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MGM102H5 (177)
Chapter 7

MGM102 Textbook Chapter7- Working Within the Legal Environment of Business.docx

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University of Toronto Mississauga
Dave Swanston

Chapter7- Working Within the Legal Environment of Business The Need for Laws • Laws are essential part of a civilized nation and over time, the direction and scope of the body of laws must change to reflect changes in the needs of society • Three branches of government in the Canadian system: 1. Legislative Branch makes the laws 2. Executive Branch administers the laws, putting them into practice 3. Judicial Branch applies the law and interprets it when there is a dispute • The Canadian court system has both federal and provincial courts, with jurisdiction that parallels the constitution division of power between the central and provincial governments • Courts hear cases involving both criminal and civil law  Criminal Law- Defines crimes, establishes punishments, and regulates the investigation and prosecution of people accused of committing crimes  Civil Law- Legal proceedings that do not involve criminal acts • Business community has not been perceived as implementing acceptable practices quickly enough so governments have expanded their control and enforcement procedures  Business Law- Rules, statutes, codes, and regulations that are established to provide a legal framework within which business may be conducted and that are enforceable by court action Statutory and Common Law • Statutory Law- Federal and provincial legislative enactments, treaties of the federal government and bylaws/ordinances (written laws)  Can read the states that make up the body of law but they are written in language whose meaning must be determined in court • Common Law- Body of law that comes from decisions handed down by judges (Unwritten law)  Precedent- Decisions judges have made in earlier cases that guide handling new cases  Evolves through decisions made in trial courts, appellate courts, and special courts  Lower courts (Trial courts) must abide by the precedents set by higher courts (appeal courts) such as the Supreme Court of Canada • English common law VS. French Civil law (Quebec)  Common law system recognizes that courts actually make law through their decisions  Civil law system restricts courts to interpreting the law that is provided by legislation that takes the form of the provincial civil code Laws Made under Delegated Authority: Administrative Agencies • Administrative Agencies- Federal or state institutions and other government organizations created by Parliament of provincial legislatures with delegated power to pass rules and regulations within their mandated area of authority • Administrative agencies at different levels of government:  Federal Level- Example: CRTC (Canadian Radio Television and Telecommunications Commission) regulates the use of airwaves  Provincial Level- Example: Public utility commissions and boards regulate prices for services such as electricity  Local Level- Example: Zoning boards and planning commissions control land use and development Tort Law • Tort- A wrongful act that causes injury to another person’s body, property, or reputation • Focuses on the compensation of victims and there are two types:  Intentional Tort: Willful act that results in injury  Unintentional Tort of Negligence: provides compensation when the wrongdoer should have acted more carefully even though the harm or injury was unintentional o Negligence- In tort law, behaviour that does not meet the standard of care required and causes unintentional harm or injury o Decisions involving negligence can often lead to huge judgements against businesses Example of Tort Law­ Product Liability • Product Liability- Part of tort law that holds businesses liable for harm that results from the production, design, sale, or use of products they market • Strict Product Liability- Legal responsibility for harm or injury caused by a product regardless of fault  A company could be held liable for damages caused by placing a defective product on the market even if the company did not know of the defect at the time of sale  Company is thus required to compensate the injured party financially  Rule of strict liability has caused problems for businesses so businesses and insurance companies have called for legal relief from huge losses awarded in strict product liability suits and have lobbied to set limits on the amounts of damages for which they are liable should their products harm consumers Intellectual Property: Patents, Copyrights, and Trademarks • Patent- A form of intellectual property that gives inventors exclusive rights to their inventions for 20 years (includes filings forms and ensuring product is truly unique)  Patent owners have the right to sell or license the use of a patent to others  Penalties for violating a patent can be sever but the defence of patent rights is solely the job of the patent holder  Possible remedies for patent infringements include compensation in the form of money damages, injunctions prohibiting further infringements, and an accounting for all profits gained from the infringement • Copyright- A form of intellectual property that protects a creator’s rights to materials such as books, articles, photos, and cartoons  Protection extends for the life of the original author plus 50 years after his/her death  Registration of copyright is not required but provides benefit of public notice of its existence and provides proof of copyright holder’s ownership of the work • Trademarks- A brand that has been given exclusive legal protection for both the brand name and the pictorial design  Belong to the owner forever as long as they are properly registered and renewed every 15 years and is protected from infringement  Trademark must also be distinctive • Industrial Design- A form of intellectual property that protects the owner’s exclusive right to use the visible features of a finished product that identify it  Produced in an industrial process and design of the subject matter must be original The Sale of Goods • The Sale of Goods Act establishes the rules and requirements associated with the deal, establishing the respective rights and obligations of the parties of the contract Warranties • Warranty guarantees that the product sold will be acceptable for the purpose for which the buyer intends to use it; two types of warranties:  Express Warranties- Specific representations by the seller that buyers rely on regarding the goods they purchase (EX. Warranty received with a clock, toaster, DVD player, etc)  Implied Warranties- Guarantees legally imposed on the seller o Implied that the product will conform to the customary standards of the trade or industry in which it competes o EX. Expected that toaster will toast bread to desired degree • Warranties offered by sellers can either be full or limited  Full Warranty requires seller to replace/repair product at no charge if defective product  Limited warranty limits the defects or mechanical problems that are covered Negotiable Instruments • Negotiable Instruments- Forms of commercial paper that are transferable among businesses and individuals and represent a promise to pay a specified amount; come in three types:  Promissory Note- Written contract with a promise to pay a sum of money in future  Cheque- Instruction to a bank to make a payment  Bill/Draft- Order to make a payment • All three are transferable among businesses and individuals and must be: 1. Written and signed by the maker or drawer 2. Payable on demand or at a certain time 3. Payable to the bearer (person holding the instrument) or to a specific order 4. Contain an unconditional promise to pay a specified amount of money • Transferred when the payee signs the back (signature= endorsement) Contract Law • Contract- A legally enforceable agreement between two or more parties • Contract Law- Set of laws that specify
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