business law

Class Notes

The term paper (one paragraph one idea) Introduction

- What is the objective of the term paper? - You need to narrow the requirements or the questions to be asked.

- Will the existence of bidding systems create issues in the housing markets?

- What are the ethical or moral issues to tackle? - Things that are good or need to be corrected.

- Is this bidding war ethical? Especially in lower priced areas since people tend to bid above. The numbers must make sense and match.

- Are they legal even? - Are virtual visits deceiving?

- Buyer beware. - Should we be using the general template in the paper?

- We need to understand the worry - One key issue to remember; more than the majority of dwellings in the past year

and a half in Ottawa were without any form of inspection. You buy as is. You have to weigh the legal obligations.

- Is the foundation cracked? Is there mildew, mold? Do you actually know what’s in the house? Is there french drains?

- Houses are staged? Do they increase bidding wars? Renovation increases the prices.

- Methodology (avoid one big paragraph, go one statement at a time) - Step by step on how you completed the assignment - Needs to be bulletproof otherwise you lose credibility

- See OCtranspo crash - Possible versus possibility

- Did you take the photos right? Did you provide the chain of custody?... - One concept per line

- Parties involved - Buyer, seller, bank, real estate agent, inspection… - You need to have that information before you make your offer. With the short

turnaround time it’s hard to get done. - Pre-approvals are important

Clauses - We do not go outside the content of this class and the material we covered - You will read each of these lines and explain the legal consequences. What does the

provision tell you? - They tell you something you put it in writing

- If it’s good in words it’s good on paper Legal Concepts

- Any legal concepts brought up in class. We will discuss 300 in the class. We only need to choose 20 concepts.

Scenario - Create our own story. There’s no good story, things go wrong right left and centre

- There’s supposed to be appliances and there’s none when you walk in - A smoker lived there so you need to renovate

- Look at the contract and find out how to fix it. - In real life they show you A, but it’s really D,E,F - Do you accept the consequences or do you litigate?

- Choose your battles - Easy to say litigate. It’s a mental issue. Brings out the story. Capacity and

Desire. Recommendations

- What do you tell them? What will they do? What did you indicate? What should they be putting in the agreement? What protection clauses should be included? What if the offer isn’t accepted? Do you have an exit strategy?

- Any important reminders (mortgages last longer than marriages lol) - What will you include in the actual purchase agreement? - What and how would you put in the agreement? - Planning for contingencies: What is your tolerance for risk? How do you want to resolve

the issue (arbitration)? - Be upfront early on to gauge where the other party is on the issue.

Next week the professor wants us to have the table of contents

Where do you find in the Charter the rules regulating dress codes in change rooms? There is no provision for this. He mentioned an example of his daughters: “Why are there naked ladies in the change rooms?”

There’s no regulations governing this. How could this be enforced if this was the case? There’s a lot of legal vacuums in so many things. Our society is moving towards genderless bathrooms. There’s cubicles instead. The appeal court in Ontario made a key decision.

Are you legally required to cover your chest? If it’s not for sexual gratification, you cannot forbid someone from not covering their chest. Breach of equality of gender Women breastfeeding is also connected to this

No longer require gender to be on ID

Charter of Rights and Freedoms It was adopted on April 17th, 1982. First referendum was in 1980 and Pierre Trudeau said that if they vote no to the referendum they say yes to constitutional reform. This is an actual copy of the US bill of rights but put into a canadian setting. The Québec and Indigenous issues are still unanswered. Canada is founded upon the principles that recognized the supremacy of God (no god is better than another) and the rule of law.

Huawei example The US had a request for extradition and China says that they should just be repatriated. The two Michaels, this has impacted the relationship between China and Canada. Will India be the superpower of Asia? Butterfly effect? We allow the courts to assess the evidence to determine if there’s probable cause for her extradition. American’s hold the cards in this case. That person was coming to Vancouver to take a transit flight. There’s a great wealth of information being shared between different countries (5 eyes).

Fundamental rights - Freedom of expression - Freedom of association -

Mobility rights - You can get a job in any province so long as you meet the basic requirements

Legal Rights - The rights you have between yourself in the state

- Euthanasia would fall under here. Termination of life under certain conditions. Palliative care, or 18, or 16, or 14 years old. When can you make this decision? Health is a provincial jurisdiction.

- Equality rights - Equal protection under the law no discrimination based on race, ethnicity,

sex, age, religion, colour, mental or physical disability - Official Languages of Canada

- Requires the use of both official languages (english and french) - It’s a bonafide requirement for the position - Official language of the seat of Ottawa - Amendments to the constitution where all federal regulated

corporations will need to abide by the official languages act. Filed in june or july of this year.

- Minority rights -

- Enforcement - Court can correct any violation that is covered by the charter of rights

- A country is powerful when they have a good legal system - General

- Aboriginals - The charter does not apply to them. It does not affect treaties.

Court system is the guardians of our democracy. Courts can correct any violation. The most powerful legal system kills corruption, allows for redressing the issues, protects the interests and rights of individuals and persons.

Only since 2013 can a member of the royal family marry a catholic and still be part of the royal family. This has been a battle for the past 200 years.

Provision 1 - Reasonable limits clause AKA the Oakes test https://www.justice.gc.ca/eng/csj-sjc/rfc-dlc/ccrf-ccdl/check/art1.html

Balance between the rights of individuals and society. There’s no rights that are absolute but the limitations need to be tailored.

1. Demonstrate that the right exists and that it has been limited a. The onus of proof is on the person that must justify the limit. Either based on

balance of probabilities or civil standard. Must be demonstrably justified. Must bring evidence, social science, scientific, statistical…

b. Reason and logic may suffice 2. Determine in an express statute. Must be prescribed by law

a. It can be a policy, statute. b. Discretionary administrative decision-making limiting a right or freedom was

previously regarded as a limit ‘prescribed by law’.

c. The actions of the state need to be authorized by clear elements, there cannot be ambiguity or vagueness (need for precision and validity)

3. Oakes test a. Is the legislative goal pressing and important?

● Should the Charter be involved? (critical/relevancy) i. Ex. should we regulate the glasses of university students? Is this even

relevant? ii. Ex. Do Sihks need to wear the RCMP headgear instead of their turbin.

b. Is there proportionality between the objective and the means used to achieve it? i. You must rationally connect the objectives and the finality. ii. Be minimal impairment. iii. Final balancing

4. Pressing and substantial objective 5. Proportionality

a. Rational connection b. Minimal impairment c. Proportionality or final balancing

Example can we request that employees be vaccinated before they enter a government facility. Justifiable in the interest of the public and society. “Find me a better tool and we’ll get there”. Just because there’s a violation does not mean that it’s acceptable.

Legislation (Quebec)

● Act respecting the exercise of the fundamental rights and prerogatives of the Quebec people

● Objective: establish measures to foster adherence… ○ Required to have state neutrality

● When the state is involved (funded by the state), it must demonstrate religious neutrality ○ Exception: company’s main activity is religious/spiritual

● There are some religious accommodations

Quebec ● Have language schools only ● Religious schools are private, meaning you have to pay for the education

English canada vs french canada ● English Canada

○ Focus on Individual rights ● French Canada

○ Focus on Collective rights

➔ Oakes test does not matter in section 33 ➔ Courts are granting the evolution of our society

Intro to Class 3 (May 18th) In Law it’s never a straight line, there are always legal challenges. Will Québec force us to go towards

Québec filed Bill 96 last thursday. This is an overhaul of the language act. One of the things to understand is that Québec wants the bill entrenched in the Charter of Rights and Freedoms. They want it to be in the Charter or they will use the Notwithstanding clause (section 33) to protect this bill.

Scotland? They have a similar governmental structure to Québec. Similarities exist in their laws, ex. civil code of Québec. Scotts have also tried a referendum to leave the UK. The difference is that Québec hinges on the opinions of Québecers and indigenous peoples.

Legal Steps of the Oakes Test Section 1 - Reasonable Limits

Guarantees the rights and freedoms in the charter. Only subject to reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society.

Balances between the rights of individuals and the interests of society. Most modern constitutions recognize that rights are not absolute and can be limited if this is necessary to achieve an important objective and if the limit is appropriately tailored, or proportional. Inherent dignity of the human person, commitment to social justice and equality, accommodation of a wide variety of beliefs, respect for cultural and group identity, and faith in social and political institutions which enhance the participation of individuals and groups in society.

Analysis - Requirements of the test

- Right or freedom must be in the Charter - The right or freedom has been limited - Onus of proof is on the person that justifies the limit - Prescribed by law

- Needs to be in a regulation or statute - Reasonable and demonstrably justified

- Is the legislative goal pressing and substantial? - Does it have a reason to exist or is it just cause

- Is there proportionality between the objective and the means used to achieve it?

- What’s the link between the objective and the measure - Mask and not spreading disease

- Minimal impairment - The limit must impair the right or freedom no more than is

reasonably necessary to accomplish the objective. - Final balancing

- Proportionality between the situation, the effects, and the law.

Talked alot about removing tattoos, what’s appropriate and inappropriate?

Cannot forecast the future. Ex. Climate change hasn’t been brought to the supreme court because there is not an immediate problem to be dealt with.

Bill 96 has conflicts between the individual rights of people and the collective rights of society. It’s important to find where the differences lie in between the english and the french speeches. They’re not always the same stories.

Court Structure https://www.justice.gc.ca/eng/csj-sjc/ccs-ajc/02.html

Military courts Sexual misconduct is a huge problem. Should there be a civilian style of court in the martial system to ensure everyone gets their due process. General Vance, used to be a CDF then took his retirement. He was dating a lower ranking soldier under his command. She became a spouse and they had two children. Could we technically put them in jail? The military jail is in Edmonton. It’s not a great situation. This is the sanction.

Federal Tribunals If you’re in federal court you’re discussing federal matters. You need to get permissions in order to appeal to higher courts.

Provincial Courts The provincial courts are over capacity. 1 out of 9 Canadians will have a criminal record. 750 000 prosecutions on dui charges. About 6 million in Ontario per year. The provincial Superior court

Major financial issues, divorce.

You can appeal all these decisions. Supreme Court

The supreme court only sees about 120 cases a year. Dissension

Limitations Act https://www.ontario.ca/laws/statute/02l24

When can we be sued and what is the period, what are the limitations…

Applies to anything except when you’re dealing with real property or aboriginal rights

Basic Limitation Period You have a right to a proceeding. Must be commenced in respect to the second year

anniversary of the day which the claim was discovered. 1. The injury, loss, or damage had occurred. 2. Injury caused by or contributed to by an act or omission 3. That the act or omission was that of the person against whom the claim is made

You have the obligation to demonstrate that the two year period should be extended if there’s any reason why.

Ultimate Limitation Period Even if the limitation period established by any other section of the Act. No proceeding shall take place if it responds to the conditions below.

1. Anything prior to 15 years on the date that the act or omission on which the claim is based on took place.

No Limitation Period - When dealing with a sexual assault.

- Includes misconduct if the victim was a minor

Risk Management

Sources of Law Royal Prerogative: refers to the historical rights and privileges of the crown, including the right to conduct foreign affairs and to declare war.

Common Law: judge-made law, common law is created when judges make decisions. The decisions become precedents, and they are cumulatively referred to as the common law. Law of Equity: Another set of rules, that will try to give fairness to the circumstances, usually through remedies. Equity assists only those with clean hands. It removes some of the restrictions that common law imposes Public Law: Areas of law that relate to or regulate the relationship between persons and government at all levels such as Criminal law

Common Law versus Civil Law Common law is the judge made law Civil law, judges look to the Civil code for general principles to be applied to the case at hand. They are not bound by how other judges have interpreted the Code. A reason for everything and a million exceptions.

Examples of Administrative Bodies Liquor control board to get permission to sell alcohol Workers’ compensation board to hire employees

Domestic versus international law Substantive versus procedural law

USMCA - with Canada becoming more entwined in North America

Contract, tort, property, company law.

How the Common Law System works A lower court must follow a relevant precedent created by a higher court. The higher the court the stronger the precedent. Ex. the Supreme Court is the highest court and so any decisions made are essentially final.

3, 4, 28. Agency maybe

May 25th, 2021 Bill and Melinda Gates He talked about these two again and their reason for divorce. Ethical standards

Branding is an important question when thinking of risk management. How do we manage people and the brand? How can we push people away from the brand (PR poison)? How can we differentiate between the person and the business?

You need to sever the relationship between the offender and the business. If it’s good in words it’s good in writing. The Founder (movie on Netflix) Should we be having trust or naiveté? (he means naiveté in a good way I guess).

Legal Risk management involves all managers and employees at every level. 1. Identify the legal risks

a. Assess the organization’s functional areas b. Review how the organization makes decisions c. Examine the organization’s business relationships d. Analyse the organization’s operations and transactions

i. Examples 1. Business could harm the environment and result in prosecution

under environmental legislation or civil actions by affected people 2. Employee harassment could result in human rights investigations 3. Aggressive marketing could result in investigation under the

federal Competition Act 4. Machine breakdown could result in a loss of production and an

inability to fulfill contracts, resulting in lawsuits for breach of contract.

5. Bill Gates 6. Vaccinations: how many?

2. Evaluate the risks a. One or two doses? Three doses? This is most subject to change. Consistency in

the information, in dealing with the problem… 3. Devise a risk management plan

a. Avoid or eliminate the risk b. Reduce the risk

c. Transfer the risk d. Retain the risk

How might a business absorb or Retain risk (Mcdonald’s systemic discrimination example was used)

- Self-insurance - the organization can establish a funded reserve - Insurance policy deductibles - the organization can retain risks to a certain dollar amount - Noninsurance - the organization can charge losses as an expense item

4. Implement the plan a. Carry out the plan

i. What do we do b. Monitor and revise the plan

i. What was wrong, right and what did we do right wrong

Maple Leaf Foods Example Had to have had Symptoms of listeriosis for 24 to 48 days is entitled to a settlement Signed affidavit Maple Leaf requires no proof Filed electronically (920$ per person) The total cost was less than 20 million dollars CAD

125 000 each for those who passed away (2 750 000$) 86.25% of the cost was the 920$ payouts

Lessons learned React quickly and in a positive fashion. Immediate recall Use a prominent spokesperson to tell the company’s side Use appropriate messages in different media: don’t argue whether it was responsible or Not Be open and consistent in acknowledging the problem and the company’s role in it

Managing Legal Risk A business can assess its legal environment by:

- Assessing that environment - Developing a risk management plan - Reacting to changes in the legal environment - Managing its legal services

How Business activities can lead to disputes - Pollution incident - Motor vehicle accident - Hacking attempt - Bylaw changes

- Delinquent customers

Is Litigation the only option for resolving legal disputes? - Alternative dispute resolution (ADR)

- Preserve confidentiality - Preserve relationship - Less costly - Less time-consuming - Each side can agree on the outcome

- Negotiation - Parties discuss their differences and attempt to reach a mutually

agreeable resolution. - Lawyers can be of assistance (things begin to get legalized and

then the other side will lawyer up) - If the loss is one for which - Can be used to resolve virtually any type of dispute - Saying Sorry (this may open the door to negotiations)

- Pros & Cons to this - Mediation

- Do not make decisions, they help the parties reach a conclusion - Very high success rate - Popular because it’s

- Less expensive, quick, private, confidential, helps to preserve the relationship, and can result in a resolution tailored to the needs of the parties

- Arbitration - A third person that makes the decision that is binding for all parties - Works particularly well for most commercial and business disputes

because the parties can select an arbitrator that’s relevant - Very common in international contracts - Parties can agree in contract not to sue and use arbitration to

resolve disputes - Virtually no mandatory qualifications - Every party brings their perspective - The negotiation is legalized and binding

Private (civil) Litigation - Plantiff and Defendant - Is it really worth it? What do you gain? What do you do? Is it in your best interests?

Small Claims Court https://www.ontario.ca/laws/regulation/980258

1.03 General Principle Liberally construed to secure the just, most expeditious and least expensive determination of every preceding on its merits in accordance with section 25 of the Courts of Justice Act.

For scope or jurisdiction see article 6

Partnerships and proprietorships are in article 5

Maximum is for small claims court is 35 000$ per case - Plaintiff (Form 7A) - Defendant (Form 8A)

Must serve documents to the person, physically. Cannot be electronically

Service by email Requirements re Email Message

(3) The email message to which a document served by email in accordance with these rules is

attached shall include,

(a) the sender’s name, address, telephone number, and email address;

(b) the name of the person or representative being served;

(c) the date and time of the email; and

(d) the name and telephone number of a person to contact in the event of a

transmission problem. O. Reg. 108/21, s. 9.

When Effective

(4) Service of a document by email is deemed to be effective,

(a) on the day the email is sent; or

(b) if the email is sent between 4 p.m. and midnight, on the following day. O. Reg.

108/21, s. 9.

Imminence: Does it effect the health and safety? Will it cause significant material hardship?

Defence

9.01 A defendant who wishes to dispute a plaintiff’s claim shall, within 20 days of being served

with the claim,

(a) serve on every other party a defence (Form 9A); and

(b) file the defence, with proof of service, with the clerk. O. Reg. 44/14, s. 5.

Contents of Defence, Attachments

The following requirements apply to the defence:

1. It shall contain the following information:

i. The reasons why the defendant disputes the plaintiff’s claim, expressed in

concise non-technical language with a reasonable amount of detail.

ii. If the defendant is self-represented, the defendant’s name, address,

telephone number and email address (if any).

iii. If the defendant is represented by a representative, the representative’s

name, address, telephone number, and email address (if any) and Law

Society of Ontario registration number (if any).

2. If the defence is based in whole or in part on a document, a copy of the document

shall be attached to each copy of the defence, unless it is unavailable, in which case

the defence shall state the reason why the document is not attached. O. Reg.

461/01, s. 11; O. Reg. 78/06, s. 18; O. Reg. 56/12, s. 2; O. Reg. 230/13, s. 12; O.

Reg. 108/21, s. 10.

Noting Defendant in Default

11.01 (1) If a defendant to a plaintiff’s claim or a defendant’s claim fails to file a defence to all or

part of the claim with the clerk within the prescribed time, the clerk may, when proof is filed that

the claim was served within the territorial division, note the defendant in default. O. Reg. 78/06,

s. 24.

Dismissal

11.1.01 (1) Unless the court orders otherwise, the clerk shall make an order dismissing an

action for delay if, by the second anniversary of the commencement of the action,

(a) the action has not been disposed of by order; and

(b) no step has been taken by the plaintiff under subrule 11.03 (2) or (2.1) to obtain

judgment, nor has a trial date been requested. O. Reg. 194/15, s. 3; O. Reg. 38/16,

s. 6; O. Reg. 488/16, s. 1 (1).

RULE 14 OFFER TO SETTLE 14.01 A party may serve on any other party an offer to settle a claim on the terms specified in

the offer. O. Reg. 258/98, r. 14.01.

Written Documents

14.01.1 (1) An offer to settle, an acceptance of an offer to settle and a notice of withdrawal of an

offer to settle shall be in writing. O. Reg. 78/06, s. 28.

June 1st, 2021

Insurance Insurance Terminology

Insurance policy: contract of insurance (60 - 70 pages on average, times 9, single spaced…) Legislation requires a copy be delivered to the insured, They will almost never be covered. It is incredibly technical and well-defined. It will first and foremost provide protection to the insurance company.

Premium: Price paid for insurance coverage Insurer: company that sells insurance coverage Insured: one who buys insurance coverage

Limitations of Insurance - Can be costly and is not always available - Does not prevent a loss from occurring - Does not prevent the potential adverse publicity associated with a loss

- Ex. you own a business and there’s a fire

The insurance relationship An insurance policy is a contract that provides protection against a specific loss.

Insurance Legislation - One of the most regulated industries in Canada due to the vulnerable nature of the

clientele. - Mandating the terms that must be found in insurance contracts - Regulating the industry by setting out licensing requirements for insurance companies,

brokers, and adjusters. - Monitoring insurance companies, particularly with respect to their financial operation - Includes definitions

- Total disability example (quadrapeligic only moving head) - Basic definitions are in the legislation - Small differences can be made in policies

Basic types of insurance 1. Life and disability insurance

a. Options: renewal of policy to increase protection with protection of health changes

2. Property insurance (aka fire insurance) 3. Liability insurance (also known as casualty)

a. When you make a mistake b. Malpractice insurance

Deductible - With the exception of life insurance contracts, insurance policies can be written so that

the insured pays a deductible - This means that the insured is responsible for the first part of the loss, and the insurer

has liability for the balance - Agreeing to a deductible generally reduces the premiums that the insured must pay

Specialized concepts Duty to disclose: obligation of the insured to provide to the insurer all information that relates to the risk being insured. Has to have a link to what is being insured, can be an indirect link. Insurable interest: financial stake in what is being insured Indemnity: obligation on the insurer to make good the loss Subrogation: right of the insurer to recover the amount paid on a claim from a third party who caused the loss. You as the insured will get compensation from the insurer, they then take over your rights and sue the other party.

Forfeiture Rule - An insured is not permitted to profit from his or her willful misconduct

- Shawshank redemption escape. - If he or she deliberately causes a loss, the forfeiture rule will prevent them from

collecting on their insurance

The policy Rider (a change in the policy): a clause altering or adding coverage to a standard insurance policy. Cannot make a verbal change to a policy Endorsement (confirmation of the policy): Written evidence of a change to an existing insurance policy.

Insurance product - Specialized business policies - Auto insurance - Occupiers’ liability

- Comprehensive and general liability insurance (could be coming from a professional designation)

- Errors and omissions insurance - Property - Business interruption loss insurance - Environmental damage insurance - Key-person life insurance

Business Application of the law No-fault insurance systems (PQ and BC) Place emphasis on providing accident benefits without regard to the victim’s fault. The chart may not suffice to properly compensate the victims Critical analysis: what is the purpose of “pain and suffering” caps for minor injuries?

Remedies of the insured

Against the broker - A broker is the middle person between the insurance companies and the insured - Liability may arise if the broker provides negligent advice

Against the insurance company - When an insured makes a claim under its policy, an insurance adjuster will likely

investigate the events and evaluate the loss - On the adjuster’s advice, the insurer will offer to settle the claim. There may be

disagreements between the insured and the insurer. - An insurer owes the insured a duty of good faith, including a duty to deal with an

insured’s claim in good faith.

Automobile insurance https://www.fin.gov.on.ca/en/autoinsurance/index.html

Dispute resolution system Understanding auto insurance: http://www.fsco.gov.on.ca/en/auto/brochures/Pages/brochure_autoins.aspx

Dived deep into Medical, rehabilitation, and attendant care benefits Maximum for serious injury is 65 000$, with additional coverage can be 130 000$ An additional 1 000 000 for catastrophic injuries Includes provisions for things like housekeeping, care givers, death and funeral

Agency What is agency at law? Shows us the form that we should have in our safe deposit box.

Examples of agency relationships - A sports agent who negotiates a multimillion-dollar deal on behalf of hockey players - An insurance agent sells fire and theft insurance on behalf of several insurance

companies. - A travel agent sells tickets, cruises, and vacation packages on behalf of carriers and

hotels - A booking agent negotiates fees + dates on behalf of enterprises - A stock broker buys and sells on behalf of individuals and companies

The Agent-principal relationship - Agent is the person negotiating - Principal is the person being negotiated for

The outsider principal relationship - Agent and principal are present but an outsider will also be present to negotiate between

them.

Agency by Estoppel - An agency relationship created when the principal acts in a way that the third parties

reasonably conclude that an agency relationship exists. - Example, the principal says x person is my conduit for this relationship.

- Estoppel (the principal is stopped from making changes)

Agency by ratification - An agency relationship created when one party adopts a contract entered into on his

behalf by another who at the time acted without authority

Creation of an agency relationship - A principal can only ratify a contract if

- They do so within a reasonable time - The principal had the capacity to create the contract at the time the agent entered

into it and at the time the agent entered into it and at the time of ratification, and - The agent identified

Authority of Agent Actual - part of the process, that derives from either express or implied agreement Apparent - the power that an agent appears to have to an outsider because of conduct or statements of the principal

Express authority - written or oral authority granted by the principal to an agent

Implied - agent’s authority that is present by implication only

Duties of an agent - Must perform in accordance with the principal’s instructions, or failing instructions, then

performance must meet the standards of the particular trade or industry - Fiduciary duty: imposed on a person who has a special relation of trust with another.

You work in the best interest of the principal - Fiduciary: person who has a duty of good faith toward another due to a relationship

Duties of the principal - Pay the agent a specified fee or percentage for services rendered - Assist the agent in the manner described in the contract - Reimburse the agent for reasonable expenses associated with carrying out the agency

duties - Indemnify against losses incurred in carrying out the agency business

Liability of the principal to the outsider - The liability of the relationship is that of the principal and not the agent.

Liability of the agent to the outsider - When an agent is exceeding their authority. They may become personally liable. - Warranty of authority - a representation of authority by a person who purports to be an

agent. - Can only happen after the ratification of the excess of authority by the principal (the

principal has to say it)

Liability of an undisclosed principal - A principal whose identity is unknown is still liable so long as they are acting within their

authority or if they were neglecting their fiduciary duties.

Liability of agent to principal - When an agent exceeds their authority the principal can sue the agent for breach of

contract.

Power of attorney kit (free document) https://www.attorneygeneral.jus.gov.on.ca/english/family/pgt/poakit.php One for property and one for personal care Normally two, to allow people with whom you have confidence in that will execute your plans as stated.

- Assessor is someone who is qualified to assess someone’s mental capacity, will provide the state of capacity of the individual.

- What is incapacity? - Here we look at the mental incapacity, is the person able to understand or

appreciate relevant information to make a decision and its consequences

- Personal care - Health care, shelter, clothing, hygiene

- Property management - Choose wisely who will have POA, there’s a lot of trust put into that person. - Must provide separate or joint attorney’s, the authority granted, compensation provided

Partnerships https://www.ontario.ca/laws/statute/90p05

Definitions - Business means a trade, an occupation, and profession

What is the nature of a partnership A partnership is a relationship that subsists (continuity) between persons (individuals,

associations, corporations…) carrying on a business with the view to profit. A contractual relationship.

Elements of a partnership - Joint tenancy (joint property or common property) - The sharing of gross return does not in itself constitute a partnership - The receipt by a person of the share of the profits is proof of them being a partner

except: - When a debt is repaid - This is how you’re paid - A person who

- Was married to a deceased partner immediately before the deceased partner dies

- The child of a deceased partner

The legal name of a firm is: persons who have entered into a partnership with one another for the purposes of this act. Collectively called a firm, and the name under which their business is carried on.

Relations of partners to persons dealing with them Power of partner to bind firm

Every partner is an agent of all the other partners. They can go and buy stuff for the firm without express permission unless you have no authority to do so.

An act or instrument relation to the business of the firm and done or executed in the firm name, or in any other manner showing an intention to bind the firm by a person thereto authorized. Partners bound by acts on behalf of firm Partner using credit of firm for private purposes

Liability of partners Every partner is liable for the actions of the other partners during operable hours.

Liability of firm for wrongs

Liability for wrongs and several Every partner is jointly liable for the actions of the firms. If the firm is wrong

(misappropriated money), the partners are liable to right the wrong.

June 8th

Important links

Annotated partnership agreements https://store.lsuc.on.ca/Content/pdf/2017/CLE17-00907/CLE17-00907-pub.pdf

June 22nd Corporations

Shareholders - person who has ownership in a corporation Director - person elected by shareholders to manage a corporation Limited liability - responsibility of obligations restricted to the amount of investment Dividend - division of profits payable to shareholders

Pros - Limited liability - Flexibility - Greater access to capital - Continuous existence - Tax benefits - Transferability - Potentially broad management base

The corporation Profit sharing - profits of the corporation are distributed to shareholders through dividends Decision making - the corporation is managed by a board of directors, which in turn is elected by shareholders. In addition, officers - that is, high-ranking corporate employees - can be hired by the board to assist in running the corporation.

Source of Capital: A corporation can get its capital in two ways: it can borrow or its directors can issue shares. Taxation: Because it is a separate legal entity, a corporation pays its own taxes. Transferability: The fact that a corporation has a separate legal identity often allows for easy transference of an ownership interest represented by shares. Perpetual Existence: Because the corporation exists independently of its shareholders, the death or bankruptcy of one or more shareholders does not affect the existence of the corporation.

Business Arrangements There are additional ways to carry on the business activity itself. These ways are not distinct business organizations but are, for the lack of a more accurate term, arrangements.

Franchise An arrangement whereby an owner of a trademark or trade name permits another to sell a product or service under the trademark or trade name. Disclosure Requirements: Franchisors are required to deliver a disclosure document to prospective franchises 14 days prior to franchises entering into binding agreements or paying money. Franchises have the right to rescind or cancel the franchise agreement within certain time periods if they do not receive a disclosure document. Parties to a franchise agreement have the duty of fair dealing in the performance and enforcement of the agreement. Right of Association: Franchises have the right to associate with one another and form or join an organization of franchises.

Other Business Arrangements Distributorship of Dealership:Contractual relationship where one business agrees to sell another’s product. Strategic Alliance: Cooperative arrangement among businesses that may involve joint research, technology sharing, or joint use of productions. Joint Venture: Grouping of two or more businesses to undertake a particular project. What are the legal risks with joint ventures? Sales Agency: Arrangement in which a manufacturer or distributor contracts with an agent to sell goods or services on its behalf. Product Licensing: Agreement whereby the owner or a trademark or other property right grants to another the right to manufacture and distribute products associated with the trademark or other proprietary rights.

The Corporation Predominant business vehicle in modern commerce because it is a separate legal identity.

The corporation alone is responsible for its own debts and other liabilities. Should the corporation fail to make good on its obligations, the shareholders are not responsible.

Salomon v Salomon Ltd, [1897] AC 22 (HL) See pg.343 of textbook Critical Analysis: Do you think that the court went too far in giving independent existence to the corporation, especially when the interests of Aron and his company virtually identical?

Pre-Incorporation Issues Whether to incorporate federally or provincially What types of shares will be available and to whom What to name the corporation

Federal or Provincial Corporation? Federally incorporated corporations have the right to carry on business in each province. Provincially incorporated corporations have the right to carry on business only in the province in which they are incorporated (with some exceptions).

Deciding on share Structure Share: Represents an ownership interest in the issuing corporation. A corporation may simply have one type or class of shares with all the basic shareholder rights attached to it. Classes of shares may include a combination of various rights and privileges, including:

● Voting Rights ● Financial Rights ● Preference Rights ● Cumulative Rights ● Redemption Rights

Widely Held Corporation Widely Held Corporation: Shares are normally traded on the stock exchange (available to the general public). Securities Legislation: Corporations are subject to regulations in those provinces ins which the securities are issued or traded.

Closely Held Corporation Closely Held or “Private” Corporation: Does not sell its shares to the public. Many small and large businesses are closely held corporations, meaning that their shares are not traded on the stock market. Legislation often limits the number of shareholders. May be subject to lower tax rates.

Naming the Corporation

All jurisdictions require a company to be identified by a name or designated number. Must be distinctive. Must not cause confusion with any existing name or trademark. Must include a legal element (Ltd., Corp., Inc., etc.) Must not include any unacceptable terms Nuans Report:

● Document that shows the result of a search for a business name to ensure the name is not already in use.

The Process of Incorporation ● Articles of Incorporation ● Notice of registered office ● Notice of directors ● Newly upgraded automated search (NUANS) report ● Filing fee payable to the Receiver General of Canada

Articles of Incorporation ● Defines the basic characteristics of corporations and sets out the basic features of the

corporation, including: ● Name and place of corporation’s registered office ● Class and number of shares ● Any restrictions on the transferring of shares ● The number of directors ● Restrictions on the business that can be carried on ● Any other provisions that any incorporator requires to customize the corporation

Creating the Corporation ● Articles of Incorporation are filed along with Notice of Directors and Notice of Address ● Fee is paid ● If in order, a “Certificate of Incorporation” will be issued.

First Directors Meeting ● First Directors call an organization meeting to:

● Make bylaws ● Adopt forms of share certificates and corporate records ● Authorize the issue of shares and other securities ● Appoint officers ● Appoint auditor ● Make banking arrangements ● Transact any other business

Financing the Corporation A corporation may raise money by borrowing.

● Bonds: Document evidencing a debt owed by the corporation, often used to refer to a secured debt.

● Debentures: Document evidencing a debt owed by the corporation, often used to refer to an unsecured debt.

● Securities: Shares and bonds issued by a corporation. A corporation may raise money by selling shares.

● Shares are issued to investors in exchange for a purchase price. ● Provides flexible means of raising capital. ● Provides opportunity to benefit from corporation’s growth.

Securities Legislation ● Provides the mechanism for the transfer of securities. ● Seeks to ensure that all investors have the ability to access adequate information in

order to make informed decisions. ● Ensures that the system is such that the public has confidence in the marketplace. ● Regulates those engaged in the trading of securities. ● Removes or punishes those participants not complying with established rules.

Selling Securities to the Public ● Any corporation within to sell securities to the public must:

● Register ● File a Prospectus — statement by the issuing company of prescribed information. ● Insider Trading Restrictions — insiders must report any trading that they have

engaged in.

Insider Trading ● Transactions in shares based on confidential information of a material nature. ● Insider:

● Person who has a special relationship with a corporation. ● Tippee:

● Person who acquires confidential information from an insider.

Corporation Liability

“Identification Theory” of Corporate Liability ● Developed by the courts and provides that a corporation is liable when the person

committing the wrong is the corporation’s directing mind.

Vicarious Liability ● Identification theory established when a corporation has primary liability in tort. ● A corporation can also have vicarious liability, when a wrong or breach of contract occurs

as a result of the conduct of an employee.

Contract Liability of Corporations

● Agency law generally determines when a corporation is liable on a contract. ● Outsiders can now generally rely on the apparent authority of agents — the corporation

would be liable on the contract.

Contract Liability of Corporations ● To avoid personal liability, contracts signed should clearly indicate that the person is

signing on behalf of the corporation and is not signing in a personal capacity.

Criminal and Regulatory Liability of Corporations ● New Criminal Code Provisions:

● Expanded the range of individuals whose actions can trigger liability by broadening corporate responsibility for all criminal offences and by increasing the penalties.

● Senior officers are now under a positive obligation to act when they have knowledge that an offence has been or will be committed.

● Stiffer penalties are corporate probation orders.

● Regulatory Offences: An offence contrary to the public interest. ● Corporation and sometimes even its directors and officers face penalties, including civil

liability for damages.

● Corporation faces liability in many areas, including: ● Taxation, human rights, pay equity, employment standards, consumer protection,

unfair or anticompetitive business practices, occupational health and safety, and environmental protection.

Duties of Directors and Officers ● Directors and officers are fiduciaries to the corporation: ● Implications?

● Must avoid self-dealing contracts — A contract in which fiduciary has a conflict of interest.

● Fiduciary Duty: ● Cannot intercept a corporate opportunity — A business opportunity in which the

corporation has an interest. ● Duty of Competence:

● Directors and officers must meet a general standard of competence.

Personal Liability of Directors and Officers ● Directors and officers are exposed to a broad range of liabilities relating to the business

of the corporation, including: ● Liability in torts and contracts ● Liability by statutory offences

● Liability in Tort: ● Not personally liable provided that they were acting in furtherance of their duties

to the corporation and their conduct was justifiable. ● May be liable for own tortious conduct

● Liability in Contract: ● Director not generally liable for the corporation’s contracts ● Principles of agency apply ● May be liable if guarantees the performance of the corporation

● Liability by Statutory Offences

● Avoiding Risk of Personal Liability ● Make all decisions informed decisions ● Do what is necessary to learn about matters affecting the company ● Identify problems within the company ● Stay apprised of and alert to the corporation’s financial and other affairs ● Regularly attend directors meetings ● Ensure they receive reliable professional advice

Liability of Shareholders ● No duty to act in the best interests of the corporation ● Can freely compete with the corporation in which he or she holds shares ● Not obligated to attend shareholder meetings, cast vote, read the corporation’s financial

Lifting the Corporate Veil ● Courts are generally reluctant to lift the corporate veil except when they are satisfied that

a company is a “mere facade” concealing the true facts. ● It must be shown that there is complete domination and control by the shareholder and

that the corporate form must have been used as a shield for conduct akin to fraud.

Shareholder Rights ● Three broad categories:

● Right to vote ● Right to information ● Financial rights

● Rights are allocated by directors when issuing difference classes of shares.

Classes of Shares ● Common Shares:

● Share that generally has a right to vote, to share in dividends, and to share in proceeds own dissolution.

● Preferred Shares: ● Share or stock that has a preference in the distribution of dividends and the

proceeds on dissolution.

Right to Vote ● Includes right to:

● One shareholder general meeting each year ● Be given notice of the meeting ● Attend the meeting ● Ask questions ● Introduce motions ● Have a proxy — person authorized to exercise a shareholder’s voting rights

Right to Information ● Includes right to:

● Inspect the annual financial statements ● Apply to the court to have an inspector appointed if it can be shown there is

serious concern about mismanagement ● Inspect certain records, including minute books ● Know whether directors have been purchasing shares of the corporation

Financial Rights ● Include:

● Right to receive any dividend declared by the corporation ● Share in the assets of a corporation on dissolution ● May include preemptive rights — Shareholder’s right to maintain a proportionate

share of ownership by purchasing a proportionate share of any new stock issue.

Shareholder Remedies ● Dissatisfied Shareholder may:

● Sell shares ● Exercise dissent and appraisal rights.

● Derivative Action: ● Suit by a shareholder on behalf of a corporation to enforce a corporate cause of

action. ● Oppression Action:

● Statutory remedy available to shareholders and other stakeholders to protect their corporate interests (oppression remedy).

● Shareholders’ Agreement: ● Agreement that defines the relationship among people who have an ownership

interest in a corporation. ● Unanimous Shareholders’ Agreement:

● Agreement among all shareholders that restricts the powers of the directors to manage the corporation.

Contents of a Unanimous Shareholders’ Agreement ● May include:

● Agreements — allow the shareholders to define their relationship in the following areas:

● Management of the company ● Protection for the minority shareholders

● Control over who will be the other shareholders ● Provisions of the market for shares ● Capital contribution ● Buy-sell arrangements in the event of a dispute ● Mechanism for terminating an agreement.