RISK MANAGEMENT AND SOURCES OF LAW
Risk Management: Process of identifying, evaluating and responding to the possibility
of harmful events
Identification: should be concerned about liability (litigation = time + $$$)
Evaluation: understanding various options
Response: make informed decision
Goal of risk management is not necessarily to eliminate risk but to manage them.
Appropriate strategy varies depending upon circumstances:
Risk avoidance - so serious risk should be avoided altogether (car that explodes)
Risk reduction - reduced to acceptable level through precautions (mortgages)
Risk shifting - shift risk onto another party (insurance, exclusion/limitation
clauses, hiring independent contractor vs. employee). Important to understand
Risk acceptance - accept a risk (likelihood small)
3 important concepts of risk management:
1. Insurance- contract in which one party agrees, in exchange for a price, to pay acertain
amount of money if another party suffers a loss.
• Liability insurance: provides a benefit if the purchaser is held liable for doing
• Property insurance: provides a benefit if the purchasers property is damaged.
2. Exclusion clauses: is contractual term that changes the usual rules of liability. While
exclusion clauses are subject to certain rules and restrictions, the law generally allows
people to sign away their right to sue.
3. Incorporation: limited liability protects individuals from debts by putting debt on
AN INTRODUCTION TO THE LEGAL SYSTEM
Law - a rule that can be enforced by the courts.
Civil law - systems trace their history to ancient Rome. Only civilian jurisdiction in
Canada is Quebec (borrowed from France)
Jurisdiction - a geographical area that uses the same set of laws. Common law - systems trace their history to England. Rest of Canada, Australia, US, etc.
Public Law is concerned with governments and the ways in which they deal with their
citizens. It includes:
• Constitutional Law
• Administrative law
• Criminal Law
• Tax Law
Constitutional Law provides the basic rules of our political and legal systems. It
determines who is entitled to create and enforce laws, and it establishes the fundamental
rights and freedoms that Canadians enjoy.
Administrative law is concerned with the creation and operation of the bodies that are
created by governments to delegate and assign responsibility to a variety of agencies,
boards, commissions, and tribunals that help manage the workload in governments.
Criminal law deals with offences against the state. In other words it is concerned with
people who break rules that are designed to protect society as a whole.
• White collar crimes- created by people in suites. i.e. a manager who steals money
from the petty cash drawer is a white collar criminal.
• Corporate crime- committed by corporation itself. (car dealership rolls back the
odometer on its vehicles).
Tax law is concerned with the rules that are used to collect money for purposes of public
spending. The various branches of government, such as parliament, administrative
bodies, and courts, require a great deal of money in order to operate.
Private law: is concerned with the rules that apply in private matters. Both parties in a
private dispute are usually private persons, either individuals or organizations like
Private law is usually divided into 3 parts:
• The law of torts
• The law of contracts
• The law of property
Tort - a private wrong, an offence against a particular person.
1. Intentional Torts: assault and false imprisonment.
2. Business Torts: such as deceit and conspiracy
3. Negligence: covers most situations in which one person carelessly hurts another. The law of contracts: is concerned with the creation and enforcement of agreements,
contracts are involved in;
1. The sale of goods
2. The use of negotiable instruments, such as cheque’s.
3. Real estate transactions, such as the purchase of land.
4. The operation of corporations.
5. The employment relationship that exists between a business and its stakeholders.
The law of property: is concerned with the acquisition, use, and disposition of property.
Divided into 3 main parts;
1. Real property: which involves land and things that are attached to land
2. Personal property: which involves things that can be moved from one place to
3. Intellectual property: which involves things that consist of original ideas, such
as patents and copyrights
Other areas of property law:
1. The law of succession deals with the distribution of a person’s property after
2. The law of trusts deals with a situation in which one person holds property on
behalf of another.
• A single event can trigger more than one set of rules. (Punch = crime + tort)
• Some situations involve various types of laws (employer an employee =
administrative: discrimination, criminal: sexual harassment, tort: hurt)
Sources of law
The 3 sources of law:
1. the constitution
3. the courts
-Most important source of law
-Provides the foundation for everything else, which has two significant consequences.
1. Every other law in the country must be compatible with it.
2. Constitution is very difficult to change. Can only be changed through the
amending formula (consent of Parliament plus legislatures of at least 2/3rds of the provinces where those consenting provinces represent at least 50% of the
Division of powers:
Canada is a federal country because it has 2 levels of government. (Section 92 of
Constitution allows provinces and territories to create a 3rd level of gov't, municipalities)
1. Federal (located in Ottawa) governs country as a whole. Composed of two parts:
i. House of Commons: consists of MP's who have been elected from P/T's
ii. The Senate: consists of senators who are appointed to job
2. Provincial - Cdns elect politicians to represent them within their own P/T.
The Queen remains our head of state, who is represented by the governor general.
Division of power - states the areas in which each level of government can create laws.
(Section 91 and 92 of Constitution)
Residual power- gives the federal government authority over everything that is not
The doctrine of federal paramountcy - determines which law is pre-eminent based on the
Constitution's division of powers. (When prov/fed conflict, e.g margarine). Federal wins.
Canadian Charter of Rights and Freedoms (1982) was introduced to protect basic rights
and freedoms. Some deal wit