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Midterm

Midterm Review.docx

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Department
Business
Course
BU231
Professor
Valerie Irie
Semester
Winter

Description
The Law of Torts *Don’t divorce the law from common sense The Scope of Tort Law -Tort – a wrongful act causing harm to the person or property of another -Harm is a required element of any tort – the wrongful act must cause harm -Personal injury -Compensation for harm done – injured person can charge for money -Tort law is between individuals -Criminal law is between individuals and state -Discussed issues of personal injury –hard to one person/property or economic harm (financial loss) -Tort law is developed to help the injured person -We use the term ‘liable’ – not guilty -The object of tort law is to place the injured party back in the position they would’ve been, had the tortious act not occurred Development of the Tort Concept -Strict liability – liability that is imposed based upon causation regardless of fault -The requirement of a writ -Category of wrongdoing acknowledged in law -Strict liability – no need to prove fault -Gradually, the idea developed that a person should not be responsible for harm caused to another if he acted without fault -Early tort law evolved in two ways: the law took into account the fault of the defendant and it also took into account causation – whether the defendant’s conduct could be considered the cause of the harm -Both concepts, fault and causation, are at the heart of modern tort law -The wrong committed must still be one recognized in law -The wrong committed must cause harm to the injured party -Our tort system is fault based – some torts do not require an element of fault -Can’t sue for stealing a boyfriend or for your mom not taking care of her body when she was pregnant with you The Basis for Liability -Fault – unjustifiable injurious conduct that intentionally or carelessly disregards the interests of others -People will be more inclined to be careful if they must pay for the consequences of their carelessness -Strict liability persists in only a few areas of modern tort law -Public policy – considerations or objectives that are considered beneficial to society as a whole -These standards force the law to adapt in many ways -No-fault insurance – a system of compulsory insurance that eliminates fault as a basis for claims -Workers’ compensation – a scheme in which employers contribute to a fund used to compensate workers injured in industrial accidents regardless of how the accident was caused -Vicarious liability – the liability of an employer to compensate for torts committed by an employee during the course of his or her employee Intentional Torts -Intentional torts are those where the activity or conduct is done deliberately, not by accident -Unintentional torts are those where the behaviour itself is accidental and not done deliberately Nuisance -Public nuisance – interference with the lawful use of public lands and is often quasi-criminal in nature with action taken against the tortfeasor by the government – Ex. Blocking public roads -Private nuisance – interference with an occupier’s use and enjoyment of his/her land – Ex. Excessive noise -The term “occupier” includes not only the owner of land but tenants as well Trespass -The act of entering someone else’s land without consent -Harm must be caused -If a trespasser has caused damage to the property, then the land owner can bring an action in court -A landowner can stop trespassing through a barrier, but they cannot inflict personal harm  “Can’t set bear traps” Assault and Battery -Assault – the threat of violence to a person -Battery – unlawful physical contact with a person -Considered to be a trespass to the person -Ex. Battery – the kick, assault – “I’m going to kick you” -Doctor is an exemption to these rules – emergency situations Intentional Infliction of Mental Distress -Intent to cause harm -Recognizable physical or psychopathological harm must occur -Psychological distress False Imprisonment -Unlawfully restraining or confining another person -Does not need to be physical constraint – can by psychological -It is not false imprisonment if charges are laid by the police -False imprisonment – unlawfully restraining or confining another person -False arrest – causing a person to be arrested without reasonable cause -It is not necessary that there be actual physical restraint, or even the threat that it will be applied: a reasonable fear that a store detective might shout “Stop, thief!” would be enough restraint to amount to an imprisonment -Malicious prosecution – causing a person to be prosecuted for a crime without an honest belief that the crime was committed - No good reason to believe someone did a crime but you report them to the police anyways Defamation -Making an untrue statement that causes injury to the reputation of another -Slander – spoken -Libel – written -Elements: 1. Intent (malicious) 2. Statement made 3. Statement is false 4. Statement is published – made to a third party 5. Statement must cause “genuine and significant injury” to the reputation of the plaintiff -Has to be made to a third person and hard their reputation -Has to be significant – Ex. Steve Jobs defaming Bill Gates vs. me defaming Bill Gates Defences to Defamation -The statement was true; or -Qualified privilege – statement made in good faith and with honest belief in its truthfulness -Reference letters – this is why they’re so vague -Absolute privilege – complete immunity from liability for defamation -Qualified privilege – immunity from liability for defamation provided a statement was made in good faith -Responsible Communication on Matters of Public Interest – a defence to defamation when the publication of the statement is in the public interest and was done responsibly Other Intentional Torts Related to Business -Inducing a breach of contract- intentionally causing one party to breach his contract with another -Unlawful interference with economic relations – attempting by threats or other unlawful means to induce one person to discontinue business relations with another -Product defamation – making false and damaging statements about the products of another person -Passing off – representing one’s own goods as those of another Defences to Intentional Torts -Consent - Where the injured party consented to the act that caused harm, there is no tort -Absolute defence -Self-defence - The party asserting the defence needs to show that the self defence was necessary; and -No excessive force was used -Have to have no other options -Necessity - This is a defence to trespass, where the right of way is impassable -Or no other option but to destroy property – Ex. Knocking down a building to prevent the spread of fire -Volition - Act must be voluntary -Ex. Your friends throw you over a fence and you break someone’s gnomes – you would not be liable because it was not voluntary -Capacity - Requirement of mental capacity to inform intent – if absent, forms a complete defence -Ex. A kid with autism would not be liable because of this The Elements of a Cause of Action -Example, trespass to property: 1. Intention 2. Entering property 3. Without consent; and 4. Causing harm -All elements must be present to go forward Unintentional Torts -Involve behaviour that is not done deliberately or on purpose -The incident happens unexpectedly, by mistake or accident Negligence -Negligence – the careless causing of injury to the person or property of another Three Part Test for Negligence 1. The defendant owed the plaintiff a duty of care 2. The defendant breached that duty of care by falling below the standard of care 3. The defendant’s actions caused the injury 1. Duty of Care -The legal duty imposed on everyone: -to take reasonable care to avoid injury to others -the injury must be reasonably foreseeable -the duty is not all encompassing – you must owe a duty to the other person -Obligation to take care to avoid injury to others -“You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour” -Test for Duty of Care 1. Is there a sufficiently close relationship between the parties…so that, in the reasonable contemplation of the [defendant] carelessness on its part might cause damage to the person? If so 2. Are there any considerations which ought to negative or limit a. The scope of the duty b. The class of persons to whom it is owed c. The damages to which a breach of it may give rise 2. Standard of Care -Standard of care – the level of care that a person must take in the circumstances -The law places a general duty on every person to take reasonable care to avoid causing foreseeable injury to other persons and their property -Level of care that people must take in their action – when you are living -Special standards of care: -The reasonable and competent person in a specific profession – where someone requires specialized skill and knowledge -The professional standard of care -The fiduciary -Children – the standard of a reasonable child of the same age, unless engaged in an adult activity -The professional standard of care – compared to your trade standard – Ex. Electrician, people in trades -Children have lower standards -In Canada, you can’t sue children, but in the U.S. you can -You cannot determine if a person has fallen below the standard of care if you do not first determine what the appropriate standard is in any given situation 3. Causation of Damage -Did the defendant’s action cause harm to the plaintiff? -If there is no harm/loss – there is no tort -“But For” test -Would the injury have occurred “but for” for the conduct of the defendant? If yes, then this is the cause of the loss/harm -Legal test -The defendant does not have to be the sole cause of the harm, if is sufficient for the plaintiff to show that the defendant’s conduct was a cause of the harm/loss -Show that the defendant is the cause of law – does not have to be the only cause -Remoteness -The conduct of the defendant cannot be too removed/remote from the harm caused -Element of foreseeability is required – the harm has to be foreseeable at the time of the tort -The action of the defendant cannot be so far removed from the plaintiff -Cannot be a lot of interference -Ex. War lost because a horse was missing a nail from a shoe – too far removed -Has to be foreseeable to have a cause of action against the manufacturer Insurance -The role of insurance in the business environment -Minimizing the risk of loss due to tortious actions on the part of the employer or employees (vicarious liability) -Cost of business -Makes a claim for the insurance company and then the insurance company sues Product Liability -Product liability – a tort imposing liability on manufacturers for harm caused by defective products -Circumstantial evidence principle – A plaintiff can meet the burden of proof by using circumstantial evidence to show that the defendant’s negligence was the mostly likely cause of the injury -The defendant then has the burden of showing that is was not negligent -Manufacturers are liable for injuries resulting directly from all product defects of which, given the present state of technology, they can reasonably be expected to be aware -Manufacturers who choose to reduce costs by omitting necessary safety features or by using a system of sampling inspection rather than inspecting every them become responsible for harm that results -Duty to warn – manufacturer’s responsibility to make users aware of the risks associated with the use or misuse of the product -Ex. Warning labels on bleach – have to be on there Vicarious Liability -Employers can be held liable for the tortious actions of their employees, when the employee is acting in the course of his/her employment -Because the company is bearing the benefits of an employee, they should also bear the risks -Employee and company are both at fault, but the person with more money will be sued Occupier’s Liability -The special standard of care owed by persons who occupy property to persons who enter those premises -Invitee – a person permitted by an occupier to enter premises for business purposes - customers -Licensee – people with a reason to be there – Ex. Mailman -Trespasser – a person who enters premises without the permission of the occupier -Occupier - the person who has control over the property -Occupier has to remove hazards -Where the use of the land is to encourage recreational activity, the user of the premises willingly assumes the risk it’s their own fault, not the owners -Ex. Farmer and snowshoeing – if the snowshoer falls and injures themselves it is their own fault Defences -Contributory negligence: -Contributing to their own harm -Eggshell skull principle – pre-existing health conditions don’t matter because you take your victim as you find them -Plaintiff is responsible for their own injury -Ex. Plaintiff is texting and falls into a hold – they contributed negligence to it -Partial defence – defendant will get a reduction in what they have to pay -Mitigate – duty to act reasonably and quickly to minimize the extent of damage suffered -Voluntary assumption of risk -Where the plaintiff is engaged in an inherently risky activity -The plaintiff knew of the risks and voluntarily assumed that risk -This is a complete defence -You are aware of the risk, so if something happens it is your own fault -If someone’s going to take a risk, they need to be fully aware (ridiculous things you have to read and sign before a massage) -Illegal Act -When the plaintiff is harmed while engaged in an illegal activity -You are compensated for your injury but no more – can’t profit because it was an illegal act -Consent: -Defence to an intentional tort -Where the plaintiff consents to the tortious act, then they cannot later claim compensation -The consent must be fully informed and genuine Damages -Damages = $$$ -Three types of damages: -Special – quantifiable (stuff you can get an invoice for) -General – not quantifiable (Ex. Lost an arm, pain and suffering, momentums – sentimental value) -Punitive (rare) – punishment (Ridiculously rare – behaviour was so bad (of defendant) that money needs to be added to what they are being sued for) -What you’re suing for Professional Liability Professional Liability -Those with specialized knowledge or skill will be held to a higher standard than that of the ordinary person -Professionals with certification in their field held to the standard of their field of expertise -Standard = the reasonably competent and diligent person in that field -Those who choose to specialize are held to a higher standard -Specialists within fields of expertise are held to a higher standard than generalists -Liability may arise from three relationships, generating three different causes of action: -The contractual relationship leads to a breach of contract cause of action -The fiduciary relationship leads to break of fiduciary duty; and/or -The duty of care owed in tort leads to a tort cause of action Fiduciary Duty -The highest standard of care -Applies to those who stand in a special relationship of trust to another person, Ex. Parent, doctor, trustee -Will also apply to some professionals who are acting in a “trust” relationship with their clients -Highest standard there is -Ex. Parent and child – parent provides everything for a baby to remain alive – high level of trust -Three characteristics to determine who is a fiduciary: 1. A fiduciary has the scope for the exercise of some discretion or power 2. A fiduciary can unilaterally exercise that power or discretion so as to affect the beneficiary’s legal or practical interests 3. The beneficiary is peculiarly vulnerable to, or at the mercy of, the fiduciary holding the power or discretion -Ex. Doctor, surgeon -Lawyers, doctors, trustee (person who manages trust money for a minor until they come of age) are inherently fiduciary relationships -Must avoid and disclose conflicts when fiduciary – can’t benefit one client over another -Sometimes there is no contract between the professional and the injured party; in such circumstances fiduciary or tort law are the only alternatives -If a fiduciary duty is found to exist, the law imposes a wider range of obligations on the professional than is expressly stated in the contract or required under tort law Tort Liability -When a professional deliberately or carelessly causes damage to a client, a tort has occurred -Their contract may also have been breached -Sometimes “other” people may rely on a professional opinion given to a single client -Third-party liability – liability to some other person who stands outside a contractual relationship Loss/Harm -A tort requires that one party suffers some sort of harm, injury or loss to his/her person or property -That harm was traditionally physical harm -In every tort, all you’re getting back is money Negligent Misrepresentation -Statement can be made that is untrue -If it is intentionally made (a lit), then it is fraudulent misrepresentation -If it is made carelessly, then it is negligent misrepresentation -Test: 1. A statement is made 2. The statement is false 3. The maker of the statement must owe the hearer of the statement a duty of care 4. The hearer of the statement must act on the statement 5. The hearer of the statement must suffer a loss as a result of their acting on the statement -Deceit – an intentional tort imposing liability when damage is caused by a false statement made with the intention of misleading another person -Fraudulent misrepresentation – an intentional tort imposing liability for an incorrect statement made knowingly with the intention of causing injury to another -Disclaimer – an express statement to the effect that the person making it takes no responsibility for a particular action or statement Accuracy of the Statement -It is easy to determine the accuracy of a factual statement -The accuracy of the statement is assessed as of the time the information was given; the fact that the statement becomes untrue later does not necessarily establish that it was untrue at the time it was made The Standard of Care for Professionals -Professionals must take reasonable care before making a representation -The standard of reasonable care includes not omitting essential information -Providing partial or incomplete information in response to an inquiry can be negligent misrepresentation where the professional has a duty to the plaintiff to make the disclosure in question The Role of Professional Organizations -Most major professions – accounting, law, doctor – are governed by professional organizations established under, and to some extent regulated by, provincial statutes -Code of conduct – rules of a professional organization setting out the duties and appropriate standards of behaviour to be observed by its members -Punish serious cases of unethical conduct by expulsion or suspension -Privilege – the right of a professional to refuse to divulge information obtained in confidence from a client Business Related Torts Inducing Breach of Contract rd -Where one party induces another party to breach his contract with the 3 party -Ex. Breaking work contract because a head hunter lured you away – have to give proper notice Unlawful Interference with Economic Relations -Where threats or other unlawful means are used to convince one party to cease doing business with another -Ex. Threatening when someone tries to quit because they were headhunted – bribe Product Defamation -Where one party intentionally makes untrue or disparaging remarks about another’s product in advertising their own product -Ex. Pepsi saying Coke tastes like crap Passing-Off -Representing one’s own product as that of another (Trademark Infringement) -Ex. Coach knock-offs -Taking advantage of another company’s goodwill Formation of a Contract: Offer and Acceptance Contract Law -Parties choose to make a contract and only then become legally obligated to comply with its terms -Contract – a set of promises that the law will enforce -Law will allow you to sue if you have met the requirements of contract law Formation of a Contract -Offer -Acceptance -Consideration -Intention to create legal relations -Capacity -Legality -Certainty of terms -All of these have to be present -Last 4 are presumed to exist but she will make it clear if someone is doing something illegal for example Offer -A tentative promise made by one party, subject to a condition or containing a request to the other party -Offeror – the person making the offer -Offeree – the person to whom the offer is made -Must be definite and certain -Must be communicated to the intended recipient -It is intended to be binding on both of the parties as soon as it is accepted -Expression of willingness to enter the contract -Radio ads are invitations, not contracts -Most common type of contract: Standard Form Contract (SFC) -The form of an offer is not important as long as it is heard and understood -In most situations, an offeror communicates orally or in writing Standard Form Contract -The “take it or leave it” offer – Ex. Cell phone contracts -No room for negotiation over terms of the contract -All consumer contracts -Advantages: highly efficient, fast, easy -Disadvantages: inequality of bargaining power, little or no room to negotiate terms -Make sure terms are clear and evident (no small print) -Unusual information needs to be pointed out Counter-Offer -Amending the contract in order to ‘accept’ the contract does not equal acceptance -This amounts to a rejection of the offer and a counter-offer -Not acceptance of an offer, but rather is it rejection and counter-offer -Lapse – the termination of an offer when the offeree fails to accept it within a specified time, or if no time is specified, then within a reasonable time -An offer may lapse in the following ways: -when the offeree fails to accept within a time specified in the offer -when the offeree fails to accept within a reasonable time, if the offer has not specified any time limit -when either of the parties dies or becomes insane prior to acceptance -An offeror may be able to revoke an offer at any time before acceptance, even when it has promised to hold the offer open for a specified time – the offeror must provide notice of revocation to make it effective Options -Option – a contract to keep an offer open for a specified tie mini return for a sum of money -In an option, the offeree makes a contract with the offeror in the following general terms: the offeree agrees -Exercise an option – accept the offer contained in an option Acceptance -Final unqualified consent to the terms of the offer -Must be communicated to the offeror either by word or by conduct -Unilateral contracts – offer to the world – Ex. Lost dog ad -Both offer and acceptance must be communicated to the other party -Ex. Poochie Poo – lost dog, roses, $500 reward -If the other party doesn’t know about the offer than they can’t accept it -Negative option billing – a practice of adding services and sending bills without request and relying upon the customer to cancel if they don’t wish the service Timing of Acceptance -Revocation – offeror can revoke the offer any time up to acceptance -Exceptions: where an offeree has paid money to keep an offer open, and where the offer was made under seal -Lapse – where the offer stipulates a time by which the offer must be accepted and that time passes -Deadline to accept offer Communication of Acceptance -Method of acceptance should be reasonable in the circumstances and reasonable to the offer -Ex. Responding by snail mail on a time sensitive offer is not reasonable -Acceptance is complete when the offeree has performed -Respond with the same method – receive it in e-mail, respond with e-mail The Moment of Acceptance -The moment a contract is formed by acceptance of an offer, each party is bound to its terms -We can identify: -who made the offer -when it was communicated -when and by whom the offer was accepted -Inviting tenders – seeking offers from suppliers -The successful bidder has made a standing offer -Standing offer – an offer that may be accepted as needed from time to time Jurisdiction -Location where the contract was formed is determined by where acceptance is completed -Jurisdiction is important in aiding in determination of what province or country’s laws will govern that contract Transactions between Parties at a Distance from Each Other Modes of Acceptance -If the offer expressly states how acceptance must be communicated, then it must be completed in exactly that way -Any mode may be used: fax, e-mail, phone call Modes of Revocation -Revocation by instantaneous means of communication is subject to the same rules as acceptance -Revocation by post is effective only when notice is actually received by the offeree, not when it is dropped in the mailbox Determining the Jurisdiction where a Contract is Made -Parties to a contract are often in different provinces or countries at the time they enter into the arrangement -Jurisdiction – the province, state, or country whose laws apply to a particular situation -When an offeror invites an acceptance by mail, the contract is formed at the moment when and where the acceptance is dropped into the mailbox Consideration and Intention Consideration -The price paid for the contract -Usually money, but doesn’t have to be -Price could be in performance -Price could be in services/goods in trade -Adequacy of consideration: -The court does not care if you make a bad bargain – that’s YOUR problem -Past consideration = no consideration -Ex. If it is something that was already done, you can’t bring it forward -Existing legal duty -No new consideration, so no new contract -Debtor/creditor rule: -No new consideration for promise to reduce debt = no new contract -Exceptions created to avoid unfair results -Bargain – each party pays a price for the promise of the other Gratuitous Promise -No consideration = no contract -Then there is no promise and it is not enforceable by law -No contract – don’t have to pay -If the promisor does not perform, the promise has no legal remedy – he cannot seek compensation for the benefit he was promised -Charities for example, seldom find it in their interest to sue those who have made pledges but do not perform Equitable Estoppel -Suppose a person makes a gratuitous promise to another, fully intending to keep it, but later finds it inconvenient to perform – the gratuitous promise remains gratuitous, the promise cannot be enforced, and the promisee suffers the burden of his expenses -Court exercising equitable jurisdiction to prevent a party from denying his or her promise -At present, can only be used as a shield not a sword -If a party spends money based on your promise and you back down, then the party can sue you (in the United States) – Ex. Shoe store and antiques examples – In Canada, it can only be used as a defence, not an action -Equitable estoppel applies in situations when: 1. Some form of legal relationship already exists between the parties 2. One of the parties promises (perhaps by implication only) to release the other from some or all of the other’s legal duties to him; and 3. The other party, in reliance on that promise, alters his conduct in a way that would make it a real hardship if the promisor reneges on his promise -Injurious reliance – loss or harm suffered by a promisee who, to his detriment, relied reasonably on a gratuitous promise Consideration – Seals -Covenant – a serious promis -Document under seal – a covenant recorded in a document containing a wax seal, showing that the covenanter adopted the document as his act and deed -Any offer may be made under seal and so becomes irrevocable -Certain documents, such as a deed of land and a mortgage, traditionally required a seal even if there was consideration -Exception to the rule of consideration -From when no one knew how to read or write -Affix seal to the document in lieu of a signature -Act of sealing a document meant that the covenantor adopted the document as his/her “act and deed” -Solemn promise -No consideration required -Sealed documents are not referred to as ‘deeds’ -Replaced requirement of consideration because it was such a long process -Seal has to be put on right at that moment Relation Between Existing Legal Duty and Consideration -Consideration already given will not support new promises when parties try to modify an existing contract Gratuitous Reduction of a Debt -Early payment before the due date is sufficient new consideration to make an agreed reduction in the debt binding on the creditor -A third party, who is not bound to anything to the creditor, may offer to pay the creditor a lesser sum if she will cancel the debt – a creditor who accepts such an offer is bound by her promise and will fail is she later sues the debtor The Effect of a Request for Goods or Services -When one person requests the services of another and the other performs those services, the law implies a promise to pay -Even though neither party mentions price, the implied promise is for payment of what the services are reasonably worth – that is, for payment quantum meruit -Quantum meruit – the amount a person deserves to be paid for goods or services provided to the person requesting them -After the requested services have been performed, the parties may agree on what they consider to be a reasonable price Intention to Create Legal Relations -Reasonable bystander test: -Did the outward conduct of the parties lack a serious intention to create legal obligations? -Parties making the deal have to intend to make a legal relation -Have to be intending to -Think about relationship and situation – Ex. Brother losing job -Ex. Help me move and I’ll give you beer and pizza – if there’s no beer, your buddy can’t sue you Capacity to Contract and Legality of Object Capacity to Contract Capacity -Some parties lacking the necessary legal capacity to enter contracts or holding diminished capacity: -Minors – people under the age of majority -Mentally incompetent persons – drunk/drugged – have to prove that you were drunk and that the other party was aware you were drunk -Corporations – municipal/crown corporations -Labour unions – don’t have ability to sue/be sued -Enemy aliens -Aboriginal Persons – a reserve (historic situation) -Bankrupts – if asked point blank, you have to, by law, disclose if you have, and even if you are not asked point blank, if you are undischarged -Person has to have mental ability/capacity to understand what they’re doing and enter into a contract The Burden of Proving Essential Elements of a Contract -Once a plaintiff shows that there was offer and acceptance and consideration for the promise, the court will ordinarily presume an intention to create legal relations -At that point, the court will also presume that two additional elements are present: (1) the defendant has the capacity to make a contract, and (2) the contract is legal -If the defendant shows that she did not have the capacity to enter into the contract or that the contract was not legal, she will be released from her contractual obligations Minors -Provincial “age of majority” – in Ontario, 18 years of age -Cannot bypass the contract and sue in tort -Below 18 years a person is considered an “infant” in law -Minors can enter into contracts -Contracts would be enforceable by the minor, but not against the minor -Minor has the ability to make the contract void – can’t be used against a minor -If living with parents, nothing is a necessary because your parents are providing it -Guardian – a person appointed to manage the affairs of a minor in the place of his or her parents -Necessaries – essential goods and services -A minor may always repudiate (back out of) a contract for non-necessaries even where the non- necessaries are clearly beneficial to him -A seller cannot rely on a statement by a minor that his parents will pay for the purchase -A vendor needs express authority from the parents before being able to bind them Other Persons of Diminished Contractual Capacity -The law protects a person of unsound mind or incapacitated through alcohol or drugs in the same way as a minor -A person who was drunk or insane at the time of making a contract often has a difficult problem of proof -With an aging population, we face a growing problem of diminished contractual capacity among the elderly Corporations -Since a corporation is a “legal fiction” – it is merely a creature of the law – it has no physical existence: it cannot think or act or sign its name as a natural person can -The law may give corporations the capacity to make any contract or enter into any obligation that a natural person possesses, and business corporations’ statutes now give this capacity Labour Unions, Associations, and Other Organizations -In our legal system, the fact that a group of individuals gets together and forms an organization does not make that group into a legal entity – unless it incorporates -The legal status of labour unions remains limited -Representative action – an action brought by one or more persons on behalf of a group having the same interest Enemy Aliens -Alien – non-citizen -In the event of a declaration of war, an enemy alien loses all contractual capacity -An enemy alien is identified not by citizenship but by the fact that either his residence or business interests are located in enemy territory Aboriginal Peoples -Indians not living on a reservation have the same contractual capacity as that of any other citizen Void vs. Voidable Contracts -Void contracts – never existed, failed formation = no contract – no contract, never existed -Voidable contracts – exist, but can be made void at the option of one of the parties Legality -Can’t enter into a contract to make a promise for something that is illegal -Ex. I’ll pay you $1 000 to kill my husband -The object of the contract cannot be illegal -Cannot be in violation to a statute: criminal code, income tax act, competitions act -Contracts illegal by statute: -Criminal code -Income Tax Act -Competitions Act -Contracts can also be illegal where they breach other Acts or Regulations – Ex. Practicing a profession without a license -CANNOT violate a statute -Contracts illegal by Common Law or Public Policy: -Contracts considered to be immoral or a perversion of justice or prejudicial to the interests of the Canadian public -Ex. Paying a witness to show up and vouch for them in court -Historically, gambling fell into this category -Insurance and stock exchange transactions are excluded – Ex. Gambling on someone’s life -“I think she’s going to die soon, let’s take out life insurance” – have to have insurable interest to take out a policy on someone -There are common law rules that you can’t violate -Public policy – goals or principles benefiting society or good for the general public -Unenforceable – no court assistance or remedy is available to parties of the contract Contracts Illegal by the Common Law and Public Policy -Common law – precedents developed over time from the decisions of many cases -Even though a contract does not contemplate the commission of a crime or of any of the recognized torts, it may still be regarded as illegal because it is contrary to public policy Agreements in Restraint of Trade -Can be statutory where the restriction violates the Competitions Act -Can be a violation due to public policy -Can be valid where the restraint is reasonable in the circumstances -Violation of the Competitions Act -Rebutting the presumption is particularly likely for two of types of contracts in restraint of trade: -Agreements between the vendor and the purchaser of a business in which the vendor undertakes not to carry on a similar business in competition with the purchaser -Agreement between employer and employee in which the employee undertakes that after leaving her present employment she will not compete against the employer, either by setting up her own business or by taking a position with a competing business Agreements between Vendor and Purchaser of a Business -The vendor of a business can persuade the purchaser to pay for the goodwill only if he can make a binding promise that he will do nothing in the future to diminish or destroy the value of what he is selling Certainty of Terms -Vague or incomplete agreements can be deemed “void” by a court, therefore no contract was ever formed -Has to be too vague or incomplete -Acceptance will not fit this -Vague contracts: -Using terminology that is not clear – Ex. “Fair value” “if satisfied” -Incomplete: -Leaving necessary informatio
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