Commercial Law - Notes PDF

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Summary

Chapter 1 Law, Society, and Business The Role of Law Influences and controls the behaviour of individuals in society o Sets basic standards of behaviour that are enforced government and also organizations and groups with the help of the government o Law is needed to protect persons, property, and so...

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Chapter 1 – Law, Society, and Business The Role of Law 

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Influences and controls the behaviour of individuals in society o Sets basic standards of behaviour that are enforced by government and also organizations and groups with the help of the government o Law is needed to protect persons, property, and society as a whole Empowers, influences, and controls the actions of government o Rule of Law establishes legal principles that treat all persons equally, which government is also bound by and must obey o Law that regulates the government and its relationships with private persons Influences and controls interactions between individuals o Enables us to make legally binding agreements enforced in the courts o Referred to as private law (civil law)

Forms of Legal Liability Lawmakers use three forms of liability to influence individual behaviour o Criminal Liability  Against government and society as a whole; public law o Regulatory or quasi-criminal Liability  Less serious offences enforced through regulatory bodies set up by the government for specific purposes; public law o Civil Liability  Breach of private law; enforced through civil lawsuit initiated by victim 

Law and Business With regards to the laws regulating a business and its relationships with government, stakeholders, competitors, and suppliers  Business may be faced with different rules for each country in which they operate, causing conflict among the law o Treaties, conventions, and model laws attempt to harmonize these laws as to limit conflict 

o Super-government organizations like the UN and WTO work to find commons approaches to international issues

Legal Risk Management  

Legal Risk occurs wherever a business can potentially face legal liability through their business activities A legal risk management plan must be developed by a company to outline potential legal risk that may occur, and preventative measures and strategies

Steps in Development of a Legal Risk Management Plan 1. Identify potential legal risks  Through ways of a legal audit that explores every area of the company 2. Assess and prioritize each legal risk based on likelihood and magnitude 3. Develop a strategy to address each risk from both proactive and reactive perspectives  There must be a plan to prevent the risk from occurring and one that also minimizes the consequences if it does occur 4. Implement the plan  Announcing, educating, training, testing, and monitoring the plan 5. Regularly review and update the plan  New legal risks must be added to the plan

Strategies to Manage Legal Risk 1. 2. 3. 4.

Avoid the risk Reduce the risk Transfer the risk (to an insurance company) Absorb the risk (self-insure)  All strategies used in combination

Sources of Law  The Constitution o Made by monarch or a government  Legislation/Statutes o Subordinate legislation  Handed down by a body designed in the statute, i.e., federal government or cabinet minister o Administrative Rulings

Handed down by bodies created by the legislation  Court decisions o Judgements handed down by single judges or panel of judges o Decision referred to as Case Law 

What do Courts do?     

They determine the validity of legislation They interpret legislation They protect human rights They develop case law, creating new principles to be applied to resolve disputes without court intervention They determine disputes for the parties before the courts

Federalism and the Constitution (Division of Powers) Canada is a federal state with its powers divided among federal and provincial bodies  When conflict arises, the courts must determine if the legislation is within the jurisdiction of the enacting government o Outside = ultra vires o Inside = intra vires  Residual Powers are granted to the federal government  When conflicts arise as a result of a new legislation, the courts must 1. Look at the law itself—what does the law do and why? What is its purpose/intent? 2. Identify under which delegated power the identified topic falls  If it falls under the other power, the legislation is void  Concurrent Powers are overlapping powers of both levels of government to regulate the same activities o If there is no conflict between the federal and provincial laws, then both are valid o If there is a conflict, the principle of federal paramountcy applies, to which the federal law prevails over a conflicting provincial law 

The Charter of Rights and Freedoms  

Places limits on many aspects of government action and protect human rights Ordinary legislations may not infringe on the rights entrenched in the constitution

Cannot be amended without following Canada’s amending formula  Section 33 allows government bodies to opt out of the charter, operating notwithstanding  Section 1 states that our rights are NOT absolute and subject to reasonable limitations  The charter applies to government and government activities o Limited application to private persons o Human rights codes cover those activates that are not under federal jurisdiction  Public universities would apply but not private ones, i.e., TWU 

Rights and Freedoms Protected by the Charter o

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 Fundamental Freedoms Conscience and religion, expression and belief, peaceful assembly, association  Legal Rights Life, liberty, and security Secure against unreasonable search and seizure No arbitrary detainment or imprisonment To be read Charter Rights on arrest  Equality Rights No discrimination based on race, religion, etc. (except for affirmative action)

Challenging the Validity of a Statute   

Argue that the statute is invalid because the subject matter of the legislation is not within the jurisdiction of the relevant government Argue that the statute is invalid because the legislation violates the Charter of Rights and Freedoms Argue that the interpretation of the legislation is wrong and the statute does not apply to the particular conduct

Chapter 2 – The Machinery of Justice Classifying Law Public vs. Private Substantive Law is the acceptable conduct and the rights and duties of each person o i.e., own property, vote, enter contracts  Procedural Law deals with the rules that deal with how substantive rights and duties may be enforced  

Who Makes the Law  

The courts through case decisions The government through legislation

Legal Systems 

Civil Law o Based on legislated code or statutes)

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Common Law o Based on precedence o Consistency and predictability o Based on stare decisis  Judge-Made Law o Case Law precedence  The collection of decision is known as Common Law  The court of Chancery was developed in order to provide equity or equitable remedies to harsher rules existing in common law

Procedural Law Rules of Civil Procedure are the provincial regulations that set out the steps in a private lawsuit, including forms, fees, and timelines  Any Canadian of legal age or non-Canadian may start a class action law suit o For this matter, corporations also have the ability to sue or be sued o An unincorporated collectivity includes private clubs or trade unions, that are unable to sue or be sued  A single plaintiff has the ability to commence a private (civil) legal action against another party o When multiple plaintiffs arise against a company, this is known as a class action  Res judicata means that a case in a class action cannot be brought before the court again after a binding court decision has already been made 

Procedure Before Trial (Pre-Trial) Action Issuing (a claim) and serving (providing a copy to both parties) a writ (statement of claim) as a result of a cause of action (giving rise to legal liability  The defendant will review the writ and respond by entering (filling) an appearance (an intention to contest the action) and replies with a statement of defence o The defendant will also prepare a counterclaim to be tried along with that action  The aggregation of documents filed by each party to an action is known as the pleadings, whereby no new evidence may be introduced in trial  

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An examination for discovery is a process where each party can examine each other’s’ evidence in order to assess the strength of either side’s case, in order to narrow the issues of the case, and whether the case is worthy of going to trial Alternative Dispute Resolution is weighed in order to narrow the issues or drop the case

The Trial    

The onus is on the plaintiff The standard of proof is the balance of probabilities All evidence brought forward must be admissible When a witness recounts a story that is not their own, or that of a second account, it is known as hearsay and is not allowed in trial

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Must be done within a time limit of 30 days or less Appeal court may order a case back to a new trial, if it is determined that the trial judge erred in applying the law

Appeals

Court Costs  Solicitor-Client Fess o Payment for the time and expenses of a lawyer in preparing a case and representing the client in negotiations to settle, or in court o Fees covered by government in the case of legal aid to lowincome litigants  Party and Party Costs o An award that shifts some of the costs of litigation to the losing side according to a published scale of fees

Contingent Fees  

A fee paid for the lawyer’s services, only if the client is successful There is no charge if the client is unsuccessful

Settlement Out of Court   

Provides quick compensation and avoids the expense of litigation Reduces the probability of losing in court Creates a delay in the court system

Rules have also been created to encourage settlement out of court o Parties must attend mandatory settlement conferences as part of the pre-trial procedures o If it is determined that a reasonable offer of settlement is made, and one party rejects it, then the other party will be ordered to pay the costs incurred by the other party o ADR is encouraged by the courts 

Alternative Dispute Resolution   

Arbitration Mediation Negotiation

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Speed – cases handled more promptly than that of courts Cost – Less time means less money Choice of adjudicator or mediator – Choose someone with expertise in the field Confidentiality – disputes remain private and out of the press Preservation of ongoing relations – less adversarial than litigation

Advantages

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Legislation: Government Made Law Made by the federal and provincial governments through legislation or statutes  Made by municipal governments through bylaws  Subordinate legislation is statute-making power given to administrative bodies set out in a large statute  Legislatures sometimes enact statutes to codify existing case law precedents o This does away with the process of looking through several cases 

Chapter 6 – Formation of a Contract

Intention to Create Legal Relations  

An intention must be present corresponding to an agreement between two parties An advertisement is not a legally binding contract, although false advertising is still considered illegal

Chapter 9 – Writing and Interpretation Distinction Between Substance and Form A contract is formed when there is an accepted offer, consideration, and intention  Substance refers to the terms of the contract  The form refers to the physical shape of the contract, and includes: o Oral (spoken) o Part oral and part written o Entirely written (aggregated or separated into multiple documents)  Written contracts are superior, as spoken contract can be forgotten overtime  Most legal disputes arise due to a misinterpretation of a contract, which must then be construed by the courts 

Legislation Dealing with Writing Certain language must be used in the formation of various types of contracts  Three common types of legislation exist, affecting a wider range of contracts: o The Statute of Frauds  The first piece of legislation to impose writing requirements  Makes certain types of contracts unenforceable unless  Valid oral contracts that fall within the statute are unenforceable, in an effort to reduce fraud—which hasn’t been the case  Guarantees made by a guarantor are only enforceable through writing, but indemnifying a creditor through an indemnity (a third party promising to take primary liability of a debt) can be enforceable orally  A miscarriage is an injury caused by the tort of another person, and is only enforceable via written contract 

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Land ownership must be part of a written contract, whereas tenancy would be out of scope from the statute of frauds, and therefore, orally enforceable  Part Performance indicates that performance undertaken in reliance on an oral contract relating to an interest in land, is accepted in place of a written contract, i.e., Hill vs. Nova Scotia *ALL ESSENTIAL TERMS MUST BE INCLUDED IN THE WIRTTEN CONTRACT AND SIGNED BY THE DEFENDANT (PARTY TO BE CHARGED)

o The Sale of Goods Act o Consumer Protection Legislation

Consequences for contracts within scope of statute of frauds Parties cannot use the courts to find a remedy in the case where contracts are not written (unenforceable)  The contract is not necessarily void; a remedy may not be offered though in many cases, except for when: Recovery of Money Paid under a Contract  If the parties do not perform, recovery of any down payment will depend on which party repudiates the contract  The party who breaches an unenforceable contract may not gain a further advantage, i.e., getting back down payment after flaking on an oral tenancy agreement Recovery for Goods and Services  Accepting goods and services under a contract that is unenforceable would still require the party who retained the goods to pay something for them Effect of a Subsequent Written Memorandum  If a written contract is made before legal action is taken, after the oral contract has been made, it is enforceable Defendant Must Expressly Plead the Statute  If defendant fails to do so, then the contract will be enforceable Varying a Prior Written Contract  An oral contract made after a written contract may effectively terminate the prior written contract  An oral contract for an option in land, made after the oral termination of a prior written contract, is not enforceable in court (statute of frauds) 

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Chapter 12 – Breach of Contract and its Remedies Equitable Remedies Granted in cases where common law remedies are insufficient  However, plaintiff must meet certain guidelines: Come to court with “clean hands” Plaintiff must not delay in bringing the case to court Plaintiff must have paid a meaningful consideration, not simply just signing a contract under seal Were the plaintiff actually a defendant, they would only receive an equitable remedy if they were to equally pay an equitable remedy  Equitable remedies include the following: Specific Performance  Require defendant to do a contract-for act, to complete a transaction, except in the case where the court might be obligated to supervise a defendant Injunction  A court order restraining a party from acting in a particular manner; restraining a party from committing a breach of contract  The contract; however, must contain a negative covenant, which is a promise not to do something, which can then be upheld by an injunction  An interlocutory injunction is a temporary injunction issued by the courts in the time that a case is pending its court date  Issued in cases where the vendor cannot sell the property for the time of the trial, since doing so would make a specific performance remedy unfeasible Rescission 

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Restoring two parties back to the position they were in before the contract was made o Quantum Meruit  The fair amount a person deserves to be paid for a benefit conferred, most common in the case of partial performance 

Chapter 5 – Formation of a Contract: Offer and Acceptance The role of Contract Law    o o o o

Contract are not legal obligations forced upon everyone, as are torts Parties choose to make a contract, and then become legally bound by it Four basic requirements exist to form a legally enforceable contract

Offer Acceptance Consideration Intention

Offers A contract is not made until an offer is made by one party and accepted by the other  The offer itself is a description of a promise one party (offeror) is willing to make, subject to agreement by the other party (offeree)  A mere invitation to do business is not an offer capable of forming a contract, i.e., an advertisement o Exceptions: in the case where the advertisement is offering a fixed number of items at a fixed price to those who accept first; offering a reward to a person using preventative medicine (Re: Carlill); offering a reward for a lost item 

Communication of an Offer The form is not important, as long as it is heard and understood  Crossed offers are a prerequisite (an offeree cannot accept an offer until they are aware of it)  A consumer has no legal obligation to pay for unsolicited goods or services, until they expressly acknowledge to the supplier in writing their intention to accept the goods or services o General Rule: In the case where goods or services are provided to a person without his or her request, but the chance to reject them is not taken, then the acceptance or use of the products or services legally binds the offeree to pay for them 

Written Offers In the case of a Standard Form Contract, an offer is prepared in advance by the offeror, including terms favourable to the offeror that cannot be changed by the offeree, but must be accepted as is or rejected in their entirety (Re: Rudder)  If the offeror does not take the necessary steps to make the offeree aware of a major term of the contract, then the offeree is not bound by it (as determined by the courts) o Merely putting up a sign is not enough; should also explain reference to the sign when the offeree purchases a parking voucher o Greater effort must be made to give notice of unusual or unexpected terms 

Lapse and Revocation of an Offer When the offer has lapsed, the offeree can no longer accept it even he is unaware that it has lapsed  Offers lapse when: The offeree fails to accept within the time specified on the offer When the offeree fails to accept within a reasonable time, in the case where no time limit is specified When either of the parties dies or becomes insane prior to acceptance  An offeror is allowed to revoke a contract any time before it is accepted by the offeree The offeror must provide notice of revocation to make it effective 

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o The revocation must be RECEIVED by B before A ACCEPTS o Offering and selling an item via contract to another party, while still awaiting acceptance from another party is not illegal, but is a poor business practice and damages goodwill o An option may be made to keep an offer open for a specified period of time in return for an additional sum of money  This is known as exercising an option

Rejection and Counter-Offer by the Offeree   

The making of a counter-offer is a rejection of the earlier offer and bringing it to an end The original offer does not revive if the offeror rejects the counter-offer When an offeree merely inquires whether the terms offered are the best they can expect, it does not amount to a rejection (Re: Montane Ventures)

Acceptance Must be positive (certain) and unconditional Can be made orally ...