A patent gives an inventor exclusive rights to an invention for a period of
Patents take a long time to process, and patent infringement cases can take
o Many firms turn to the US International Trade Commission (ITC)
because it can move these cases along faster then other
The US is known as the world’s most litigious society because of what seems
like an unreasonable fondness for filing lawsuits.
It is estimated that the average US family pays a hidden “litigation tax” of 5%
each year because the costs of lawsuits force businesses to increase their
Lawsuits are as much a Canadian concern as they are American because of
the high level of business exchange that takes place across our common
Judiciary: the branch of government that is responsible for applying laws to
settle disagreements; also known as the court system.
o This system consists of several types and levels of courts, each with a
o They are organized at the federal, provincial, and local levels.
Administrative agencies (i.e. CRTC) also perform some limited judicial
functions, but are more properly viewed as regulatory branches of
Federal Both Provincial
Exclusive powers over Hear civil and criminal Rule mainly on civil
areas that concern the cases. matters such as property
entire country, including law.
criminal law, defence, May empower municipal
currency, and governments to pass local
The Supreme Court of Canada will hear only lower-level appeal court cases
that they select.
o Chosen on the basis of their perceived importance to the entire
Generally, each province has a similar court structure with a provincial court
level and a superior court level.
Deal with minor criminal and civil cases.
o Superior: Include trial and appeal courts.
Generally deal with more serious matters, including murder.
There are several specialized courts (i.e. tax court).
Law: the standards set by government and society in the form of either
legislation or custom.
o Govern the actions of all members of society.
Common law: laws that result from judicial decisions, some of which can be
traced to early England.
o I.e. common law marriage (after x amount of years a couple is
considered husband and wife by common law).
Statutory law: written law that includes provincial, state, and federal
constitutions; legislative enactments; treaties of the federal government; and
ordinances of local governments.
o Statutes must be drawn precisely and reasonably to be constitutional,
and thus enforceable.
International law: the numerous regulations that govern international trade.
o Companies must be aware of:
The domestic laws of their trading partners
Trade agreements (i.e. NAFTA)
The rulings by such groups as the World Trade Organization
o Manufacturers and distributors are held liable by the various
government regulatory bodies for the quality of their foreign-made
o Recent recalls have all stemmed from products made in China usually
for toxic chemicals used in the products (i.e. corrosive gases in
construction drywall manufactured in China).
Business law: those parts of law that most directly influence and regulate the
management of business activity.
Specific laws vary widely in their intent from business to business and from
industry to industry (i.e. legal interests of airlines differ from legal interests
of oil companies).
Some laws affect all businesses that operate in a province (i.e. workers’
Other provincial laws apply to only certain firms or business activities (i.e.
specific licensing requirements for businesses such as law firms).
Many local laws deal with specific business activities (i.e. guiding the sizes
and types of business signs allowed).
Governments swing between increased regulation and deregulation
o Public opinion
o The economy
o The political climate
The main goal is the protection of healthy competition.
The federal Competition Act:
o Guards against monopolies o Guards against price-fixing
Price-fixing: an agreement between two or more businesses to
set a price for the goods they sell in the marketplace.
o Ensures consumers have a choice in the marketplace
o Ensures businesses are free to compete
o Prohibits any contract or agreement for the purpose of limiting trade
Market allocation: an agreement to divide the market among potential
Boycott in restraint of trade: an agreement between businesses not to sell or
buy from a particular entity.
Business law includes:
o Contract law and the law of agency
o Sales law and negotiable instruments law
o Property law and the law of bailment
o Trademark, patent, and copyright law
o Tort law
o Bankruptcy law
o Tax law
Contract: a legally enforceable agreement between two or more parties
regarding a specified act or thing.
Four elements of an enforceable contract are:
The parties must reach an agreement about the act or thing
Each party must supply consideration.
Consideration: the value or benefit that each party
provides to the other with whom the contract is made
(i.e. payment for a job).
o Legal and Serious Purpose
Agreements made as a joke or involving the commission of
crimes are not enforceable as legal contracts (i.e. a contract to
The legal ability of a part to enter into agreements (i.e. the law
does not permit legally enforceable contracts by certain
people, such as those judged to be insane).
Contracts govern almost all types of business activities.
Breach of contract: a violation of a valid contract.
o The injured party can go to court to enforce the contract provisions
and, in some cases, collect damages.
Damages: financial payments to compensate for a loss and
related suffering. Agency relationship: exists when one party, called the principal, appoints
another party, called the agent, to enter into contracts with third parties on
the principal’s behalf.
o Many firms conduct business affairs through a variety of agents (i.e.
partners, directors etc.).
The law of agency is based on common-law principles and case law decisions
of provincial and federal courts.
o Little agency law has been enacted into statute.
Respondeat superior (Latin maxim meaning “let the master answer”): the
legal basis for holding the principle liable for acts of the agent.
o Generally, the principle is held liable if an agency relationship exists
and the agent has some type of authority to do the wrongful act (the
agent is liable to the principle for any damages).
Sales law: the law governing the sale of goods or services for money or on
o Based on the conduct of the parties.
o Generally requires written agreements for enforceable sales
If it is missing terms or includes unclear terms, it can still be
o To look at whether a legal contract exists a court will look at:
Other standards of reasonableness
o They will also look at these variables if a buyer or seller tries to
enforce his or rights as a result of the other party to completely
meeting the terms of the contract or meeting them in a defective or
o Monetary damages are usually awarded to the injured parties.
o The law