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BU451 (3)
Chapter 32

Chapter 32, 33, Securities Terms (no textbook).docx

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Charles Davidson

Chapter 32 – Government Regulation of Business The power to regulate Business Division of Powers Under the Constitution - All 3 levels of government are often unhappy with their powers, but it’s impossible to get everyone to agree to changes in the constitution - To challenge validity of a regulatory scheme, begin by asking if legislature that passed the law had jurisdiction o 2-stages: identify the “pith and substance” of the law in question, AND THEN assign it to the appropriate area of legislative power - Sometimes gives concurrent powers to both levels of government…if no conflict between laws, then both are valid o If conflict, federal law always wins Restrictions on Government Powers: The Charter - If a law conflicts with a Chartered right, it’s invalid Judicial Review of Government Regulation - Courts have a right to review the legality of administrative acts/decisions 4 Ways to Get to Judicial Review (4 grounds for a challenge) Jurisdiction of the Law-Maker (Ultra Vires) - If Ontario creates a body that has jurisdiction over Via-Rail, that body never has jurisdiction over Via-Rail because Ontario doesn’t have jurisdiction over the railroads in the first place - If the creating statute is ultra vires, there will be no jurisdiction The Creating Statute may be Valid, but Decision-maker may lose authority by moving outside of jurisdiction - If Via-workers try to unionize and go to the Ontario Labour Relations Board, Via-rail will attack the Ontario Labour Relations Board because they went beyond their jurisdiction Losing jurisdiction because of a procedural irregularity - UofT Dean had a procedure that he had to follow for academic misconduct o He accused a student of academic misconduct, she admitted she made a mistake, and he imposed a penalty  he can only impose the penalty on admission of guilt o He has authority to impose penalty, but because he didn’t follow the procedure, he lost jurisdiction and the imposition of the penalty is set aside Procedural Fairness = the higher the stakes are, the higher the standard of procedural fairness (how high the threshold will be depends entirely on the context) o The level of procedural fairness requirement depends on the consequences - ie. for a murder suspect  right to an unbiased decision-maker, right to be heard, presumption of innocence, right to counsel o WHEREAS if library thinks you stole a book, the standard will be low - Reasonable apprehension of bias – must establish reasonable apprehension of bias to claim this o Don’t need to prove that the decision-maker IS biased, just need to prove there’s a reasonable fear of bias Natural Justice  ie. Guantanamo Bay has very low natural justice - You cannot go for judicial review unless there’s a government aspect involved in there Consumer Protection - Consumers = individuals who purchase goods and services from business for personal enjoyment, NOT people using goods/services for business/resale Why is Consumer Protection Legislation Necessary? - No bargaining power - Need rights against manufacturer (retailer can’t detect defects) - Can’t examine quality til after purchase - Sophisticated borrowing terms are difficult to understand Principal Types of Consumer Legislation - 5 main categories: o Regulation of misleading advertising o Regulation of quality standards affecting labelling, safety, performance, availability of servicing and repairs o Regulation of business conduct towards consumers o Disclosure of the effective cost of credit o Supervision of businesses that deal with public through licensing, bonding, inspection Misleading Advertising - Statutes govern representations that can be made, quality, inspection of industry - Create regulatory (less serious offences that don’t require mens rea (allow due diligence as defence) and criminal offences for non-compliance - Competition Act regulates business conduct, including advertising o Can’t misrepresent a product (misleading the public) o Can’t mislead about the qualities of a product or the “regular” price it’s sold at - Misleading advertising (ie. bait and switch, unsubstantiated performance claims, misleading savings claims) is a dual offence  can be criminal or regulatory depending on the seriousness o Reviewed by Competition Tribunal  Competition Tribunal – is competition always a good thing?  No, don’t want public utilities or railroads, etc competing against each other  Need to explain why a monopoly will be good for Canadian citizens/business - Consumer Protection Act outlines some civil remedies for consumers Regulation of Labelling, Product Safety, Performance Standards - Consumer Packaging and Labelling Act sets out rules for packaging and labelling - Textile Labelling Act  have to say what fabric is made out of - Hazardous Products Act  some are banned, some must be manufactured with regulations - Food and Drugs Act  sanitary production, contamination prevention, listing of ingredients - Also have implied terms under Sale of Goods Act Regulation of Business Conduct Towards Consumers - Pressure Selling: certain types of contracts are non-binding; consumers given a “cooling off period” are contracting where they can terminate contract with written notice - Unsolicited Goods: (send goods, hope recipient will pay for them) use of the goods does not amount to acceptance of the offer…can use the goods without being liable for the price - Telemarketing: Do Not Call list, not allowed to conduct contests or sell things grossly above market value with prior payment required - Repossession: seller’s remedy of repossession is lost once the buyer has paid a specified proportion of the purchase price; limited circumstances for acceleration clauses - Financing arrangements: assignee of a consumer credit contract has no greater rights than the assignor and is subject to the same obligations Disclosure of the True Cost of Credit - Interest rates must be expressed in annual percentages, or customer not bound Regulation of Specific Businesses by Licensing, Inspection, other Regulation - Regulates the providers of a variety of goods and services (ie. inspecting restaurants) Competition - If consumers have a choice b/w goods of competing firms, prices will be lower/quality better - If firms start teaming up to eliminate other firms, the market efficiency will be lost; governments must intervene to preserve competition The Common Law - Even though there’s non-competes after leaving a firm, can’t be an unreasonable restriction on competition - Tort of conspiracy, tort of unlawful interference with trade Competition Act - Supplements common law  3 main headings: conspiracies, monopolizing, mergers Exemptions: - Doesn’t apply to professions (law, medicine, etc)… they may establish agreements with their members regarding qualifications as long as it’s reasonable; doesn’t apply to underwriters Enforcement: - Less serious regulatory offences ultimately referred to Competition Tribunal Conspiracies - No cartels allowed – known as trusts in US, hence anti-trust law - Criminal offence  need mens rea - Essential element: conspires, combines, agrees or arranges… - Distinction drawn between tacit agreements and “conscious parallelism”  prices might be the same because of parallel pricing (to not lose sales) - Anti-competitive practices: o Imposing limits on production (quotas) o Market sharing (divide up market on territorial basis) o Product specialization (they each agree to sell a different type of product) - Other offences: o Agreeing not to bid/agreeing in advance what bid in response to a call for bids (rigging) o Unreasonably limit opportunities for someone to play in a professional sport o Implement instruction from a person outside Canada that would constitute an offence if don’t in Canada Monopolizing - Can’t abuse your dominant position - Pricing practices not allowed: o Discriminatory pricing o Regional price discrimination o Predatory pricing - Can’t try to do “resale price maintenance”  a supplier of goods trying to control resale price - Distribution practices: if lack of suppliers but not a lack of supplies, and a customer tries to buy but can’t get enough, Tribunal may order supplier to supply the customer o Reviewable: exclusive dealing (can only buy supplier’s product), tied selling (buy 1, must buy the other), market restriction (can only market product in specific area) - Anything that substantially lessens competition is bad Mergers - Try to prevent mergers that would significantly lessen competition (horizontal, vertical, diversification) Environmental Protection - Growing concern for the environment - Federal and provincial legislatures have concurrent jurisdiction - Canadian Environmental Protection Act (CEPA) most important – applies to all elements of environment - Canadian Environmental Assessment Act (federal) tries to prevent injury to environment before it happens through environmental impact assessment - Private enforcement is through common law tort or nuisance or negligence, but primarily it’s a public matter  can be regulatory or criminal Extra Class Stuff - Some contracts are unenforceable due to public policy (ie. buying weed and suing for him not delivering o The state has an interest in private law matters Contract law and tort law do not adequately protect the public - Why? There are real problems suing employers o Voluntary assumption of risk, other workers’ negligence, etc - We’ve taken things like Worker Safety & Consumer Protection and moved it out of private law into public law - Securities Act doesn’t help people  only creates Ontario Securities Commission  Act doesn’t tell the OSC how to help people o They use administrative tribunal, policy-making, etc… very different from role of a judge o OSC has objectives, and it makes rules/decisions based on its overall objectives, whereas judges compare fact to law and come up with decision - Anytime you see the “state” as one of the parties in a court case, it’s probably in the realm of Public Law - If you’re an employee getting owned, you have 2 options: (think of Conrad book) o Private law remedy o Government-created entity  they decide whether or not to investigate, and if they do, they pay for lawyers and become the plaintiff - There’s a realm where nobody will sue – if you bought something for 40$ that SUCKED, you aren’t going to sue for 40$ back…which is why the government needs to step in Who should regulate lawyers? - Other lawyers – to be a professional is to be governed by other members of your profession - Law society of upper Canada can decide who gets to be a lawyer Ron Carelli in Quebec  Jehovah’s witness restauranter who bails out other Jehovah’s witnesses. The minister decided not to renew his liquor licence because the government hates him  minster has discretion to not renew the liquor license, BUT Supreme Court decides that while he has the power to do so, he has to do it with proper review????? - KNOW THE DIFFERENCE BETWEEN APPEAL AND JUDICIAL REVIEW Appeal - A mechanism laid out in statute provided by law Judicial Review - Asking the court to exercise a review function over a decision made by an administrative decision-maker o Review of a decision-maker by a court - Ie. the law society disbars someone because they’ve been doing illegal things, etc, it’s okay o If they disbar because of their astrological sign, it’s not a good exercise of judgement - Why let committees do this instead of legislature? o We don’t want the judicial system to be experts in everything; the professions are the best at it, they know best how to handle/look at things! Chapter 33 – International Business Transactions International Law - Foreign trade = buy/sell goods/services b/w parties from different countries - E-commerce has made it possible to skip the natural progression and go straight to foreign trade - Foreign presence = placing representatives/agents of a business in foreign markets - Eventually, move from foreign trade to “foreign investment” (operations in a foreign market) and is by definition a multinational enterprise - Private firm dealing in country A with private firm in country B: o Which country should have jurisdiction? o Which country’s laws should be applied? these are questions of private law o What are legal relationships b/w private persons and governments?  questions of public law  Any case between citizen and government or government and government is public international law  UN has no jurisdiction over any member states except to the extent that the members give jurisdiction over certain areas  All parties must accept the jurisdiction of the UN  Countries will agree to things that are beneficial to have 1 globalized law (ie. piracy) o GATT, NAFTA are public international law (law involving relations b/w states) Foreign Trade Export/Import Contracts - Goods/services can be supplied in 3 ways: o Supplier delivers directly to customer in other country o Delivery made through supplier’s own organization established in other country o Customer accepts delivery in supplier’s home country and arranges to ship goods home himself Proper Law of the Contract - To determine the “proper law of the contract” (which country’s laws apply), must refer to conflict of laws, aka private international law o Best way to establish proper law is to make an express provision – can be “neutral” law if they choose the law of a place where neither of the parties is related to - If left unstated, courts try to infer the intention from the circumstances o If can’t, they apply system of law considered most connected with the contract o Having it in 1 country automatically can be very biased, home-court advantage, etc Contr
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