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LAW 122 (618)
Chapter 1

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Law and Business
LAW 122
Avi Weisman

Chapter 1 – Risk Management and Sources of Law Why Study Law? - Consumers: all need to be aware of the rules that govern commercial transactions - Employment: may intend to work in the public sector - Every business choices have legal consequences - Contract: legal concept that allows people to create enforceable promises Risk Management - Risk management: the process of identifying, evaluating, and responding to the possibility of harmful events o Goal in business is not necessarily to eliminate risks; but to manage them o Risk avoidance: some risk are serious that they should be avoided altogether (taking a regularly exploding vehicle off the market) o Risk reduction: some risks can be reduced to an acceptable level through precautions (bank requiring a business to grant a mortgage over its factory if they do not pay back the loan) o Risk shifting: even if a risk cannot be avoided or reduced, it may be shifted onto another party (insurance and exclusion causes) o Risk acceptance: it is sometimes appropriate to simply accept a risk o Insurance: 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  Liability insurance: provides a benefit if the purchaser is held liable for doing something wrong  Property insurance: provides a benefit if the purchaser’s property is damaged, lost, or destroyed.  Insurance SHIFTS the risk o Exclusion and limitation clauses: changes rules of liability (basically people signing away their right to sue through contracts; a courier company not held responsible if it loses a package) o Incorporation: limited liability (only the company itself, and not the directors or shareholders, may be held liable for debts)  Does not protect individuals from ALL risks o In-house counsel: instead of hiring lawyers from time to time as the need arises, a company may create its own permanent legal department An Introduction to the Legal System The Nature of Law - Law: a rule that can be enforced by the courts o Moral issues may arise even if a rule is identified as a law (legally entitled to reduce production costs by using child labor as a company) A Map of the Law - Civil law: systems trace their history to ancient Rome - Jurisdiction: geographical area that uses the same set of laws - Common law: systems trace their history to England Public Law - Public law: concerned with governments and the ways in which they deal with their citizens o 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 and Canadians enjoy o Administrative law: is concerned with the creation and operation of administrative agencies and tribunals o Criminal law: deals with offences against the state  Crime: public wrong/offence against society as a whole  White-collar crimes: crimes that are committed by people in suits  Corporate crimes: crimes that are committed by companies Private Law - Tax law: concerned with the rules that are used to collect money for public spending - Private law: concerned the with rules that apply in private matters (usually private persons: individuals or organizations) o It is possible for a private person to sue a public company - Divided into 3 main parts o Tort: private wrong/offence against a particular person  Intentional: assault and false imprisonment  Business: deceit, conspiracy  Negligence: carelessly hurts another o Law of contracts: concerned with the creation and enforcement of agreements  Sale of goods (computers, food)  The use of negotiable instruments (cheques)  Real estate transactions (purchase of land)  Operation of corporations  Employment relationship that exists between a business and its workers o Law of property: concerned with the acquisition, use, and disposition of property  Real property (land and things that are attached to land)  Personal property (things that can be moved from one place to another)  Intellectual property (things that consists of original ideas)  Law of succession: deals with the distribution of a person’s property after death  Law of trusts: deals with a situation in which one person holds property on behalf of another Overlap - A single event can trigger more than one set of rules o If you punch me, you may commit both a crime and a tort - Some situations involve various types of laws o An employment relationship is based on a contract between the employer and the employee Sources of Law The Constitution - Constitution: document that creates the basic rules for Canadian society, including its political and legal systems o Every other law in the country must be compatible with it o The constitution is very difficult to change  Amending formula: requiring the consent of Parliament plus the legislatures of at lea
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