unable to consent (e.g. unconscious), must use reasonable efforts to obtain consent of immediate family can proceed without any consent if patient’s life at risk and cannot reasonably obtain necessary consent in time (or at all) CH. 8: CONTRACTS: FORMATION (OFFER AND ACCEPTANCE) Contract Elements - Overview: Contract Requirements (all 4 must be met): “O + A + C + I” Offer: one party (“offeror”) must offer (verbally, in writing, or by conduct) to make a contract (“c”) and specify all key terms + Acceptance:otherparty(“offeree”)mustacceptthatoffer,onthose terms, withoutanychanges + Consideration: the (accepted) offer must require each party to give something “in return for” what the other party must give (some exceptions – see Ch. 9 Contracts: Formation (Consideration and Intention)) + Intention: outward conduct of each party must show serious intention to make c Contract Elements - Offer: (1) Terms of Offer: offer must include (or refer to, or provide formula for determining) all keyof the terms exception: price: if price not addressed in offer: if past practice for setting price, law assumes parties will follow that practice “quantum meruit” (see also Ch. 9 Contracts: Formation (Consideration and Intention)) – must pay “reasonable” price offer terms must be clear and unambiguous (or offer not valid) (2) Offer vs. “Invitation to Make Offer”: a party may make an offer, or invite the other party to make an offer the law treats some situations as only an invitation to make an offer: goods on store shelves, racks goods shown in catalogues advertisements (where ad refers to type of item(s) being sold but does not indicate which specific one(s) are being sold) “invitation” does not satisfy “offer” element – “accepting” invitation = making offer (3) “Ticket Cases”: involves “take it or leave it” standard form offer presented in written document (e.g. “ticket” or “receipt”), or posted on notice(s), or both offer typically accepted by conduct (e.g. paying for ticket, parking car in lot, etc.) nothing signed, no negotiation law imposes a “reasonable notice” requirement: only bound by those terms in offer for which reasonable notice given at time contract made the more unreasonable or unexpected the term, the more clearly the notice must be to qualify as “reasonable notice” (4) Signing Contract: creates strong presumption: read, understood and accepted all terms some exceptions - see below under “Contract Elements - Acceptance” (5) An Offer Ends When: offer “lapses” (expires): at the time (if any) specified in the offer  after a “reasonable time” (if no specific time mentioned) consider: subject matter of offer, typical “turnover” for that type of subject matter, circumstances under which offer made upon either party dying or becoming mentally incompetent offer is revoked (withdrawn): if offeror communicates revocation (either directly to offeree, or indirectly through someone else) communication must actually be received by offeree revocation by mail only effective when actually received by offeree unclear whether faxed revocation “actually received” when arrives in fax machine, or when viewed by offeree if it becomes unreasonable for offeree to believe offer still open offer is rejected (or offeree makes counter-offer) (6) Promise to Keep Offer Open: where offeree wants more time to decide whether to accept offer, s/he might ask offeror to keep offer open for acceptance by offeree for a specified period of time such a promise not binding unless offeror receives “consideration” in return for this promise i.e. must make separate contract (offeror promises to keep offer open for specified time, in return for consideration from offeree) – called “option” or “option agreement” in effect there could be two contracts: (1) option agreement, and (2) contract that would result if original offer (the one required to be kept open) was accepted (7) Counter-offer: if “accept” offer but not exactly on terms offered, no acceptance – it is “counter-offer” counter-offer rejects and cancels original offer (no longer able to accept original offer) vs. “mere inquiry” – asking whether offered terms represent the “best” offer is not treated as counter-offer Contract Elements - Acceptance: (1) Terms of Acceptance: must be unqualified - cannot alter, add to or take away from any of the terms offered (2) Method of Acceptance: “unilateral” contracts – where offer invites acceptance simply by doing what offer requires, acceptance involves doing what offer requires (e.g. offering reward) “bilateral” contracts– where offer requires acceptance bypromising to do something, acceptance involves communicating thatpromise to offeror before offer lapsesor is revoked general rule: may be communicated verbally, in writing, or by conduct if offer specifies way acceptance must be communicated, must follow that way (3) Silence: general rule: not acceptance exceptions: previous series of dealings between parties where silence considered acceptance normal industry trade practice followed by both parties parties agree in advance that silence means acceptance (4) Acceptance vs. Counter-offer vs. Mere Inquiry: (b) see above under “Contract Elements - Offer” (5) Signing Contract: creates strong presumption – read, understood and accepted all terms exceptions: “non est factum” (“it is not my doing”) – e.g. illiterate or blind or do not understand language in which contract written misrepresentation by omission (Tilden case - see Ch. 12 Contracts: Misrepresentation, Undue Influence, Duress) (6) “Mail Rule”: applies where offeror does not specify required or preferred means of acceptance and reasonable for offeror to anticipate that acceptance might be by mail general rule: acceptance effective when properly stamped and addressed acceptance letter is mailed (even if letter never received)
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