- The goal in business is to maximize gains and minimize losses.
- Every choice we make has a legal consequence; we must make the best legal decision.
- Risk management is the process of identifying, evaluating and responding to the possibility of harmful events.
i. Identifying: We think of liability, being legally responsible.
ii. Evaluation: We evaluate our position on being sued or not and then decide how to move forward.
iii. Response: You are now in a position to make informed decisions.
- The goal in businesses is to manage risks since we cant avoid them.
Risk managing strategies:
Risk avoidance: Risks that are serious enough to cause losses should be avoided.
Serious means the financial costs of being liable outweigh the sales profit.
Risk reduction: Risks are reduced using precautions.
Like the bank lends you money but with a mortgage. If it doesnt get its money back, it gets the property.
Risk shifting: We shift the liability. For example, we hire an independent contractor that wouldnt be liable
to the firm instead of allowing the firm to be vicariously liable for the employee.
Risk acceptance: Insurance might be too high, so we just pay for the damage that was done. For example,
golf players hit a factory window. If the cost is cheaper than insurance, pay for it.
Insurance: Works by spreading the cost of the liability over the entire group and shifting the risk.
i. Liability insurance: Provides a benefit if the purchaser is held liable for doing something wrong.
ii. Property insurance: Provides a benefit if the purchasers property is damaged or lost.
Exclusion and limitation clauses: If there is no written contract, then there is no liability.
For example: Car parking lots are park at your own risk businesses. There are large signs that tell
customers that they are parking at their own risk; this means that they give up their right to sue.
Incorporation: have limited liability (ltd). In case of a problem, the company is liable but not the
shareholder. However, the employees, directors, etc can be held personally liable if they commit any
tort. Advantage: It may be right to hire an in house counsel which always helps in preventing problems.
The legal system:
- All laws are rules, but not all rules are laws.
- Laws are rules that are enforced in courts.
Ethical perspective: If you see a guy tip over a boat, you have a moral obligation to rescue him, but not a legal
one. Legally, you could be held liable for committing a tort of some sort. You could be imprisoned or might
have to pay damages to the victims family.
You can get sued for trying to help someone.
1 - Civil law: trace their history back to Rome. It applies to all provinces except Quebec because it traces its
history back to France. However, criminal and constitutional laws still apply in Quebec.
- Jurisdiction: is a geographical area that uses the same set of laws.
- Common Law: trace their history back to England. (New Zealand, Australia, and most of U.S.A and the rest of
- The law is divided into 2 major groups, public and private.
- Public law is concerned with governments and the ways in which they deal with their citizens. It includes:
i. Constitutional law: provides the basic rules of our political and legal systems. It determines who is
entitled to create and enforce the law, also created the fundamental rights and freedoms.
ii. Administrative law: is concerned with the creation and operation of administrative agencies and
tribunals. (Federal, Provincial/Territorial, Municipal).
iii. Criminal law: deals with offenses against the state.
a. White collar crimes: are committed by people in suits. For example: a manager steals money
from the petty-cash drawer.
b. Corporate crime: a company commits a crime. For example: a car dealer company rolls back
the odometers on its vehicles.
iv. Tax law: is concerned with the rules that are used to collect money for the purposes of public
- A crime is a public wrong, an offence against society as a whole.
- Private l aw is concerned with the rules that apply in private matters.
- The government is subject to private law rules when it enters into private transactions.
- A tort is a private wrong, an offense against a particular person.
1. Law of Torts:
i. Intentional torts
ii. Business torts
2. Law of Contracts:
i. Sales of goods
ii. The use of negotiable instruments
iii. Real estate transactions
iv. Employment relationships
v. Operation of corporation
3. Law of Property: concerned with buying, using and disposing of property.
i. Real property: involves land and everything attached to land
ii. Personal property: involves things that can be moved (chattels)
2 iii. Intellectual property: Patents, copyrights, original ideas
- There are several forms of law that deal with all types of properties:
i. The law of succession: deals with the distribution of someones property after death
ii. The law of trust: deals with a situation in which one person holds property on behalf of another.
(deals with laws of equity, page 23).
- Laws can overlap; it is possible to commit a tort and a crime lets say if you punch me.
- A contract between an employer and employee need administrative (ethnic discrimination), criminal (boss
sexually harasses an employee), and tort law (in case one worker injures another).
Sources of Law:
i. The constitution
iii. The courts
came to force 1982, but the first was in 1867.
Section 52 of the constitution:
a) the constitution of Canada is the supreme law of Canada and any law that is inconsistent with the provisions of
the constitution is, to the extent of the inconsistency of no force or effect.
b) The constitution can only be changed through a special amending formula. There are rare; it requires the
consent of the parliament and legislatures (of at least 2/3 of the provinces which is supposed to represent at least
50% of the Canadian population).
Division of power:
- Established by Sections 91 and 92 of the Constitution in order to identify the levels in which the government
can act in.
- have the residual power, the power over everything that is not otherwise mentioned.
- Canada is a federal country because it has 2 levels of government, the House of Commons and the senate.
- House of Commons: consists of members of Parliament (MPs) who are elected for every province and territory.
- The senate: consists of senators who are appointed to their jobs.
- Queen of England is head of state, but the country is run by the party who has the most MPs where the leader is
the Prime Minister.
- Parliament has authority over telecommunications and air travel, and others (which did not exist in 1867).
- The federal government can ban imports internationally and interprovincially.
3 Provincial and territorial:
- In addition to electing parliament members, Canadians also elect politicians to represent them within their own
provinces. The elected body is called the Legislative Assembly.
- The provinces can stop manufacturing within their own borders.
- Ultra Vires: A government sometimes tries to create a law outside of its own area; beyond power. These laws
have no effect; they are not laws at all.
- When its federal versus provincial, and they are in true conflict, the Doctrine of Federal Paramountcy comes in.
- The Doctrine of Federal Paramountcy determines which law will have the power. The federal law wins.
Charter of Rights and Freedom: 1982
- Intra Vires: The government acts within its powers. (Valid laws).
- The charter was introduced to protect basic rights and freedoms.
- The charter is under the constitution; any law that is inconsistent with it has no effect.
Ex: Close stores on Sundays to protect Christian beliefs; declared invalid because it violated their freedom of
religion under section 2(a).
Ex: Creating a law that prohibits partnerships between law firms in different provinces; declared invalid because it
violated mobility rights under section 6 (2).
Ex: Creating a law that prohibits non Canadian citizens from practicing law; declared invalid because it violates
their equality rights under section 15 (1).
Sections: (Page 15)
- Democratic rights: Sections 3-5.
- Legal rights/Criminal cases: Sections 8-14
- Languages: Section 16-23
- Multiculturalism: Sections 25, 27.
- Fundamental Freedom: Section 2 (Religion, opinions, communication, assembly, etc).
- Mobility Rights: Section 6 (Leaving and Entering Canada).
- Equality Rights: Section 15 (Nationality, ethnicity, sex, age, culture, etc).
- The charter however does not contain economic and property rights. People who wrote it did not want them
- Why did we not have property rights, becaus