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Business Law (BADM1010) Notes

Formation of Confederation
Prior to the formation of Canada (the collection of British Colonies including Quebec) faced problems
➔ Deterioration in relations with the United States
➔ Possibility of loss of land to that foeign power
➔ The increasing unwillingness of Britain to come to the defence of its colonies along with other
The solution, aided by the building of the railways and the possibility of a trans- continental railway, was
unification in an east- west direction by way of confederation.
The Division of Powers Under the Constitution
In 1867, the four colonies of British North America [Upper Canada (Ontario), Lower Canada (Quebec),
Nova Scotia and New Brunswick) decided to form a new country called Canada.
In 1867, the British Parliament passed the ​British North America (BNA) Act​, which outlined the division
of powers.
Federal Government (​Section 91 of BNA Act)
➔ Unemployment insurance (section 91 (2A))
➔ Postal service (section 91 (5))
➔ Regulation of trade and commerce (section 91 (2))
➔ Incorporation of banks and issuing of paper money (section 91 (15))
➔ Criminal law ( section 91 (27))
➔ Taxation
➔ Immigration, defence, navigation
➔ POGG (Peace, Order and Good Government)
Provincial Government (​Section 92 of BNA Act)
➔ Sectiction 92 (16) gives the provinces exclusive jurisdiction over “all matters of a merely local or
private nature in the province.”
➔ Health
➔ Property and civil rights
➔ Education
➔ Taxation
Bringing the Constitution Home
During the 1960's and 1970's, the provincial and federal governments were anxious to make several
changes to the ​BNA Act.
➔ To allow amendment to it without having to go before the British Parliament
➔ To agree to a new division of the law making powers among the federal and provincial
➔ To add a guaranteed set of rights and freedoms
In 1982 the BNA Act was patriated or brought home to Canada. the power to make changes to it now
rests with the government of Canada.
The ​Charter of Rights and Freedoms ​was incorporated into the Constitution at that time.
The name of the ​British North America Act ​was officially changed to the ​Constitution Act​, and the new
Canadian Constitution was called the ​Constitution Act, 198​2.
Business USe of Division of Powers
Federal and provincial governments often pass laws to regulate business activities
Because of the divisions of powers in the Constitution business can challenge a law as being ​ultra vires
that level of government.
➔ Ultra Vires​: when a matter is outside a government’s designated power.
➔ Latin ​ultra m
​ eaning beyond, and ​vires​ meaning power.
Example: A city is created by the provincial legislature and so can have no more power than a province
under the Constitution. The city of Toronto passed a bylaw prohibiting restaurants from serving shark fin
soup. a group of businessmen successfully had the bylaw set aside on the basis that it was​ ultra vires
provincial power. Sharks do not naturally occur in Ontario freshwater. (Eng v. Toronto (City), 2012
ONSC 6818 (CanLII)).
The Supremacy Clause
The ​Canadian Charter of Rights and Freedoms​ is a piece of legislation that sets out the fundamental
rights of all Canadians.
It was made an integral part of the Constitution so that the charter would be difficult to change.
The ​Charter of Rights and Freedoms​ changed the concept of the supremacy of parliament before the
government in power could make any laws that it wanted.
When the​ C
​ harter came into being a new qualification was put on laws. They must also be in accordance
with the principles of the Charter.
Those principles take precedence over any of the laws enacted by the federal or provincial government.
The Charter, with some of the limitations, is superior to the acts of Parliament and the provincial
Companies have successfully used the Charter to attack the legislation that affects their businesses.
➔ Southam Publishing Inc (newspaper and magazines company), challenged a section of the
Combines Investigation Act (Competition Act)​ which permitted search warrants to be issued
without the usual protections that apply to the issuance of police warrants.
➔ That section was struck, or declared invlaid.
➔ The tobacco companies had federal legislation that banned all commercial advertising of tobacco
products successfully struck on the basis that the act was unjustified infringement of freedom of
The Charter Does Not Always Apply
The purpose of the Charter is to protect the rights of people, businesses and organizations from violations
by the government.
The Charter applies only to the actions of the government (federal, provincial or municipal) but this can
include actions of government agencies such as the CBC, RCMP, colleges and universities, schools and
hospitals, when they are acting in a government capacity.
Private disputes with these agencies may result in the application of laws other than the Charter.
If a person's rights are violated by a private citizen or company, the Charter does not apply, but Human
Rights Code could be the appropriate legislation to deal with their complaint.
Protected Charter Rights
The charter guarantees many important rights for individuals, businesses and organizations.
There are 34 sections in the Charter.
Section 1 Reasonable Limits
The Canadian Charter of Rights and Freedoms guarantees the rights and freedoms set out and it's subject
only to reasonable limits prescribed by law as can be demonstrably justified in a free and democratic
Section 1 is often referred to as the ​reasonable limits clause​ because the section recognizes that the rights
in the Charter are not absolute and are in certain circumstances may be justified to override this right.
Case example:
➔ Tobacco companies have repeatedly argued that their section 2 rights to free speech are violated
by laws that restrict the rights to advertise their products.
➔ In 1995, the Supreme Court recognized that restrictions on advertising are a violation of
companies’ free speech rights. However, in their decision in ​RJR-MacDonald Inc. v. Canada
(A.G.)[​ 2007] 2 S.C.R. 610, the court ruled that given the proven serious health consequences of
smoking, it is justified under Section 1 to override their free speech rights and significantly limit
tobacco companies abilities to advertise these dangerous and deadly products.
➔ In ​ Irwin Toy v. Quebec, [​ 1989] 2 S.C.R. 927, the Supreme Court of Canada ruled that a Quebec
law that prohibited commercial advertising directed at persons under 13 years of age was valid
despite infringing on companies’ free expression rights.
➔ Court justified the law under Section 1 as it was considered the minimum restraint on free
expression consistent with the important goal of protecting children against manipulation through
➔ The toy company could promote towards adult consumers, not children.
Section 2 Fundamental Freedoms
Everyone has a following fundamental freedoms:
➔ Freedom of conscience and religion
➔ freedom of thought, belief, opinion and expression including freedom of press, and other media
of communication
➔ freedom of peaceful assembly
➔ freedom of association
Freedom of Speech
In ​ Rocket v. Royal College of Dental Surgeons, [​ 1990] 1 S.C.R. 232, two dentists challenged an Ontario
law that greatly restricted the content of advertisements that dentists could use to advertise their dental
➔ The court ruled the law did violate their freedom of expression and those certain standards should
exist when advertising professional services, this law was too extreme and its restrictions, so it
was declared invalid.
A Montreal noise bylaw restricted any noise produced by sound equipment that could be heard outside of
a building.
➔ A Montreal strip club had a loudspeaker near its entrance and the music and announcer could be
heard outside on the street.
➔ When the city fined the club under the bylaw, the strip-club complained that the bylaw violated
its freedom of expression rights.
➔ The court upheld the bylaw and the fine as it ruled that the bylaw was justified to restrict noise
pollution and only minimally impacted the club's right to freedom of expression.
Human rights laws that protect people from hateful discriminatory statements can come in conflict with
freedom of expression rights.
➔ The debate is between hate speech vs. free speech.
➔ In ​Saskatchewan Human Rights Commission v. Whatcott 2​ 013 SCC 11, Bill Whatcott (religious
anti-gay activist) distributed flyers with very strong anti-gay comments on them. The
Saskatchewan Human Rights Commission ruled the fyers violated the Saskatchewan Human
Rights Code as a wording promoted hatred against people due to their sexual orientation.
Section 8 Unreasonable Search or Seizure
Everyone has the right to be secure against unreasonable search or seizure.
In the investigation of illegal business activities, the right to search for relevant evidence has triggered the
application of the section as seen in the ​RBC v. Walton [​ 2008] 89 O.R. (3d) 532.
➔ In this case, the investigation of a suspected bank fraud involved with the release of confidential
information which was permitted under the federal law.
➔ It was argued that the federal law that allowed the release of the private information created an
illegal search and seizure and violated section 8.
➔ The Court ruled it was a violation of section 8 but it was justified infringement when the
information was used by banks to try and prevent the fraud.
The actions of individuals, corporations and governments (when acting like a private person as opposed to
making or administering laws) are governed by human rights legislation.
Human rights legislation is in acts of discrimination in three main areas:
➔ Employment
➔ Housing
➔ Provision of goods and services
For example, a business refuses to hire a person because that individual is a member of a minority group.
Human rights legislation would apply because the situation:
➔ An act of discrimination
➔ Involves a business (viewed as an individual, corporation or not)
➔ In the area of employment
Systemic Discrimination
The act recognizes that are seemingly neutral policy may result in discrimination.
For example, a policy by a police force requiring a certain minimum height and weight for police officers
could exclude minority groups whose racial characteristics include a lighter weight and smaller frame.
Systemic discrimination ​is discrimination that is the consequence of a policy, whether the effect of
discrimination was intended or not.
Bona Fide Occupational Requirement (BFOR) is a genuine requirement for a job such as the need to wear
a hard hat when working on a construction site.
A BFOR for is a defense that excuses discrimination on a prohibited ground when it is done in good faith
and for a legitimate business reason.
➔ Rejected BFORs:
A BFOR commonly raised by employers as defenses to human rights complaints is
customer preference. This has almost universally been rejected as a BFOR.
Physical capability has also been rejected.
➔ Efficiency and Safety:
An employer may claim that BFOR is necessary because of business profitability or
safety to the public.
When public safety is involved, a court is more likely to find that a BFOR exemption
➔ Is Drug Testing a BFOR?:
Previews or existing dependence and alcohol or drugs is specifically defined as a
disability by section 25 of the ​Canadian Human Rights Act.
Studies have shown that alcohol is frequently a contributing factor in accidents in the
Alcohol and drugs also contribute to absenteeism, higher turnover rates, increased sick
benefits, more workers’ compensation and insurance claims, lower productivity, lower
quality services, theft and trafficking.
Affirmative Action and Other Special Cases
Human rights legislation makes exemptions for affirmative action and other special programs.
This is done in an effort to relieve the effect of discrimination in minority groups.
It is felt that many people will not complain because of the fear of pressure and consequences.
The cost of processing individual complaints is high, and delays before tribunals, and courts are lengthy
Laws are Rules of conduct that are enforced by government sanction-agencies (such as court or police).
Categories of law:
➔ Private or Civil law -​ Set of laws that attempt to resolve disputes between individuals or
Many contract law and tort law cases fall under civil law.
Attempts to obtain compensation for the wronged party.
➔ Criminal or Regulatory law -​ set of laws that attempt to resolve disputes between Society
generally certain individuals or businesses.
The results of running afoul of these laws are tickets, fines, or/and jail time.
These laws are created for the best interests of society as a whole.
Attempts to extract punishment (fine or jail time) from the offending party.
➔ Constitutional law ​- Set of laws that attempt to resolve disputes between individuals and
governments, or between governments and governments, when governments are acting in their
capacities as lawmakers.
Nullifies certain actions of government if certain rules are not followed
➔ Administrative law - E
​ ncompasses a wide variety of government tribunals or boards or
commissions that are set up under provincial or federal laws to deal with disputes in specific
They are very necessary adjudicators as we do not have the money or resources to handle
all of these cases in the regular court system.
B.C Human Rights Tribunal, Immigration Board, TAx Review Board, Ontario Landlord
Tenant Board, and Ontario Securities Commission
Nullifies certain actions of government if certain rules are not followed
It is possible to get two different results for the same incident in the two different courts.
In the criminal trial, the accused may be found not guilty because a higher standard of proof is required in
criminal law.
The crown attorney has to prove ​beyond reasonable doubt ​(criminal law burden of proof) that the
accused committed a crime.
➔ This is a high difficult standard to meet and good defense lawyers can often create reasonable
doubt in the mind of the judge or jury.
In civil court, the plaintiff has a lower easier burden of proof to meet.
➔ They only have to prove ​on the balance of probabilities​ (civil law burden of proof) that the
defendant did it.
Judge-Made Law
Judges frequently met and discussed similar cases and tried to discover those principles that extended
generally to all England and were common to all people.
It is from this that the term common law arose.
Binding Precedent
Precedent i​ s the principal in the common law system which requires judges to follow a decision made in
higher court in the same jurisdiction.
➔ Once a common principle is declared, it is to be applied in similar circumstances by all judges of
equal or lower rank (​stare decisis).
Legal Research
Stare decisis: W
​ hen a court has once laid down the principle of law as applicable to a certain set of facts,
it will adhere to that principle, and apply it to all future cases where facts are substantially the same.
Government-Made Law
Common law was created by judges, but as the principles became settled, they were sometimes gathered
together as statutes.
➔ Statutes- s​ ummarized​ ​or codified short-code formats of common law, comprising acts or
legislation passed by Parliament
➔ The ​Partnership Act​ is an example of a set of principles developed by judges, then put into a
statute form that has remained mostly unchanged since.
The Civil Law (Quebec) System
The legal system in Quebec is different from the rest of Canada and follows a civil code system rather
than a common law approach.
The law is established by governments in a written code.
Rule of Law
The ​Rule of Law​ means that law is supreme (law rules). No one is above the law.
The role of the courts has been traditionally considered as also subject to the Rule of Law and that their
function is limited to deciding whether laws are valid under the Constitution:
➔ Under the division of power sections
➔ The Charter
Courts cannot force the government to make laws. Only if the government makes a law can the Court rule
on it.
The Court Structure
There are two types of courts in Canada: trial and appeal.
➔ There are also three tiers to the court system in Canada.
➔ First: Trial Courts, Second: Provincial Court of Appeal, Third: Supreme Court of Canada
➔ The first tier only does actual trial, while the other two do not and are primarily for appeals.
➔ Only appeal court decisions are binding in the sense of creating ​stare decisis.
There are different names for trial courts in each province.
➔ Provincial (inferior) court
Conduct trials for small claims court cases
e.g. claims under about $35,000, minor criminal offences, youth court (12-17), provincial
offences and traffic violations, and family matters (except divorce).
➔ Superior court
Hear major criminal cases, civil cases above the small claims court limit, divorce,
surrogate/probate court cases (dealing with financial matters of deceased people), and
bankruptcy courts.
The appeal court normally hears appeals based on the transcripts of the trial.
➔ Because it does not actually see the witnesses, and cannot judge their credibility, appeal courts are
reluctant to change findings of fact made by a trial judge or jury.
➔ Appeals are usually based on matters of law.
A common basis for an appeal on law is that no appeal court decision on that point exists in the province,
or that there are conflicting decisions.
➔ Since Canada is a confederation (union of separates), each province is a separate jurisdiction.
➔ Only a Supreme Court of Canada decision is binding throughout Canada.
Appeal courts do not conduct trials, only trial courts can do.
➔ 90% of the appeals loses, as the appeal court agrees with the lower decision and the appeal is
➔ There are barriers to success on appeal. On the provincial level, there is a test called “standard of
➔ The trial judge sees live witnesses, but the Court of Appeal sees only a transcript of the witnesses’
➔ The trial judge is in a better position to evaluate credibility.
➔ The appellate court gives respect to the trial judge’s finding of fact (judicial ​deference:​ to give
respect to another’s opinion)
➔ To succeed, the appeal usually has to be on a point of law.
The Stages in a Lawsuit (Higher- Level Courts)
Before you can sue another party, you must determine what court has jurisdiction.
➔ Jurisdiction ​is the court which has the legal right to hear the civil case.
➔ The plaintiff has the choice and they can sue where the event occurred or where the defendant
➔ The court(s) in that location is allowed to try the case.
➔ Under certain circumstances, either side may ask the trial to be moved to a different jurisdiction,
but there must be a compelling reason to do so.
Limitation Periods
Cause of action (​ right to sue) a plaintiff must sue within a certain time after the event happened that gave
rise to the right to sue.
➔ The plaintiff in a civil action must be sure to start the legal proceedings within a specific time
limit referred to as the ​limitation period​.
➔ The limitation periods vary across Canada. it depends on the type of claim that is being made,
who is being sued, what court has jurisdiction and if there are any relevant laws establishing a
specific limitation period.
Several provinces have moved to have a two-year limitation period for all civil claims.
➔ The plaintiff must start the legal proceeding within two years from the day on which the plaintiff
discovered or should have discovered the damages or cause of action.
➔ If the plaintiff does not start the court action within the appropriate limitation period, it will be
too late and the plaintiff will be prohibited from pursuing the claim.
➔ A fundamental issue: when does the period begin to run? It starts when the plaintiff knew, or
should have known, all the elements that would give rise to the cost of action.
➔ It is not only when the breach of a legal obligation happened, but when the plaintiff knew of a
right to sue because of the event.
A lawsuit involves several different stages. It is commenced by a document issued under the seal of the
court (writ of summons or statement of claim).
➔ After the initial document is issued by the courts, it has to be served on the party who will be the
defendant in the lawsuit (statement of claim.)
The other party will file a document called the statement of defence giving his answer to the allegation set
out in the statement of claim.
➔ The statement of defence is filed with the courts, and then served on the plaintiff.
The statements of claim and defense are referred to as the pleadings.
➔ They are very brief outlines of each party’s case, the law that they claim applies, and the
monetary damages or other remedies they want, plus interest legal costs.
At any stage of a lawsuit, the parties can negotiate an out-of-court settlement.
➔ 90% of cases never go to trial, as the parties have settled. It is usually faster, cheaper as it saves
on the legal fees of a trial, and there is no uncertainty as to the result, as the parties have
negotiated an outcome that is acceptable to all concerned.
➔ If a settlement is reached, the plaintiff is usually required to sign a ​release​ that releases the
defendant from any further legal action regarding the case.
➔ In the release is a ​confidentiality clause​, which prohibits the plaintiff from revealing any details
of the settlement .
Trial Process
The trial process can be viewed as containing two sections: fact finding, and application of law to those
➔ The fact-finding process is governed by the law of evidence.
➔ From experience gained over centuries of hearing disputes, judges developed rules to exist and
dealing with the fact-finding process.
➔ The laws of evidence perform a critical sort function. They exclude some evidence judges have
found to be unreliable and potentially misleading, that they should not even be admitted into the
fact-finding stage of the trial
Hearsay Exclusion Rule: ​Witnesses can only testify to what they know from direct personal knowledge
not from what others have told them
➔ Hearsay can be thought of as a repetition by a witness of someone else said (or wrote). The
person who originally said the statement is not in the courtroom.
Business Records
Under business records exception to the hearsay rule, if the business can prove that the records were
made in its ordinary course of business, and that seems probable, then the records are admissible without
having to call each of the staff who actually made the entry.
Standard of Proof
If the plaintiff can mean the civil standard of proof, he or she will win.
➔ The ​standard of proof ​refers to how strong a case the plaintiff must have to win.
Civil case: balance of probabilities; more likely than not; 51% probability
Criminal trial: beyond reasonable doubt (usually on the Crown); the crown has to have a very strong case
to convict someone under the criminal law.
The court judgment will then set out any remedies that are appropriate for the case.
Types of Monetary Damages:
➔ Pecuniary Damages- t​ his is money awarded to the victim to compensate for financial losses such
as lost wages, medical costs and repair costs.
➔ Non- pecuniary Damages- ​ this is money awarded for non-financial losses such as pain and
suffering, loss of enjoyment of life and shorten life expectancy.
➔ Aggravated Damages- ​Aggravated damages are awarded because of the malicious nature of the
defendant's conduct.
They are designed to compensate the plaintiff specifically for the additional harm caused
to the plaintiff's feelings by reprehensible or outrageous conduct on the part of the
This is money awarded for mental anguish, mental distress, humiliation or emotional
➔ Punitive Damages- P
​ unitive (exemplary) damages are extra money awarded to punish
intentionally bad behaviour.
If the court finds that the defendant's behaviour is malicious, deliberate, high-handed and
beyond ordinary standards of decent behavior, these damages may be awarded.
➔ Nominal Damages- A
​ nominal (small) amount is awarded when the plaintiff suffered no real
economic losses or injury but a legal right was violated.
Non- Monetary Remedies:
➔ Injunction- ​An injunction is a stop order from the court.
A court can order a defendant to: stop trespassing, stop polluting or stop soliciting
former clients.
➔ An Order of Specific Performance-​ In certain contract law cases, a court can order the defendant
to perform the exact contract.
This remedy is generally limited to contracts that are for the sale of something rare and
unique such as the sale of a rare antique car or a unique piece of real estate.
➔ An Accounting of Profits - ​In certain cases, the defendant is ordered to pay the plaintiff any
profits that they have wrongfully earned
(e.g. profits from sales of illegal copies of DVDs)
➔ Deliver Up Order - T
​ he court may order the defendant to deliver to the plaintiff certain illegal
items that the defendant has in its possession.
(e.g illegal copies of DVDs still in the defendant's possession)
➔ Anton Piller Order - ​The court may issue an Anton Piller order which allows a search of the
defendant's property and the seizure of evidence illegal.
(e.g. this could be requested when a creator wants to raid the warehouse where they know
illegal copies are being made of their products)
The procedure of a small claims court is very similar to a higher court, but it is more streamlined.
The small claims court is basically a do-it-yourself court, designed to be used without the need for a
Small claims court clerks are trained to help people conduct their own litigation.
Which Small Claims Court?
There are many small claims courts within a province, and even with any particular city. You must file
your claim in the office closes to:
➔ Where the problem occurred (e.g. where the contact was made)
➔ Where the defendant lives, or carries on business
Monetary Limits
The monetary limit varies with each province, and changes from time to time.
➔ Quebec: $7,000
➔ B.C, Alberta, Newfoundland, Nova Scotia: $25,000
➔ Ontario: $35,000
If the claim exceeds the provincial limit, you can waive (give up the right) to the excess amount over the
small claims limit and then proceed to small claims court.
The solution to righting the balance of power between ordinary persons and giant corporations was the
development of a class-action.
A​ class action ​is an action brought by one or more individuals on behalf of all persons who were injured
by similar acts by the same defendant.
Plaintiffs can pool their funds and start one action rather than many separate actions
The three major goals of permitted class actions are:
➔ Increased access to the courts
➔ Economy in the conduct of the trial
➔ Deterrence of actual or potential wrong doors
Certification of the class actions: ​in order to be able to bring a class-action, the plaintiff who claims to
represent the class must first obtain court approval.
There are two hurdles to be overcome in obtaining certification:
➔ Representation- the person seeking to be certified must be truly representative of all the people on
whose behalf the action is brought
➔ Economy- the action must not be frivolous; it must have common issues so that some economy
is achieved.
If a person who has a claim does not wish to participate in the class action, that person
can opt out and conduct a separate individual lawsuit.
If a class-action fails to be certified by the court, people can still sue individually
Legal Costs
The importance of the “ loser pay” rule was seen in Quebec where an unsuccessful class action against
Canadian Honda Motors resulted in an award of costs of $675,670 against the plaintiffs.
➔ As a result of this decision, the Quebec code of civil procedure was amended to provide the cost
ordered against an unsuccessful plaintiff in a class-action would be limited to what is an effect to
small claims court scale– a small sum.
Recently, a private corporation was set up to fund Canadian class actions in return for a percentage of the
➔ The company would finance substantial legal and expert costs and would be responsible for any
costs awarded to defendants if the class action was successful.
Mediation attempts to reach a compromise between the parties, while the system is adversarial.
➔ Mediation allows for the parties so compromised, negotiate, and reach a mutually agreeable
➔ The parties themselves decide the outcome.
➔ In an adversarial system, both sides present and argue their cases in the best possible light. Then,
a winner and a loser are declared by the third party (judge or jury).
The adversarial court process is based on a historic combat model from the Court of Champions, so
aggression within the boundaries of the rules is rewarded.
➔ There is an all-or-nothing consequence: only one will win.
➔ This has a strong effect on making parties settle before a trial, because the courts will not give any
compromise solution.
➔ The loser will pay not only his or her cost, but likely a good portion of the winner’s as well.
When it comes to actually doing mediation, the process is quite different from a trial.
➔ With mediation, parties to a dispute meet with a mediator in some neutral setting.
➔ Discussions are held until a conclusion is reached.
➔ A lawyer may or may not be present.
Another alternative to court proceedings for resolving disputes is arbitration.
An arbitrator acts in a manner similar to a judge by hearing the cases of both sides and conducting what is
in effect a mini- trial ( without many of the procedural requirements of a formal trial).
An arbitration decision is binding and can be enforced just as a court judgement.
➔ There are federal and provincial arbitration acts that govern the procedure on arbitration.
Arbitration is often chosen because it is faster than a court proceeding.
➔ In some cases it is cheaper, but the party space for the arbitrator and necessary office space.
➔ The parties choose a neutral arbitrator.
➔ When a party wants to avoid a trial in a foreign court that may be hostile, arbitration is a
frequently chosen method to avoid that foreign jurisdiction.