Business Law I - 2275 - Midterm Review Notes

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Business Law Review
Chapter 1
Sophisticated Client
A sophisticated Client understands the role of the lawyer and the client. And sophisticated client also has an
understanding of when to represent him/herself, when to hire a lawyer, and how to hire a lawyer. Also the client
understands what actions can be taken with the dissatisfied conduct of their lawyer. Three major components are:
The law will protect you from people who try to take advantage of you.
The law is sophisticated
So, too, must you be.
The Role of the Lawyer
The Role of the lawyer is to present the client with legal advice relevant to the clients situation. While lawyers are
typically experts in their area of practice, and may be able to provide invaluable assistance to their clients, lawyers
are simply providers of advice. They are hired by the client who provides them with instructions and the lawyer is
bound to follow these instructions, provided they are lawful. An emphasis on one aspect of the client-lawyer
relationship is that no advice is appropriate unless the lawyer has received all information.
Solicitor-Client Privilege
Refers to the duty of the lawyer to keep all information provided by the client confidential. It is thus fundamental to
our legal system, as without it the access to justice would be significantly reduced. Most lawyers will advise their
clients about solicitor-client privilege and encourage their clients to disclose all relevant information.
Solicitor-Client
Relationship (small
business)
When to hire a lawyer:
The first thing the owner should do is considered how he will organize his business i.e. Sole proprietor; will
he have a partner will the business be operated as a franchise? A lawyer can provide information and advice
that will help the owner make decisions appropriate for achieving his objectives.
If the owner is purchasing an existing business, the lawyer can provide advice and information that will
enable the owner to minimize his potential risk and liability.
The lawyer can, of course, determine the relevant municipal, provincial and federal laws that are relevant to
the business and provide advice required to ensure compliance with them. This could cover everything
from obtaining a business license to complying with municipal noise bylaws, to satisfying provincial and
federal environmental standards.
When to represent yourself:
If you need to make a business decision, and you do not retain a lawyer, then you will either not be
considering relevant legal information when you are making your decision or you will be obtaining it
yourself. For small insignificant decisions it may be appropriate to avoid taking the time to find relevant
legal information. However, in most cases it would be beneficial to proceeding only after completing some
research of the relevant law. Anyone with computer access and access to the Internet can find legal
information online. A sophisticated client will capitalize on this, she will use the sources provided to answer
her current legal questions only hiring a lawyer if absolutely necessary.
Important to note not all-online information is true.
Other distinguishing factors that determine when to or not hire a lawyer are the time and costs incurred if a lawyer is
consulted for assistance or representation in making a particular business decision. Small Claims court (limited to
25,000 in winnings). Anything greater than this is taken to a superior court and that’s when a lawyer should be
retained. In a small claims court a lawyer may be retained due to the complexity of the case, but a sophisticated client
will understand if the cost of one is worth it. If you break the law and harm someone else, there will likely be two
different legal proceedings. First there will be a criminal prosecution in which you will be charged by the
government (state) with committing a crime. If you are convicted, you will be punished and have a criminal record.
The civil litigations may take place in a small claims court, where you will most likely represent yourself. If the
litigation involves an amount of money greater than the monetary jurisdiction of small claims court you should then
hire a lawyer to represent you, as the trial will take place in a superior court.
How to Find a good
Lawyer
The first step in finding a good lawyer is to make a list of lawyers. This is easily done through most readily available
resources in your home:
Yellow pages
Internet
Or referrals from trusted friends or relatives.
Another source is the names in the provincial law society. The organizations are self-governing bodies of lawyers.
Once you have the name of the lawyer near you who practices the type of law relevant to your situation, you should
set up a meeting for an initial consultation. During this time it is best also to confirm the costs that will be charged.
Also during this time both the plaintiff and the lawyer will decide if they are suitable for each other.
There are several advantages to maintaining a relationship with your lawyer. The lawyer will know and understand
you and your business which will able her to provide you with legal advice more efficiently cutting costs. Also it will
enable her to customize her legal advice, so that it will be even more useful to you when you are making your
decisions.
Legal Aid
You are eligible for legal aid if you have legal problems and you cant afford a lawyer. Legal Services Society (LSS)
may pay for legal problems involving criminal charges, mental health and prison issues, serious family problems,
child protection matters, or immigration problems. To receive legal aid, a client must meet certain financial
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guidelines involving household income and assets. Furthermore, if you collect money as a result of the settlement or
judgment, you will probably have to repay some or all of the benefits you received from legal aid. Duty council is
court lawyers who assist individuals who are not represented by a lawyer. Duty council may be available in criminal
courts, family and immigration courts. The assistance of a duty council is considered legal advice, not legal
representation. In a duty court, duty council may provide advice to an accused about the charges he faces, the
relevant court procedures, and his legal rights.
How Lawyers Bill their
Clients
There are three main ways lawyers will calculate there fee’s:
First, the lawyer may charge a fixed fee for the work required, regardless of the time involved. This is often
used in specific tasks like creating a will, purchasing a house, or incorporating a business.
Secondly, the lawyer may bill the client for all of the time she spends on the activity; with the hourly rate
depending on numbers of years the lawyer has been in practice.
Third, the lawyer may receive a percentage of the amount the client collects, either through a settlement or
a court judgment. This contingency fee agreement usually happens when a client does not have enough
funds to pay the lawyer at the beginning of the case.
In addition to paying for the lawyer’s time, the client is also responsible for disbursements that are the out of pocket
costs incurred by the lawyer on the clients behalf (filing documents, long distance phone charges, courier charges, fee
charged by an expert for testifying, and photocopying costs). In most cases the lawyer will ask for a retainer (initial
deposit into trust account) from the client before she commences work.
How to Complain about
your lawyer
Fee Mediation Service a neutral mediator who tries to facilitate a mutually acceptable resolution of dispute.
Court Officials taxation officers and assessment officers have the power to decide that the lawyer’s bill is fair and
does not need to be changed.
Complaint Resolution Process Complaints are investigated and may need to be sought deeper in a hearing.
Chapter 2
What is Law
Law has been defined in moral terms, where only good rules are considered law (natural law theorists). Others have
defined law by looking at its source, stipulating that only the rules enacted by those with authority to do so qualify as
law (legal positivists). And some have defined law in practical terms, suggesting that only those rules that the courts
are willing to enforce are considered law (legal realists). A simplified definition of law is “Law is the body of rules
made by government that can be enforced by the courts or by other government agencies”. While this
definition as enforceable rules has practical value, it does not suggest what is moral. Just because someone is obeying
the law doesn’t mean that they are acting ethically.
Categories of Law
Substantive Law established not only the rights an individual has in society but on the limits of his or her conduct.
Substantive law guarantees all the right to travel, to vote, and the right to own property. Procedural Law determines
how the substantive laws will be enforced. The rules governing arrest, investigation and pre-trial and court
processes in both criminal and civil cases are examples.
Law can also be distinguished by its private or public function. Public Law includes constitutional law that
determines how the country is governed and the laws that affect an individual’s relationship with the government,
including criminal law and regulations created by government agencies. Private Law involves the rules that govern
our personal, social, and business relations that are enforced by one person suing another in a private and civil
action.
Origins of Law
Common Law Legal System adopted by all provinces in Canada and has developed over the last millennium
initiating in England. Civil Law Legal System is used by and only by Quebec in Canada. It is based on the French civil
code and originated from Europe, and is to used in many jurisdictions, outside of Canada. The terms Civil Court, Civil
action, and civil Law are all definitions used within the Common Law Legal System and should not be confused with
the French “Civil Code” or Civil law as used in Quebec.
Civil Law Legal System
Civil Law is a Code a list on rules stated as broad principles of law that judges apply to the cases that come before
them. The Code determines the principles to be applied.
Common Law legal
System
The early Norman kings established a strong feudal system in England that centralized power in their hands. As long
as they remained strong, they maintained their power; but when weak kings were on the throne, power was
surrendered to the nobles. The growth of the common law legal system was much affected by this ongoing struggle
for power between kings and nobles and later kings and parliament. During times when power was decentralized the
administration of justice fell to the local lords, barons, or sheriffs, who would court as part of their feudal
responsibility. Their courts commonly resorted to such practices as trial by battle or ordeal. Trial by battle involved
arm combat between the litigants and their champions, and trial by ordeal was done by a physical test. The
assumption here was that God would intervene on behalf of the righteous party. Strong kings such as Henry II
introduced travelling courts, which were very attractive in resolving disputes. As more people begin to use them
their power base grew. The fairer the royal judges were, the more people they attracted. Eventually this turned into
royal courts where there function was no to impose any set of laws, but to be as fair and impartial as possible.
Stare Decisis
Gradually a system of justice developed in which the judges were required to follow each other’s decisions. This
process was then named stare decisis or “following precedent”. Another factor, which lead to the development of
stare decisis, was the creation of the appeal courts. The most significant feature of our legal system today is that the
decision of a judge at one level is binding on all judges in the court hierarchy in a court of lower rank, provided the
facts in the two cases are similar. The Supreme court of Canada is the highest court in the land; its decisions are
binding on all Canadian courts.
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The role stare decisis has in the common law legal system is that it allows parties to predict the outcome of the
litigation and thus avoid going to court. However, a significant disadvantage of the following precedent is that a judge
must follow another judge’s decision even though social attitudes may have changed. The system is anchored to the
past, with only limited capacity to make corrections or to adapt and change to meet modern needs.
The judge’s job is to analyze the facts of the precedent cases and compare them with the case at hand. Since no two
cases are ever exactly alike, the judge has some flexibility in deciding whether or not to apply a particular precedent.
Judges try to avoid applying precedent decisions by finding essential differences between facts of the two cases if
they feel the prior decision will create an injustice in the present case. This process is called Distinguishing the
Facts of opposing precedents.
Sources of Law
Common Law:
At an early stage in the development of common law, three great courts were created: the court of common pleas, the
court of kings bench, and the exchequer courts, referred to all together as the common law courts. The rules
developed in the courts we called “common law” because judges, at least in theory, did not create law but merely
discovered it in the customs and traditions of the people to whom it was to be applied. However, the foundation of a
complete legal system cannot be created on the local tradition and custom alone, so common law judges borrowed
legal principles from many different sources. Roman Civil Law gave us our concepts of property and possessions.
Canon or Church Law contributed law in relation to families and estates. Law Merchant contributed to law when
trading between nations was performed by merchants who were members of guilds, which developed their own
rules to deal with disputes between members.
Equity:
Because of rigidity of the process in common law, the inflexibility of the rules applied, and the limited scope of the
remedies available, people often went to the king (instead) for satisfaction and relief. The burden of this process
made it necessary for the king to delegate the responsibility to the chancellor, who, in turn, appointed several vice
chancellors. This body eventually became known as the Court of Chancery, sometimes referred to as the Court of
Equity. It dealt with matter that, for various reasons, could not be handed adequately or fairly by the common law
courts. The court of Chancery did not hear appeals from the common law courts; rather it provided an alternative
form. If people seeking relief knew that the common law courts could provide no remedy or that the remedy was
inadequate, then they would go to the court of chancery instead. This court could decide a case on its own values. The
system of law delivered by the court of Chancery became known as the Law of Equity. This flexibility was the courts
most significant asset but also was its greatest drawback. Finally the two separate court systems were combined by
the Judicature Act of 1873-1875.
Although the two court systems merged, the bodies of law they created didn’t, and it is still best to think of common
law and equity as two distinct bodies of rules. Rules of equity may have been developed on fairness and justice, but
when a person today asks a judge to apply equity, they are not asking for fairness, they are asking for rules developed
by the court of chancery.
Statutes
Justice was not available in either the common law or chancery courts and another method was needed to correct
these inadequacies. Parliament handled any major modification to the law. Parliamentary enactments are referred to
as Statutes or legislation and take precedence over judge made law based on common law or equity. The
government has several distinct functions. Legislative or Parliament creates law, the Judicial Branch is the court
system, and the judiciary interprets legislation and makes case law, The Executive or Administrative branch are the
agencies, which administer and implement the law.
Law in Canada
Confederation
Confederation was accomplished when the British Parliament passed the British North American Act (BNA Act),
which is now referred to as the Constitution Act, 1867. The BNA Act’s primary significance is that it created the
dominion of Canada, divided power between the legislative, executive, and judicial branches of government and
determined the powers and functions of the federal, judicial, and provincial levels of government. Rule of Law
recognizes that although Parliament is supreme and can create any law considered appropriate, citizens are
protected from any uninformed actions of the government. Canada’s constitution is, in essence, the “rulebook” that
government must follow. It is comprised of three elements; 1 Statutes such as the constitution act and statutes
creating various provinces, 2 conventions, which are unwritten rules dictation how the government is to operate
and include the rule of law, and 3 case law on constitution issues such as if the federal or provincial government has
jurisdiction to create certain statutes.
Constitution and Division of Powers
Because of the Constitution Act, the 3 different governments all received different powers. The Federal Government
has power over such matters as banking, currency, the postal service, criminal law (although its not enforcement),
and the appointment of judges in the federal and higher level provincial courts. The federal government passes
considerable legislation affecting such matters as the regulation of all import and export activities, taxation,
environmental concerns, money and banking transportation, patents, and trademarks. The provinces have
jurisdictions over such matters as hospitals, education, administration of the courts, and commercial activities at the
provincial level. Thus most business activities that are carried on within the province are governed by Provincial
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