MCS 3040 Chapter Notes - Chapter 16: Canada Business Corporations Act, Fiduciary, Law Of Agency

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Tuesday, December 6, 2016
Chapter 16: Corporate Form - Operational Matters
MCS 3040
Corporate Liability:
a corporation is a legal person in the eyes of the law
Liability in Tort:
primary liability and vicarious liability
a corporation has primary liability for a tort when, in law, it is regarded as the entity that
actually committed the tort in question
Identification Theory: a theory specify that a corporation is liable when the person committing
the wrong is the corporation’s directing mind
these re the highly placed corporate officers
a corporation has vicarious liability when the tort has been committed by an agent or
employees who is not a directing mind of the corporation
does not distinguish between the natural employers and the artificial employer
Liability in Contract:
agency law largely determines when a corporation is liable on a contract and when it is not
a corporation is bound by the actions of the agent only if the agent is acting within his actual or
apparent authority
Criminal and Regulatory Liability:!
Criminal Liability:
uses identification theory to criminal law
a corporation has committed a crime if the person who committed the crime was a directing
mind of the corporation and he committee it in the course of his duties and didd so mostly the
benefit the corporation
this approach proves to be difficult, because of lack of criminal convictions in 1992 in the
Westray min explosion
expanded range of indiums whose actions can trigger liability, by broadening corporate
responsibility for all criminal offences, and by increasing penalties
including senior officers
crimes require proof of knowledge or intent and crimes requiring proof of negligence
provide stiffer penalties of fines up to $100 000, it used to be $25 000
!1
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Tuesday, December 6, 2016
Regulatory Offences:
Regulatory Offence: an offence contrary to the public interest
have criminal aspect, involve punishable conduct
ex. polluting streams
Directors and Officers:
Directors:
directors are elected by shareholders
manage or supervise the management of the business and the fairs of the corporation
they also have specific powers and obligations set out in legislation
aren’t in position to carry out the actual management themselves, they appoint officers to
carry out many of their duties and expertise most of their powers
Duties of Directors and Officers:
The Fiduciary Duty:
duty requires directors and officers to act honestly and in good faith with a view to the best
interest of the corporations
directors and officers must not allow their personal interests to conflict with their duty to the
corporation
fiduciary responsibility arises in…
Self-Dealing Contract: a contract in which a fiduciary has a conflict of interest
ex. Like the corporate directs buys from Like the individual
user the Canada Business Corporation Act
Luke’s contract is enforceable provided that…
Luke discloses the contract in the corporation writing
Luke does not participate in any vote of the directors approaching the contract
the contract is fair and reasonable to the corporation
Corporate Opportunity: a business opportunity in which the corporation has an interest
Duty of Competence:
requires directors and officers to exercise the care, diligence, and skill that a reasonably
prudent person would exercise in comparable circumstances
must meet general standard of competence
Liability of Directors and Officers:
Liability in Tort and Contract:
when director is acting on behalf of a corporation and commits a tort, his actions may be
attributed to the corporation itself by virtue of identification theory
there are times when a director has personal liability for a torrent he may have committed or a
contract he may have entered into
!2
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