Canadian Business Law: A British Columbia Perspective
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Chapter 1: Student Version
Chapter 1: Foundations of Business Law in Canada
True or False
1. The only purpose of law is to resolve disputes peacefully. (p. 6) F
2. The rule of law means that government officials must obey the law. (p. 6) T
3. Businesses often include a provision in their contracts that the contract is to be
interpreted according to the “rule of law.” (p. 6) F
4. Once a good legal risk management plan is in place, a business should not need further
legal advice. (p. 2) F
5. To achieve predictability, our common law system requires courts to make decisions in
accordance with precedent. (pp. 6-7) T
6. Precedent is codified law, passed by the legislature. (p. 7) F
7. Unlike the judiciary, legislatures are the elected arms of government and are accountable
to voters. (pp. 9, 13) T
8. Provided that a legislature acts in accordance with the constitution, it can override the
common law by using clear language in a statute. (p. 14) T
9. Like statues, regulations must be approved and passed by the legislature. (p. 12) F
10. The federal government has jurisdiction over interprovincial trade and commerce. T
11. The provincial governments have residual powers to make laws for all matters that do not
fall specifically within federal jurisdiction. (pp. 10-11) F
12. The doctrine of paramountcy applies where there is a contradiction between a federal law
and a provincial law. (p. 12) T
13. The Charter ensures that the majority rules, and therefore strengthens the central
principle of democracy. (p. 15) F
14. Provincial governments create municipalities and pass statutes that delegate specific
powers to municipal governments. (p. 11) T
15. Administrative agencies may be called tribunals, boards, or commissions. (p. 21) T
16. The statute that creates an administrative tribunal generally determines its powers and its
rules of procedure. (pp. 21-22) T
17. Challenging the substance of a tribunal decision is called “judicial review.” (p. 22) T
18. The majority of judges in Canada apply common law rules and interpret
statutes/legislation. (pp. 6-7) T
19. The doctrine of judicial precedent applies to the civil law system. (p. 6) F
20. The sources of law in Canada are the Constitution, statutes, regulations, common law, and
by-laws. (p. 7) F
Canadian Business Law: A British Columbia Perspective
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21. The federal government structure created by the Constitution Act 1867 means there are
two levels of government, the federal level and the provincial level. (p. 8) T
22. The federal and provincial government are granted power to make by-laws. (p. 11) F
23. The doctrine of paramountcy provides that if there is a conflict between federal law and
provincial law, then provincial law will prevail. (p. 12) F
24. The provincial government has the power to legislate on intellectual property, as well as
currency. (p. 12) F
25. Regulations are a source of law in Canada. (p. 12) T
26. The terms “civil law” and “private law” can be used interchangeably. (p. 17) T
27. Administrative law, constitutional law, criminal law, and tax law are all categorized as
private law. (p. 17) F
28. Property law, corporate and commercial law, tort law, and contract law are all categorized
as public law. (p. 17) F
29. In a civil lawsuit the plaintiff (or lawyer) aims to prove the defendant is liable. (p. 18) F
30. The most common reason why a plaintiff will commence a civil law action is to recover
compensatory damages. (p. 18) T
31. In criminal law the prosecution is required to prove its case beyond reasonable doubt
with the use of admissible evidence. (pp. 19-20) T
32. In civil lawsuits the plaintiff will be required to prove their case on a balance of
probabilities, meaning that based on the admissible evidence, the plaintiff’s version of
events is more probable than not. (pp. 19-20) F
33. Only the province of Quebec uses the civil law system in Canada. (pp. 6, 26) F
34. Business ethics are values and moral principles that help to identify right and wrong in a
business context (p. 26) T
35. Business law and ethics can diverge. (p. 25) F
36. In Canada, statutes often supplement and/or formalize common law rules. (p. 26) T
37. Substantive law is the process that a plaintiff takes in order to begin a lawsuit. (pp. 16, 26)
T
38. Procedural law is a body of law that informs society of what they can and cannot do. (pp.
16, 26) F
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Canadian Business Law: A British Columbia Perspective
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Multiple Choice
1. A provincial government has recently legislated on matters to do with the
postal service, which would mean: (p. 14)
a. They have acted intra vires.
b. They have acted ultra vires.
c. They have violated the common law.
d. They have misrepresented.
2. Which branch of the government is composed of federally and provincially appointed
judges? (p. 8)
a. The judicial branch
b. The legislative branch
c. The executive branch
d. The sources of law branch
3. Craig has been charged with drug trafficking and is due to appear in court, his
lawyer has explained that the prosecution will have the burden of proving the case
as follows: (p. 19)
a. On a balance of probabilities, meaning that the prosecution’s version of events
is more likely than not
b. Beyond reasonable doubt, meaning that there is no reasonable doubt
about Craig’s guilt
c. Beyond reasonable doubt, meaning that it’s sufficient if the prosecution
demonstrates that Craig probably committed the crime
d. On a balance of probabilities, meaning that the prosecution must demonstrate
that a reasonable person would believe Craig is guilty
4. Amber is angry because the Quebec legislature passed a law prohibiting advertising
and marketing from targeting anyone up to the age of 13 years. How would this be
classified? (p. 16–17)
a.
Public law
b. Private law
c.
Criminal law
d. Administrative law
5. Which of the following legislation would Amber most likely use to challenge this? (p.
15)
a. Canadian Charter of Rights and Freedoms
b. Quebec Charter of Human Rights and Freedoms
c. Canadian Human Rights Act
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Canadian Business Law: A British Columbia Perspective
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d. Constitution Act, 1867
6. Julie was sued in the BC Supreme Court for causing damage to a road and the facts of
the case are very similar to one that the Supreme Court of Canada just passed
judgment on. What should the trial judge do? (p. 7)
a. Apply the doctrine of stare decisis
b. Apply any decision they feel is appropriate
c. Order a new trial
d. Base their decision on whether the plaintiff can pay for the loss
7. Which of the following is the most correct definition of common law? (p. 6)
a. law made by judges
b. law made by provincial legislatures
c. law made by Parliament
d. law made by municipal governments
8. Which of the following would fall under the jurisdiction of section 92 of the Constitution
Act, 1867? (p. 11)
a. Education
b. Currency
c. Shipping
d. Criminal law
9. Which of the following statutes would XYZ Ltd refer to in connection with hiring for
its newly incorporated business? (p. 10)
a. Occupiers’ Liability Act
b. Employment Standards Act
c. Sale of Goods Act
d. Bankruptcy and Insolvency Act
10. If matters are not specifically listed in the division of powers section of the
Constitution, they are generally within the jurisdiction of the federal government and
are called: (p. 10)
a. Residential powers of government
b. Residual powers of government
c. Authorities’ powers
d. Overturning powers of government
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Canadian Business Law: A British Columbia Perspective
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Chapter 1: Student Version
11. The principle which requires judges to follow a decision of a higher court is known as:
(p. 7)
a. The rule of law
b. Stare decisis
c. Ultra vires
d. Paramountcy
12. Which of the following are punishments under the criminal law? (p. 20)
a. Fine, imprisonment, probation order
b. Injunction, compensatory damages, specific performance
c. Settlement, non-pecuniary damages, injunction
d. Probation order, injunction, settlement
13. The standard of proof required in a civil matter is: (p. 19)
a. Beyond all possibilities
b. On a balance of probabilities
c. Beyond a reasonable doubt
d. On a balance of possibilities
14. The main advantage of studying business law is: (p. 2)
a. You can minimize legal risks.
b. You can pretend that you are a lawyer.
c. You can avoid ever having to access legal representation.
d. You can set up a law clinic in your place of business.
15. What are the three main branches of government? (p. 8)
a. Executive, legislative, and judicial
b. Executory, executed, and legislative
c. Executor, administrator, peer representative
d. Administrator, executive, judiciary
16. The executive branch of government consists of: (p. 8)
a. The Senate
b. Prime Minister and Cabinet
c. Members of Parliament
d. Courts and judges
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Canadian Business Law: A British Columbia Perspective
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Chapter 1: Student Version
17. The judicial branch of government consists of: (pp. 8, 13)
a. Members of Parliament
b. The Prime Minister and Cabinet
c. Courts and judges
d. The Senate
18. Which of the following is correct? (p. 8)
a.
Judges are appointed both federally and provincially.
b. Members of Parliament, both federal and provincial, are appointed.
c. Federal and provincial judges are elected by the people.
d. The provincial government does not delegate powers to legislate to
municipalities.
19. Municipal governments pass the following: (p. 11)
a. Statutes or legislation under section 91
b. By-laws
c. Statutes or legislation under section 92
d. Common law rules
20. If a provincial legislature passes a law prohibiting all forms of advertising by alcohol
companies, which of the following statements would be most accurate: (pp. 14, 15)
a. The law would likely be deemed unconstitutional.
b. The law would be ultra vires the powers of the provincial legislature.
c. The law would violate a right protected by the Charter but may be
justifiable under section 1 of the Charter.
d. The law will not violate any right protected by the Charter.
21. Which of the following is true about the Constitution Act, 1982? (p. 7)
a. It incorporated the Canadian Charter of Rights and Freedoms into the
Constitution.
b. It amended the Constitution Act, 1867 and provided the division of powers
between the federal and provincial government.
c. It restructured the three main branches of the government.
d. It allowed for the public to be able to elect members of the judiciary.
22. A judge’s role in court is to: (p. 6)
a. Apply legal rules and interpret statutes
b. Interpret statute law only
c. Give judgment only
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Canadian Business Law: A British Columbia Perspective
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d. Recommend cases to the appeal courts
23. Which of the following is true about the civil law system? (p. 6)
a. Judges are bound by the doctrine of judicial precedent.
b. The source of law is rules set by statutes.
c. Decisions cannot be made without following previous decisions of the higher
courts.
d. Decisions will be made only if the majority of judges agree.
24. The four main strategies of managing legal risk are: (p. 3)
a. Risk avoidance, risk transference, risk reduction, and risk retention
b. Risk evasion, risk transaction, risk increase, and risk retention
c. Risk avoidance, risk transaction, risk decrease, and risk deduction
d. Risk transaction, risk decrease, risk deduction, risk retention
25. The judicial branch of government is a source of which type of law? (p. 8)
a. Case law
b. Statutes
c. Regulations
d. By-laws
26. Jake is taking Julie to court for breach of contract. Which of the following would be the
best classification of the rules governing how evidence can be introduced at the trial? (p.
16)
a. Substantive law
b. Procedural law
c. Regulatory law
d. Common law
27. The legal system is classified into criminal and civil; they are not interchangeable, but they
have counterparts. What is the counterpart of theft? (p. 19)
a. Tort of assault/battery
b. Tort of negligence
c. Tort of conversion
d. Tort of deceit/fraudulent misrepresentation
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Canadian Business Law: A British Columbia Perspective
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Short Answer
1. In what ways can the law facilitate business? (p. 2)
The law can facilitate business by setting reliable ground rules for everyone to follow,
protect business assets and other interests, and provide mechanism for resolving disputes
in an efficient and predictable manner.
2. Why is a legal risk management plan important? (p. 2)
Legal risk management allows you to plan for and reduce, or even prevent, many
business losses.
3. What are the basic steps involved in a legal risk management plan? (pp. 2-3)

Identify the legal risks.

Evaluate the legal risks

Manage the legal risk by devising and implementing a legal risk strategy

Review and revise your legal risk strategy
4. Name the different sources of law in Canada. (pp. 7-8)

Statutes

Regulations

Case law
5. What is the doctrine of precedent and why is it important? (p. 7)
The doctrine of judicial precedent primarily assists Courts when making decisions via
previously decided case law. This certifies that certainty and consistency is being
provided within the judicial system and enables a speedier judicial process to be
effectuated
6. What is the principle of stare decisis? (p. 7)
Principle that requires judges to follow decisions of higher courts in similar cases.
7. What are regulations and why are they important? (p. 12)
Rules created by the executive branch of government that have the force of law. In the
Government, certain administrative agencies have a narrow authority to control
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Canadian Business Law: A British Columbia Perspective
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conduct, within their areas of responsibility. These agencies have been delegated
legislative power to create and apply the regulations. It is important as it acts as a
guideline as to what is accepted in society
8. What is the role of the Canadian Constitution? (p. 6)
Canadian constitution is the foundation upon which government is granted its
authority to govern. It is a supreme law that establishes the basis upon which all other
laws are created
9. List three Charter rights and how they may affect business activity. Answers will vary.
(p. 15)
Freedom of expression - Laws limiting advertising and marketing strategies have been
challenged
Freedom of association - Laws limiting the rights of workers to organize and join
trade unions have been challenged
Mobility - Laws limiting the rights of provincially certified professionals to work in
other provinces have been challenged
Equality - Laws permitting mandatory retirement policies have been challenged
10. What is section 1 of the Charter, and why is it important? (p. 15)
Section 1 of the Charter provides that all rights and freedoms are subject to “such
reasonable limits prescribed by law as can be demonstrably justified in a free and
democratic society.” This means that although rights and freedoms are guaranteed by
the Charter, they are not without limits.
11. What are municipal by-laws and what kinds of subject matter do they cover? (p. 11)
Unlike federal and provincial governments, which have the power to create legislation
in their respective areas of jurisdiction, municipal governments are granted the power
to make by-laws. Generally, municipal by-laws regulate those things that impact the
safety or enjoyment of property in the community. For instance, by-laws may regulate
parking, speed limits on local roads, noise limits, food inspection, animal control,
zoning of commercial and residential areas, building codes, and construction permits.
12. What is administrative law? (p. 20)
Administrative law refers to the body of law that is concerned with the regulation of
business and other activities by government, including the rules created and applied to
government agencies and their decision-making powers. It is an area of public law with
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Canadian Business Law: A British Columbia Perspective
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growing importance to business, as government agencies, boards, and commissions
expand regulation of economic and commercial activity.
13. Explain the three broad functions of administrative agencies. (p. 20)
Advisory (providing information to help develop government policy), Operational
(running day-to-day operations), and Regulatory.
14. What advantages does an administrative tribunal have over a court? (p. 22)

Administrative tribunals are not bound by the strict rule of stare decisis that
requires courts to follow previously decided cases.

They can take public policy into account when applying the law.

Their procedural rules are more informal and flexible.

The rules of evidence are much more permissive, such that evidence that
would not be admissible in court may be accepted at a hearing before an
administrative tribunal.

There is often no appeal process that would bring the substantive legal matter
dealt with by an administrative tribunal into the court system
15. Describe the means of challenging a tribunal decision where there is no appeal
process that would bring the substantive legal matter of the decision into the court
system. (p. 22)
There is often no appeal process that would bring the substantive legal matter dealt
with by an administrative tribunal into the court system; generally, the opportunity to
involve the court system is limited to challenging whether the administrative body
had legal authority to make the decision or whether it properly followed the rules of
procedural fairness.
16. Explain the difference between public law and private law and provide an example of
each. (pp. 16-17)
Public law governs the relationship between persons and the state. Private law
governs the relationship between persons; the relationships between persons can be
personal, social, or business relationships.
Examples of Public Law – Administrative, Constitutional, Criminal, Tax
Examples of Private Law – Contract, Tort, Property, Corporate and commercial
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Canadian Business Law: A British Columbia Perspective
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17. What is meant by “beyond a reasonable doubt”? (p. 19)
Standard of proof that the prosecutor must meet in a criminal trial in order for a
defendant to be found guilty
18. What is meant by “on a balance of probabilities”? (p. 19)
Standard of proof in civil (as opposed to criminal) law indicating that one version of
events is more probable than another.
19. What is the difference between substantive and procedural law? (p. 16)
Substantive law - rules that establish rights and limits
Procedural law - rules that establish the process of how substantive law will be
enforced
20. Why is the Sale of Goods Act important to businesses? (p. 10)
Rules that imply terms and conditions into commercial contracts, unless the
contracting parties opt out
21. Name a reason why the Competition Act is important to businesses. (p. 10)
Rules forbidding unacceptable pricing schemes
22. What is the Business Corporations Act? (p. 10)
Rules for incorporating companies that do business in Ontario
23. Name a way in which the Bankruptcy and Insolvency Act is significant to business
organizations. (p. 10)
Rules determining when an act of bankruptcy has occurred.
24. You are a legal advisor at a provincial government office in Victoria. You are in the
process of meeting with your team to determine whether the government has
jurisdiction to enact a particular law. Which statute should you refer to, and what is
the relevant section? (pp. 9, 11)
25. Identify and briefly describe the four main strategies in managing legal risk. (p. 3)
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Canadian Business Law: A British Columbia Perspective
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
Risk avoidance. This involves the decision to stop a particular business activity
because the risk is too great; this might be of particular importance where the
probability and the severity of the risk are high.

Risk transference. This approach involves transferring the risk to another; the
two most common ways to transfer risk are by contract (where another party
agrees to assume the risk) or acquisition of insurance (where your risk is pooled
with that of others).

Risk reduction. This is an extensively used strategy in legal risk management
plans that involves putting practices in place to lower the probability and/or
severity of the risks.

Risk retention. This is a decision to simply risk it; this approach may be
appropriate where the impact of the risk on the business is lower than the cost
of avoiding or transferring the risk.
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