Faculty of Management Spring Semester 2007 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. The first part is worth 12 marks and
the second part 18 marks for a total of 30 marks for that whole question, NOTE YOU MAY
ANSWER ANY THREE OF THE QUESTIONS LISTED BELOW IN SECTION A.
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 AND FACTS 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. MARKS MAY BE DEDUCTED FOR
FREQUENT MISTAKES OF SPELLING, GRAMMAR, AND SYNTAX. SUCH
MATTERS ARE IMPORTANT TO THE READER’S UNDERSTANDING OF, AND TO
THE MERIT OF YOUR ANSWER.
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 $800,000 payable by Ivanov to Wilson if he breached the aforementioned clause. Ivanov signed the contract because he was 65 and wanted to retire.
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 only a slight loss of business in
that six-month 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.
(PART I worth 12 marks)
Overleaf
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(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 his lawyers
Robb, Steel, Cheetham and Howe, but had been missed by the inexperienced accountant
in charge of the file. Danko turned up at the office of Wilson who was out and presented
the secretary Nicole with a letter from Ivanov confirming his (Danko’s) ownership of
the computer. The secretary allowed Danko to take the computer. Wilson sued Robb,
Steele, Cheetham and Howe for $80,000, for the cost of purchasing a replacement
computer and for the loss of the business information stored on the computer.
Wilson reacted furiously to Nicole’s mistake, her first in 10 year’s employment with
Wilson’s firm. She was dismissed without notice for alleged cause (her mistake). The
dismissal was verbal in the barber shop, where in front of several clients, Wilson called
Nicole a “#&@* ditzy blond air head” who had just stuck a knife in his back, and
ordered her to get out of his shop.
Referring to case law, considerWilson’s arguments, the defences of Robb, Steel,
Cheetham and Howe and, with reasons, what you consider is the likely outcome of
the law suit. Consider too with reasons the likely outcome of Nicole’s lawsuit
against Wilson for alleged wrongful dismissal. (PART II worth 18 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 two 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”. A further perspective is that of
“anarchism”. Explain each perspective and discuss their influence on, or their
contribution to your understanding of, Canadian law. Use cases and examples.
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5.Discuss critically how legislatures and courts in Canada control the abuse of power by
government officials or administrative tribunals and bodies created by legislatures.
Consider whether such judicial power might usurp the democratic process. In your
answer, explain the relevance of the concepts: (a) the rule of law; (b) ultra vires; and
(c) natural justice. 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 to the Company what steps it must take to
ensure that the courts will recognize the type of contractual relationship it chooses.
Use case law to explain the criteria used by the courts in deciding whether a worker
is an employee or an independent contractor.
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 legally
actionable 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? Explain. 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.
What is the relevance of the doctrine of “fundamental breach”? Use cases to illustrate and
provide reasons for your answers.
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Section B
ANSWER FIVE (5) OF THE FOLLOWING QUESTIONS. EACH IS
WORTH 2 MARKS TO A TOTAL OF 10 MARKS.
SECTION B QUESTIONS WILL BE DISTRIBUTED AT THE
COMMENCEMENT OF THE EXAMINATION.
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