Midterm I Textbook Notes

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Management and Organizational Studies
Management and Organizational Studies 2275A/B
Philip King

CHAPTER 2 – THE CANADIAN LEGAL SYSTEM Statement of claim: A document for setting out the basis for a legal claim. Government is divided into three parts” 1. Legislative: creates the law 2. Executive: formulates and implements government policy 3. Judicial branch: adjudicates on disputes Government policy: The central ideas or principles that guide government in its work, including the kind of laws it passes. Constitutional law: The supreme law of Canada that constrains and controls how the branches of government exercise power. Liberalism: A political philosophy that elevates individual freedom ad autonomy as its key organizing value. Canadian legal system: The machinery that comprises and governs the legislative, executive, and judicial branches of government. The Canadian Constitution Constitutional conventions: Important rules that are not enforceable by a court of law but that practically determine of constrain how a given power is exercised. The Legislative Branch of Government Legislative branch: The branch of government that creates statute law. Statute law: Formal, written laws created or enacted by legislative branch of government. Paramountcy: A doctrine that provides that federal laws prevail when there are conflicting or inconsistent federal and provincial laws. Bylaws: 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. Formal executive: The branch of government responsible for the ceremonial features of government. Political executive: The branch of government responsible for day to day operations, including formulating and executing government policy, as well as administering all departments of government. The Judicial Branch of Government Cabinet: A body composed of all ministers heading government departments, as well as the prime minister or premier. Regulations: Rules created by the political executive that have the force of law. Judiciary: A collective reference to judges. Judges: Those appointed by federal and provincial governments to adjudicate on a variety of disputes, as well as to preside over criminal proceedings. Inferior court: A court with limited financial jurisdiction whose judges are appointed by the provincial government. Small claims court: A court that deals with claims up to a specified amount. Superior court: A court with unlimited financial jurisdiction whose judges are appointed by the federal government. Supreme Court of Canada: The final court for appeals in the country. Federal Court of Canada: The court that deals with some types of litigation involving the federal government. Canadian Charter of Rights and Freedoms: A guarantee of specific rights and freedoms enshrined in the Constitution and enforceable by the judiciary. Important: Section 2) Fundamental Freedoms, and Section 3) Equality Rights Bill: Proposed legislation. Four sources of law: 1. Constitutional convention 2. Statute law 3. Royal prerogative 4. Common law Royal prerogative: Historical rights and privileges of the Crown, including the right to conduct foreign affairs and to declare war. Common law: Rules that are formulated in judgments. Precedents: An earlier case used to resolve a current case because of its similarity. Equity: Rules that focus on what would be fair given the specific circumstances of the case, as opposed it what the strict rules of common law might dictate. Classifications of Law Domestic law: The internal law of a given country, which includes both statute and case law. International law: Law that governs relations between states and other entities with international legal status. Substantive law: Law that define rights, duties and liabilities. Procedural law: The law governing the procedure to enforce rights, duties, and liabilities. Public law: Areas of the law that relate to or regulate the relationship between persons and government at all levels. Private law: Areas of law that concern dealings between persons. Administrative law: Rules created and applied by those having governmental powers. CHAPTER 4 – DISPUTE RESOLUTION Negotiation: A process of deliberation and discussion used to reach a mutually acceptable resolution to a dispute. Alternative Dispute Resolution Alternative dispute resolution: A range of options for resolving disputes as an alternative to litigation. Mediator: A person who helps the parties to a dispute reach a compromise. Arbitrator: A person who listens to both sides of a dispute and makes a ruling that is usually binding on the parties. Binding: Final and enforeceable in the courts. Litigation Class action: A lawsuit launched by one person who represents a larger group whose members have similar claims against the same defendant. Plaintiff: The party that initiates a lawsuit against another party. Defendant: The party being sued. Stages if a lawsuit: 1. Pleadings: The formal documents concerning the basis for a lawsuit.  Claim: The formal document that initiates litigation by setting out the plaintiff’s allegations against the defendant.  Defense: The defendant’s formal response to the plaintiff’s allegations.  Counterclaim: A claim by the defendants against the plaintiff. 2. Discovery: The process of disclosing evidence to support the claims in a lawsuit. 3. Trial: A formal hearing before a judge that results in a binding decision.  Burden of proof: The obligation of the plaintiff to prove its case.  Evidence: Proof presented in court to support a claim.  Decision: The judgment of the court that specifies which party is successful and why.  Costs: Legal expenses that a judge orders the loser to pay the winner. 4. Enforcement  Judgment debtor: The party ordered by the court to pay a specified amount to the winner of a lawsuit. Appeal: The process of arguing to a higher court that a court decision is wrong. Appellant: The party who begins or files an appeal. Respondent: The party against whom an appeal is filed. CHAPTER 5 – AN INTRODUCTION TO CONTRACTS Contract: An agreement between two parties that is enforceable in a court of law. Creating the Contract Objective standard test: The test based on how a ‘reasonable person’ would view the matter. Equal bargaining power: The legal assumption that parties to a contract are able to look out for their own interests. CHAPTER 6 – FORMING CONTRACTUAL RELATIONSHIPS Offer: A promise to perform specified acts on certain terms. Invitation to treat: An expression of willingness to do business. Standard form contract: A ‘take it or leave it’ contract, where the customer agrees to a standard set of terms that favors the other side. An offer can be terminated by:  Revocation  Lapse  Rejection  Counteroffer  Death or insanity Revocation: The withdrawal of an author. Option agreement: An agreement where, in exchange for payment, an offeror is obligated to keep an offer open for a specified time. Lapse: The expiration of an offer after a specified or reasonable period. Rejection: The refusal to accept an offer. Counteroffer: The rejection of one offer and proposal of a new one. Acceptance Acceptance: An unqualified willingness to enter into a contract on the terms in the offer. Consideration Consideration: The price paid for a promise. Gratuitous promise: A promise for which no consideration is given. Pre-existing legal duties: A legal obligation that a person already owes. Promises Enforceable without Consideration Promissory estoppel: A doctrine whereby someone who relies on a gratuitous promise may be able to enforce it. Intention to Contract Rebuttable presumption: A legal presumption in favor of one party that the other side can seek to rebut or dislodge by leading evidence to the contrary. CHAPTER 7 – THE TERMS OF A CONTRACT Content of a Contract Express term: A provision of a contract that states a promise explicitly. Rules of construction: Guiding principles for interpreting or ‘constructing’ the terms of a contract. Implied term: A provision that is not expressly included in a contract but that is necessary to give effect to the parties’ intention. Entire contract clause: A term in a contract in which the parties agree that their contract is complete as written. Contractual quantum meruit: Awarding one party a reasonable sum for the goods or services provide under a contract. Parol evidence rule: A rule that limits the evidence a party can introduce concerning the contents of the contract. Using Contractual Terms to Manage Risk Condition subsequent: An event or circumstance that, when it occurs, brings an existing contract to an end. Condition precedent: An event or circumstance that, until it occurs, suspends the parties’ obligation to perform their contractual obligations. Limitation of liability clause: A term of a contract that limits liability for breach to something less than would otherwise be recoverable. Exemption clause: A term of a contract that identifies events causing loss for which there is no liability. Liquidated damages clause: A term of a contract that specifies how much one party must pay to the other in the event of a breach. CHAPTER 8 – NON-ENFORCEMENT OF CONTRACTS Voidable contract: A contract that, in certain circumstances, an aggrieved party can choose to keep in force or bring to an end. Void contract: A contract involving a defect so substantial that it is of no force or effect. Contracts Based on Unequal Relationships Legal capacity: The ability to make binding contracts. Age of majority: The age at which a person becomes an adult for legal purpose. Mental incapacity:  Economic duress: The threat of economic harm that coerces the will of the other party and results in a contract.  Undue influence: Unfair manipulation that compromises someone’s free will. Operates in two circumstances, 1. Actual pressure 2. Presumed pressure  Unconscionable contract: An unfair contract formed when one party takes advantage of the weakness of another. Proof of this involves two steps, 1. Proof of inequality between the parties 2. Proof of an improvident (imprudent) bargain or proof of exploitation Misrepresentations and Important Mistakes  One party may provide only partial information to the other side.  One party may actively conceal the truth.  One party may neglect to correct an earlier assertion that, when stated, was correct but now no longer is so.  The parties may be in a relationship requiring utmost good faith. A statue imposes a positive obligation to disclose information. Misrepresentation: A false statement of fact that causes someone to enter a contract. Rescission: The remedy that results in the parties being returned to their pre-contractual positions. To count as a misrepresentation, a statement must be proven:  False  Clear and unambiguous  Material to the contract  One that actually induces the aggrieved party to enter the contract  Concerned with a fact and not an opinion Categories of actionable misrepresentations:  Fraudulent misrepresentation  Negligent misrepresentation  Innocent misrepresentation Mistake: An error made by one or both parties that seriously undermines a contract. Common mistake: Both parties to the agreement share the same fundamental mistake. Under classical model of illegality, a contract is enforceable if it:  Is contrary to a specific statue and/or  Violates public policy Illegal contract: A contract that cannot be enforced because it is contrary to legislation or public policy. Public policy: The community’s common sense and common conscience. Non-solicitation clause: A clause forbidding contact with the business’s customers. Non-competition clause: A clause forbidding competition for a certain period of time. Guarantee: A promise to pay the debt of someone else, should that person default on the obligation. CHAPTER 9 –TERMINATION AND ENFORCEMENT OF CONTRACTS Several ways to terminate a contract (201):  Through performance  Through agreement  Through frustration  Through breach Through Performance (202) Vicarious performance (202): Performance of contractual obligations through others. Through Agreement (203) In response to an agreement that has become infavorable, parties may decide to:  Enter into a whole new contract [novation (203): The substitution of parties in a contract or the replacement of one contract with another.]  Vary certain terms of the contract  End the contract  Substitute a party Assignment (204): The transfer of a right by an assignor to an assignee. Through Frustration (205) Frustration (205): Termination of a contract by an unexpected event or change that makes performance functionally impossible or illegal. Person claiming frustration must show that the event:  Was dramatic and unforeseen  Was a matter that neither party had assumed the risk of occurring  Arose without being either party’s fault  Makes performance of the contract functionally impossible or illegal Self-induced impossibility does not count as frustration in law (ex: firing all your employees). At the moment frustration occurs, any further obligations under the contract cease. Through Breach Balance of probabilities (207): Proof that there is a better than 50 percent chance that the circumstances of the contract are as the plaintiff contends. To succeed in suing for a breach of contract, plaintiff must demonstrate:  Privity of contract (establish there is a contract)  Breach of contract  Entitlement to a remedy Statutory modifications of the doctrine (209): consumer purchases and insurance. Condition (209): An important term that, if breached, gives the innocent party the right to terminate the contract and claim damages. Warranty (210): A minor term that, if breached, gives the innocent party the right to claim damages only. Innominate term (210): A term that cannot easily be classified as either a condition or a warranty. Provided that the plaintiffs can establish just one breach of condition or condition-like innominate term, they are entitled to end the contract. Fundamental breach (210): A breach of contract that affects the foundation of the contract. Anticipatory breach (212): A breach that occurs before the date for performance. The innocent party can sue immediately for breach of contract and is not required to wait and see if the other party has a change of heart. When the anticipatory breach is sufficiently serious, the innocent party can also treat the contract as at an end. Damages (213): Monetary compensation for breach of contract or other actionable wrong. Expectation damages (213) Damages which provide the plaintiff with the monetary equivalent of contractual performance. The purpose of damages in contract law is to compensate a plaintiff (213). Punitive damages (213): Damages that are awarded to punish the defendant. Duty to mitigate (215): The obligation to take reasonable steps to minimize the losses resulting from a breach of contract or other wrong. Interlocutory injunction (218): An order to refrain from doing something for a limited period of time. Unjust enrichment (219): Occurs when one party has undeservedly or unjustly secured a benefit at the other party’s expense. Restitutionary quantum meruit (219): An amount that is reasonable given the benefit the plaintiff has conferred. CHAPTER 10: INTRODUCTION TO TORT LAW Tort (229): A harm caused by one person to another, other than through breach of contract, and for which the law provides a remedy.
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