Faculty of Management Spring Semester 2006 Management Law 3010A
FINAL EXAM (WORTH 35% OF COURSE GRADE)
You are required to do THREE (3) questions from SECTION A. Each question in Section A
is worth 30 marks. Note that question 1 is in two parts. Each part is worth15 marks for a total of
30 marks for that question, PLEASE NOTE YOU ARE FREE TO CHOOSE TO ANSWER
ANY THREE OF THE QUESTIONS LISTED BELOW IN SECTION A.
The exam lasts from 9 a.m. till noon Thursday 20 April, 2006 room L1050. I recommend
you spend around 150 minutes on Section A and 30 minutes on Section B.
SOME SECTION-A QUESTIONS BROADLY COVER RELATED TOPICS. IF YOU
CHOOSE TO ANSWER SUCH QUESTIONS PLEASE ENSURE THAT THE ANSWERS
ARE SUBSTANTIALLY DIFFERENT. YOU WILL NOT RECEIVE CREDIT FOR AN
ANSWER THAT SIGNIFICANTLY DUPLICATES ANOTHER.
YOU WILL BE GRADED ON YOUR DEMONSTRATED UNDERSTANDING OF THE
LEGAL PRINCIPLES RAISED BY THE QUESTIONS, THE QUALITY OF YOUR
REASONING AND ARGUMENT, YOUR USE OF RELEVANT CASE-LAW, STATUTE
LAW AND CONSTITUTIONAL LAW, AND THE EVIDENCE YOU PROVIDE TO
SUPPORT YOUR CONCLUSIONS. WHILE MARKS WILL NOT BE DEDUCTED
AUTOMATICALLY FOR INCIDENTAL MISTAKES OF SPELLING, GRAMMAR,
AND SYNTAX, SUCH MATTERS ARE IMPORTANT TO THE READER’S
UNDERSTANDING OF THE ANSWER AND THE MERIT OF THE ANSWER.
Section B is worth a total of 10 marks. YOU MUST ANSWER FIVE (5) QUESTIONS.
Each is worth TWO (2) marks. YOU WILL RECEIVE THE SECTION B QUESTIONS
JUST BEFORE THE START OF THE EXAM. YOU MAY ANSWER A 6TH QUESTION
FOR 1 BONUS MARK. YOU MUST INDICATE WHICH IS YOUR BONUS QUESTION.
Section A
1.
(a) Yuri Ivanov sold his barber shop in Red Deer, Alberta to Alex Wilson for $70,000. The
financial statement, prepared by Ivanov’s accountant, Robb, Steel, Cheetham and Howe,
indicated that the physical assets were worth $40,000. The balance of the purchase price
was for goodwill. Annual gross earnings were $130,000 with net profits of around
$40,000 a year. The agreement contained a “restrictive covenant” stating “the vendor
agrees not to own, operate or work for a barber shop within a radius of ten kilometres
from the shop sold to Alex Wilson for a period of five years.” The agreement provided
liquidated damages of $80,000 payable by Ivanov to Wilson if he breached the aforementioned clause. Ivanov signed the contract because he was 65 and wanted to retire.
Overleaf
1
After three years, Ivanov was down in his luck and took a part-time job with a barber
shop eight kilometres from the shop he sold to Wilson. Wilson heard of this six months
after Ivanov commenced work. Although he experienced a loss of business in that sixmonth period, Wilson sued for the amount of the liquidated damages and sought an
injunction to prevent Ivanov from working for the “competitor”.
.
Consider with reasons and reference to case law whether Wilson will be successful
in obtaining the remedies he seeks.
(15 marks)
(b) Within a month of the purchase of the shop, Wilson received a letter from Danko, a
business associate of Ivanov, for the return of his computer that had been used by
Ivanov in the store for bookings, financial records and transactions, customers’ profiles
etc. and valued at $10,000 in the purchase agreement. The computer was not owned by
Ivanov’s business but was on loan from Danko in appreciation of the latter’s assistance
in enabling Danko to establish his own business. A memorandum to this effect was
contained in the financial and inventory records provided by Ivanov to Cheetham and
Howe, but had been missed by the inexperienced accountant in charge of the file. Danko
turned up at Wilson’s office who was out and presented to the secretary a letter from
Ivanov confirming his (Danko’s) ownership of the computer. The secretary allowed
Danko to take the computer. Wilson sued Cheetham and Howe for the cost of
purchasing a new computer and for the loss of the information stored on the computer.
Referring to case law, considerWilson’s arguments, the defences of Cheetham and
Howe and what you consider is the likely outcome of the law suit. (15 marks)
2. Discuss the legal principles related to professional negligence in Canada. Use cases
To illustrate. Consider the effect that Hercules Management Ltd. v. Ernst & Young
(1997), 146 D.L.R. (4th) 577 (SCC) has on the legal liability of auditors for losses
incurred by persons, other than their clients, who rely on the misstatements of
auditors. What effect will the decision to have on liability of other professionals.
3. The Canadian Charter of Rights and Freedoms protects certain fundamental rights and
freedoms, subject to limitations. Discuss the nature of one or more such protected
freedoms, and the limitations on such freedoms specified by the Charter. Make
reference to case law and provide your own reasoned opinion on such matters.
4. Yates’ text (p.1) states that it is not easy to provide a satisfactory all-inclusive
definition of law. The authors continue “philosophers have tried for centuries to
determine just what “law” means, and their theories have profoundly affected the
development of our legal system”. Three perspectives identified by the authors are
“positivism”, “natural law”, and “legal realism”. Explain each perspective and
discuss their influence on, or their contribution to your understanding of,
Canadian law. Use cases and examples.
2
5. Discuss critically how courts in Canada control the abuse of power by government or
other administrative bodies. Consider whether such judicial power might usurp the
democratic process. Use case law to illustrate.
6. Printers’ Link, an Alberta business with 20 full and part-time employees, makes,
prints and distributes custom-made greeting cards and other stationery from
recycled paper and cotton garments. The Company needs the services of an
information technology graduate from the University of Lethbridge to maintain its
website and data base containing the profiles of customers, suppliers etc. Hours vary
from a 10 per week to a high of 50 in busy times. The Company is unsure whether to
enter into a contract of employment or a contract for services with a qualified
individual. If the latter arrangement was pursued, the individual would be an
independent contractor, not an employee of Printers’ Link. Write a memorandum
to the Company president indicating what you consider to be key legal differences
between the alternative arrangements and their potential advantages and
disadvantages for the Company. Indicate what steps the Company must take to
ensure that the courts will recognize the type of contractual relationship chosen
7. Discuss critically “misrepresentation” as it affects contract law in Canada. Distinguish
innocent, negligent and fraudulent misrepresentation and the legal consequences flowing
from such types of misrepresentation. Can opinions about the future ever be legal
misrepresentations? Consider these matters in light of case law, including Queen v.
Cognos Inc.1993] 1 S.C.R. 87.
8. Does breach of a contract automatically end the contract? What particular risk is
posed for an innocent party when the other party to the contract is in “anticipatory
breach” of the contract. What types of remedies may be awarded to an innocent
party where the other party has breached a contract? Explain your answer, using
cases to illustrate.
9. One of the purposes of an exemption (exclusion) clause is to limit the liability of a party
to a contract for payment of damages to the other party for breach of contract. Explain
how exemption clauses can limit or avoid liability for breach of contract. Consider the
circumstances under which courts may not allow a party to rely on an exemption clause.
Use cases to illustrate.
OVERLEAF
3
Section B
Answer FIVE (5) of the following questions
EACH QUESTION WORTH 2 MARKS TO TOTAL OF 10 MARKS
YOU MAY ANSWER A SIXTH QUESTION FOR ONE BONUS MARK.
YOU MUST SPECIFY WHICH IS THE BONUS QUESTION
THE SECTION-B QUESTIONS WILL BE DISTRIBUTED AT THE
COMMENCEMENT OF THE EXAM
4