LAW 122 Chapter Notes - Chapter 1: Equal Protection Clause, Primary And Secondary Legislation, Liability Insurance
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Chapter 1: Risk Management & Sources of Law
WHY STUDY LAW?
As consumers, we all need to be aware of the rules that govern commercial transaction.
In terms of employment, you may intend to work in the public sector, thus you need to
understand not only the nature of gov’t org., but also the different types of laws that
may affect you.
Every business decision or choices has a legal consequence. Some consequences are
profitable while others maybe financially disastrous. The difference between winning &
losing in the business world often depends upon the ability to make the right choice from
a legal perspective.
oRisk Management is the process of identifying, evaluating, and responding to the
possibility of harmful events.
a) Identification: For e.g. If you are accuse your ex-employee of theft, she can
sue you for defamation (that’s the risk).
b) Evaluation: After identifying the risk, you may decide that a candid letter
would nevertheless be legally acceptable. Assess you case, & determine if you
should share this info with her new employer.
c) Response: After identifying and evaluating your risks, you need to formulate
a response. Do you write the letter?
The goal in risk management is not to eliminate the risk but to manage them. The
appropriate strategy depends upon the circumstances.
Risk Avoidance: Some risks are so serious that they should be avoided
E.g. A car that regularly explodes should be taken off the market. Aside
from issues of morality, the financial liability will probably outweigh the
Risk Reduction: Some risk can be reduced to an acceptable level via
E.g. A bank can lead $500,000 to a manufacturing company, and to reduce
their risk of non-repayment they can have the company put a mortgage
over its factory.
Risk shifting: Even if a risk cannot be avoided or reduced, it may be shifted
onto another party. Two important methods of shifting include insurance and
Risk Acceptance: It is sometimes appropriate to simply accept a risk.
If a golf course operates behind a factory, it is possible that a wild shot
might hit a factory window & that the golf course could be held responsible
for the resulting demage.
Three important concepts:
a) Insurance is a contract in which one party agrees, in exchange for a price, to
pay a certain amount of money if another party suffers a loss.
i. Liability insurance: provides a benefit if the purchaser is held liable for
doing something wrong.
ii. Property insurance: provides a benefit if the purchase’s property is
damaged, lost, or destroyed.
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Chapter 1: Risk Management & Sources of Law
b) Exclusion Clause: is a contractual term that changes the usual rules of
liability. For instance, a courier comp. may provide notice that it will not be
held liable for more than $100 if a package is lost, damage, or destroy.
c) Incorporation: Many businesses are set up as corporations or companies –
the many benefits of incorporation is limited liability. That means that if
something goes wrong, it is usually only the company itself, and not the
people who run it, that may be held liable. The company itself might be lost,
but the ppl behind it will be safe.
Risk mgt. doesn’t require you to become a lawyer, but it requires you to hire one.
Although, lawyer fees may be expensive, they will help you recognize potential
problems, and help you avoid expensive compensations down the road.
INTRODUCTION TO THE LEGAL SYSTEM
For example, if you are fishing and you see someone drowning? Are you legally
responsible for saving his life? Or for his death if he dies? No, and No. You are not legally
responsible for his death, but you might be morally punished by the public opinions.
oLaw: is a rule that can be enforced by the courts
A Map of the Law
To make sense of it all, we need to organized law into different parts; in Canada it is
necessary to distinguish b/t civil law & common law.
oCivil Law: is a system that traces their history to ancient Rome, which was embodied in
the Justinian code, especially that which applied to the rights of private citizens.
Since the Roman Empire covered almost all of Europe, the legal system of the vast
majority in that continent are sill civilian. The only civil law jurisdiction in Canada is
Quebec, which initially borrowed its law from France.
oJurisdiction: is a geographical area that uses the same set of laws.
oCommon Law: is a system that traces their history to England. These laws are based
on court decisions and precedent, which has grown out of legal customs and practices.
Consequently, most jurisdictions that were settled in English colonists continue to
use the common law. This is true for rest of Canada, Australia, New Zealand, and
most of the U.S.
oPublic Law: is concerned with gov’t and the ways in which they deal with their citizens.
Fig 1.1 shows that the major division is b/t public law & private law.
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