1 Chapter 2 - Intro to Legal System What is Law? ● Law is the body of rules made by government that can be enforced by the courts or by other government agencies Categories of Law ● Substantive Law ○ The rights and rules that govern behavior and set limits on conduct ● Procedural Law ○ Determines how substantive laws will be enforced ● Public Law ○ Includes Constitutional Law, Criminal law, and Administrative law and determines how the country is governed and regulates our relationship with the government. Being charged by the crown ● Private Law (Civil Law) ○ Governs personal, social and business relationships ○ Includes Tort Law, Business Law, Contract law, etc. Common Law Legal System ● Function of the royal court was to be impartial and enforce customs and traditions already in place ● Uses stare decisis (Stand by what has already been decided on) Stare Decisis ● A system of justice where judges are required to follow precedent ● Most significant feature of the common law system: the decision of a judge is binding on all judges in lower courts ● Allows the parties to predict the outcome of the litigation and thus avoid going to court ● Following precedent can be inflexible and may not acknowledge changing social attitudes Tribunals (bottom): - not a court, made up of people part of a community (ex. landlord). No jury, deal with disputes that do not need to be in court, made for efficiency Provincial and territorial courts - Highway traffic court, criminal Prov court of appeal - Cases that have been appealed from previous courts Superior courts - More serious crimes are taken to superior courts 2 Supreme courts - Supreme Court is very expensive to get a trial (top), More appealing - Significant cases can be direct to this court, decisions made from this court can affect courts below Federal courts - Federal courts deal with federal matters Equity ● Common law had limitations due to the restrictions of stare decisis ● Resulting principles known as the Law of Equity ○ Created by the judge in order to bring fairness and justice ○ operates to provide equitable relief/remedies when there is a recognizable right but no remedy under the common law. ○ Allowed flexibility in decisions but also appeared arbitrary ● Under the FLA, living common-law couples are not entitled to the equalization of their family property. Each party in the common-law relationship is entitled to only whatever it is that they brought into the relationship or acquired during the relationship. ● The courts have come up with equitable remedies for those in common-law relationships such that parties to the common-law relationship are able to claim for unjust enrichment ● Prove: sufficiently, substantially and directly contributed to the acquisition, preservation, maintenance, or improvement of the property Statues ● Parliamentary supremacy dictates that where case law and statute law conflict, statutes prevail ● The courts cannot overrule Parliament’s legislation and no Parliament can pass laws that future Parliaments cannot change ● Statutes and legislation determine what we must do to carry on business Constitution and Division of Powers ● Each province has powers to establish rules in those areas over which it has jurisdiction ● Executive branch is the decision making branch ● Legislative branch makes the laws 3 Constitution and Division of Powers Federal–Section 91 Provincial–Section 92 Trade and commerce Municipal institutions Employment insurance Hospitals (and health care) Raising monies by any mode of taxation Direct taxation within the province Criminal law (although not its enforcement) Administration of justice within the province Banking, currency, postal service Property and civil rights Indians, and Lands reserved for the Indians. Management and sale of public lands Residual power under the “POGG” clause Generally, matters of a local or private nature Paramountcy ● Powers of the federal and provincial governments can overlap considerably ○ If overlap is incidental, both laws are valid and operative ● Where laws truly conflict paramountcy may require that the federal legislation be operative and the provincial legislation no longer apply Charter of Rights and Freedoms ● Charter was added as Constitutional guarantee of basic rights and freedoms in 1982 ● Limitations on Charter rights 1. Section 1: allows interference with rights and freedoms as may be justifiable in a free and democratic society 2. Section 33: legislatures can pass acts that infringe on rights “notwithstanding” the Charter, but legislation must be reviewed every 5 years (sunset clause) 3. Section 32(1): restricts operation of the Charter to government and government-related activities Fundamental Freedoms ● Fundamental freedoms for everyone in Canada as a result of the Charter: ○ freedom of religion, freedom of thought, belief, opinion and expression, freedom of peaceful assembly and association Mobility Rights ● Section 6 of the Charter ensures that Canadians can travel and live anywhere within the geographic limitations of Canada as well as enter and leave the country at will Legal Rights 4 ● ● Intended to protect individuals from unreasonable interference from the government. Section 7 states that we have the right to life, liberty, and the security of a person. Fundamental justice: everyone is entitled to procedural fairness and the rule of law Sections 8 and 9 prohibit such activities as unreasonable search and seizure and arbitrary imprisonment Equality Rights ● Section 15 prohibits discrimination in the application of the law and a general prohibition against discrimination ● Federal and provincial laws must be applied equally to all Language Rights ● French and English have equal status ● All federal government activities must be available in both official languages ● Language rights and minority-language educational rights cannot be overridden by section 33 of the Charter Human Rights Legislation ● Human rights acts prohibit discrimination based on various protected grounds, including gender, religion, ethnic origin, race, age, and disabilities ● Evolution of human rights protection ○ Three decades ago discrimination based on sexual orientation was not specifically prohibited ○ Reference re Same-Sex Marriage case Chapter 3 - Resolution of Disputes: The Courts and Alternatives to Litigation Alternatives to Court Action ● Alternative Dispute Resolution (ADR), Main methods: ○ Negotiation: decision making is left in the hands of the disputing parties to work out for themselves ○ Mediation: neutral third party assists the parties in coming to a resolution on their own ○ Arbitration: party makes a binding decision in the matter under dispute Advantages/Disadvantages of ADR Versus Litigation ● Advantages ○ Parties to dispute maintain control of the solution, Fewer scheduling and procedural delays, Less distraction in ADR, Lower costs than associated with court process, Diminishes risk of adverse judgments, Preserves good will ● Disadvantages ○ Judicial fairness is not ensured, Courts have more power to extract information, Decisions do not follow precedent, Resolutions may not be enforceable, No public record of dispute or decision 5 Negotiation ● Parties discuss the problem with each other in order to find a solution ● Requires cooperation and compromise ● May be conducted through representatives.Process may enhance relationship ● Concessions and admissions made without prejudice will not hurt future litigation Mediation ● Neutral third party helps parties settle the dispute ● One of the most common ways for the resolution of a legal dispute ● Communication facilitated by mediator ○ Finds common ground ○ Encourages compromises ● Parties are not bound to accept solutions offered by mediator ● Successful mediators require considerable specialized training ● Disadvantages: ○ Parties must be willing to disclose information ○ When power is imbalanced, mediation may just exacerbate the weakness of one party Arbitration ● Parties agree on an independent third party to make a binding decision ● Very common in Employment law (labor relations) ● Often specified as means of resolving dispute in original contracts ● Arbitrators may be specialists in the matter under dispute ● Decision cannot be appealed but process may be reviewed by a court ● Process is faster, less costly and more private than litigation ● But more formal, more adversarial than mediation, and more costly than other forms of ADR ● Using ○ ○ ○ ADR for online disputes: Overcomes geographical issues Reduces costs Enables a quick resolution The Courts ● Trials are open to the public; justice must be seen to be done ○ Some limitations: Youth courts have a publication ban ● All litigants have equal access to the courts ● Civil matters: ○ Two private persons use the court as a referee to adjudicate a dispute ○ Decide the matter on the balance of probabilities ● Criminal proceedings: ○ The government pursues the matter and prosecutes the accused ○ The judge (or jury) must be convinced beyond a reasonable doubt of the guilt of the accused ● May face both criminal trial and civil action over same conduct 6 Trial Courts of the Provinces ● Provincial Court: ○ Lowest level in the Canadian court hierarchy ○ Criminal jurisdiction over the less serious criminal matters ○ Small claims courts and family court are separate bodies but a division of Provincial Court system ● Superior court of a province: ○ Highest trial level court ○ Unlimited monetary jurisdiction in civil matters and deals with serious criminal issues ○ Administration of wills and estates and bankruptcy courts Limitation Periods ● Court action must be brought within a relatively short period of time from the event giving rise to the complaint or plaintiff is barred from pursuing the action Jurisdiction ● Must determine which court will assume jurisdiction to hear the action ○ Prove “real and substantial connection” by identifying a connecting factor that links the litigation to the court ● Court consider what is fair to the parties and an efficient resolution of the dispute, courts will consider “all the circumstances” Pre-Trial Procedures ● Documents used to start and defend a lawsuit constitute the pleadings ● Pleadings ○ Statement of Claim (plaintiff) ○ Statement of Defence (defendant) ○ Counterclaim/Defence to Counterclaim ● Discovery 1. Documents/ records 2. Examination for discovery: verbal examination of witnesses under oath ● Pre-trial conference: meeting to determine which issues remain to be tried and whether the parties can themselves resolve the dispute ● Offer to settle: Either party can make an official offer to settle The Trial ● Plaintiff presents case ○ Burden of proof rests with plaintiff, The plaintiff’s case and witnesses are presented first, Cross examination by defendant’s lawyer, Plaintiff’s lawyer is prohibited from asking leading questions ● Defendant presents case. Then both parties summarize evidence and make argument to court 7 Judgment ● If there is a jury, the judge will instruct it on matters of law ● The function of the jury is to decide questions of fact; the judge decides questions of law. Judge cannot go against the jury Remedies ● Damages (monetary compensation) ○ General: pain and suffering or for future lost wages ○ Special: reimburse the litigant for expenses or costs incurred before the trial – Ex. medical expenses ○ Punitive: not to compensate the victim but rather to punish the wrongdoer – Ex. Prolonging litigation, abusing court process ● Other remedies: Accounting, injunction, specific performance, declaration Enforcement ● There is no guarantee that the amount awarded in a judgment will be paid ● Seizure of property (Necessities of life are exempt), Sale of property, Garnishment of wages Class ● ● ● ● Actions Identifiable class of persons with a common issue Reduces the number of lawsuits and avoids inconsistent results Lowers costs for parties and court system Court must certify the litigation as a class proceeding and appoint a representative plaintiff ● Judgment binds every member of the class Chapter 10 - Agency and Partnership Types of Business Organization ● Sole Proprietorship – an individual carrying on business alone ● Partnership – two or more people carrying on business together for the purpose of making a profit ○ Limited partnership ○ Limited liabilities partnerships ● Corporation – a legal entity, separate from the people who own and control it Sole Proprietorship ● Must adhere to licensing and governing laws: ○ Registration and licensing, Zoning bylaws ○ Comply with workers’ compensation, employment insurance and income tax regulations ○ Keep sufficient records to satisfy government agencies ● Unlimited liability for financial obligations ○ Vicarious liability for torts of employees (Bazley v. Curry) 8 Partnership ● Not a separate legal entity ● Partnership Agreement (don’t legally need one, but HIGHLY recommended) ● Partnership liability (Lansing Building Supply v. Ierullo) ● You can be liable for your partner unless you have a partnership agreement Creation by Inadvertance ● Partnership can be created inadvertently ● The Partnership Act sets out circumstances that do not create a partnership: ○ Owning property in common ○ Commission selling or profit-sharing schemes a loan is made in relation to a business and payment of interest varies with the profit ● A partnership is presumed: ○ Joint contribution of capital to establish a business ○ Intention to share expenses, profits, or losses ○ Joint participation in the management of a business. LPs and LLPs ● Limited Partnerships ● Allows some partners to have limited liability, but only if partnership operates under business name with LP as suffix (ex. Organic Meadow LP) ● Advantages? ○ Limited to the amount of investment ○ Can create more capital investments ● Disadvantages? ○ Cannot provide any services, can't manage. ● Limited Liability Partnerships – limited to regulated professions Provisions of the Partnership Act ● Rights and duties of partners are set out in S.24 of Partnerships Act: ○ Profits and losses are shared equally ○ Partners’ expenses are reimbursed ○ Partners participate in management ○ Unanimous agreement is needed for major changes ○ Partners must have access to records Creation by Contract ● Partnership Agreement should deal with: ○ Duties of each partner and what type of work or talent each is expected to contribute ○ Amount of time and money to be committed to the business by each partner ○ How the profits are to be shared and how the capital is to be distributed ○ Any limitations on the powers or authority of each partner ○ Methods of resolving any disputes between the partners and how the business is to be managed ○ The circumstances in which the partnership will be dissolved 9 Fiduciary Duty ● Fiduciary Duty - a partner must act in the best interest of other partners: ○ Not use partnership property for personal benefit ○ Cannot compete with partnership ○ Disclose all information and not use it for personal gain ● ● Partners are each agents of each other ○ Contracts made by one partner are binding on all the partners Vicarious liability: all partners are liable for the tortious conduct of partners Unlimited Liability ● Partners’ liability is not limited to the assets of the partnership ○ Personal assets may be used to satisfy claims against partnership ○ A third party can collect from any partner ○ Retiring partners remain responsible for existing liabilities Dissolution of a Partnership ● Notice of intention to dissolve can bring partnerships to an end or: ○ The death, bankruptcy or insolvency of a partner ○ Fixed-term expiry of partnership ● Partnership can be dissolved by request to the court ● Public notice of dissolution required to prevent further liability Distribution of Assets and Liabilities ● Debts paid from profits first then from: ○ Capital, Personal assets of partners ● After debts capital and remaining funds paid to partners ○ Distribution can be set out in partnership agreement ● Joint venture occurs when two or more individuals or corporations wish to cooperate in completing a project together ● Table 10.2 Comparison of Different Types of Business Organizations 10 The Agency Relationship ● Agents represent and act on behalf of a principal in dealings with third parties ● Principal vicariously liable for agent’s acts Formation by Contract ● Actual authority: authority specifically given by the principal to the agent ○ Usually set out in agency agreement ● Implied authority - conveyed by actions of principal ● Agent who exceeds authority may be liable for injury their conduct causes to principal ● Agency relationship is usually created through contract (agency agreement) ● General principles of contract apply ○ Extent of authority ○ Duties to be performed ○ Nature of payment to be received ● The law of contract applies to agency agreements ○ All the elements of a contract must be present ○ Missing elements may void to the agreement ● Estoppel: if a third party relies on the principal’s representation that the agent has the authority to act, the principal cannot then claim the agent had no authority The Agent’s Duties ● Agent must comply with the terms of the agency agreement ○ Agents may be liable for acting beyond authority. May be sued for breach of contract by principal. Must perform functions set out in agreement. Owes duty of reasonable care to the principal. Must not go against specific instructions.Cannot delegate responsibility without consent Agent Fiduciary Duty ● Agent obligated to act only in the best interests of the principal. Agent must turn money over to the principal. Agents owe their principal a positive duty of full disclosure. Agent cannot profit at principal’s expense.Agent cannot compete with principal The Principal’s Liabilities ● Employer is vicariously liable for the acts an employee commits during the course of employment Termination of an Agency Relationship ● Termination occurs: ○ As set out in the agency contract or by agreement ○ When the agent is notified ○ When employment ends ● Death, insanity or bankruptcy of principal will terminate the agency relationship 11 Chapter 11 - Corporations Separate Legal Entity ● Incorporation creates a separate legal entity, that has a legal personality separate from the people who own shares in it (s.15(1)) Funding ● Allows for acquisition of capital without involving shareholders in operation of corporation ○ Allows purchase and sale of corporation’s shares without interfering with ongoing operation of business ○ Limits liability of shareholders ■ Courts may “lift corporate veil” to get at those who commit crimes or avoid regulations Ownership Pros and Cons: Advantages ● Limited Liability ○ Shareholders protected from unexpected corporate obligations ■ Torts committed by employees ■ Failure to properly perform contractual obligations ● Limited Liability is lost when: ○ Directors/officers give personal guarantees for loans ○ Courts “lift corporate veil” ■ The corporation was incorporated to perform a wrongful act ■ The shareholders directed the corporation to perform a wrongful act ● Taxes ○ Tax advantages may be gained through incorporation ■ Shareholder can leave funds in the corporation and use it as a vehicle of investment to defer taxes ● Succession and Transferability ○ Corporation continues to exist after death of a shareholder ○ Shares can be transferred at will ● Obligations of the Participants ○ Shareholders: Owe no duty to the company, May carry on business in competition ○ directors or officers and majority shareholders activities may be restricted ● Management ○ shareholders are removed from day-to-day operation of company 12 Pros and Cons: Disadvantages ● Major changes in corporate structure require amendments to the incorporation documents ● Taxed on dividends and the corporation profits ● No tax write offs ● Most expensive way to operate a business The Process of Incorporation ○ Registration done by filing “memorandum of association” and “articles of association” with government agency ■ Memorandum of association sets out: ● Name of the company, ● Authorized share capital ■ Articles of association: internal procedural regulations for governing the operation of the company ● Articles of Incorporation ○ The articles of incorporation are the main incorporating document ■ Articles of incorporation contain constitution, purpose, bylaws controlling day-to-day operation Special Rights and Restrictions ● Shares issued by a corporation are normally divided into different classes ● Common shares: Include the right to: ○ Vote at shareholders’ meetings ○ Receive dividends declared by the corporation ○ Receive property of the corporation on its dissolution ● Common shares are issued if there is only one class of shares Borrowing ● Corporations can borrow funds and accumulate debt ● bank loans, debentures and bonds Funding of Corporations 13 Closely Held Corporation ● Few shareholders. Shares not sold openly on the stock market. Private corporation Broadly Held Corporations ● Public share offering. More highly structured and regulated than closely held corporations Corporate Directors, Officers and Shareholders ● Directors: ○ Elected by shareholders ○ Owe a duty to the company; to “exercise the care, diligence and skill of a reasonably prudent person” ○ Have a fiduciary duty to the corporation (rather than the shareholders) External Obligations ● Directors may be personally liable for: ○ Unpaid wages, Breaches of company employment standards, Unpaid taxes, Damage to the environment, Commission of tort, Causing employees to commit crimes Shareholders ● Shareholders: Have few obligations ● Rights and Remedies: Access to most records and financial reports, Receive notice of annual general meetings, Right to vote on major changes Shareholder Protections ● Minority shareholders have a weak position ● Shareholder protections: Derivative (representative) action Corporate Structure 14 Termination of Corporation ● Dissolution of a corporation ○ May be voluntary or involuntary ○ Voluntary process called winding up ○ Involuntary through bankruptcy or neglecting to file annual return Chapter 13 - Intellectual Property Intellectual Property ● Intellectual property is a subcategory of intangible personal property referring to ideas, information, and creative works ● Purpose of law is to: ○ Protect the product of mental effort, Encourage free flow of new ideas ● Five types: 1. Copyright 2. Patents 3. Trademarks 4. Industrial design 5. Integrated Circuit Topography ● Protected under statute law Copyright: ● Copyright: the monopoly to copy or reproduce a created work ○ Only the actual work itself is protected, not the ideas or thought behind it ● Creator of intellectual property has exclusive right to profit or control their creation for a period of time ○ For artists and authors: 50 years after death ○ For corporations: 50 years ● After expiry of copyright work becomes part of the public domain Creation ● Existence of copyright is automatic in Canada ○ Registration worthwhile as it establishes when the copyright was created and names owner ○ Registration helpful for gaining international protection 15 Ownership: the creator or employer owns the work unless there is an agreement otherwise Ownership ● The creator/employer owns the work unless there is an agreement otherwise ● Creator retains moral rights ○ Author can demand to have name associated with it as creator ○ New owner may not have the work changed to degrade it or bring harm to author’s reputation ○ The work may not be used in association with a product, service, cause, or institution that is prejudicial to the reputation of the author ● Fair Dealing ● Fair dealing exception expands rights to use copyrighted work under certain conditions: ○ Education, parody, and satire ○ Research, private study, news reporting, criticism, and review ● Must also meet the fairness factor ○ Take into account the purpose, nature, amount, the alternatives, and the effect of the dealing in the work Copyright Infringement ● Infringing copyright includes: ○ Benefiting from sale reproduction, distribution, or other commercial use of the work. Plagiarism.Someone else asserting authorship ● Author can seek injunction or compensation ● Employers can be held vicariously responsible for copyright infringement by employees Remedies ● Interlocutory injunction: stops infringement before trial ● Anton Piller order: court order to seize material from manufacturer or distributor ● Permanent injunction: prohibiting the production, sale, or distribution of the product ● Damages: compensates victim for losses suffered ○ Accounting ○ Punitive damages ● Rights holders can sue service providers whose primary purpose is to enable online infringers and service providers ○ Websites, web hosts, or peer-to-peer file-sharing networks Patents ● Patent: The exclusive right to produce, market and sell or otherwise profit from a specific invention ● To qualify the invention must be: ○ New and no one else has patent for it ○ Original work of the inventor ○ Unique and distinguishable. Useful 16 ● ● ○ Possible to build on basis of instructions filed with patent office Theories, concepts, or obvious improvements are not patentable Not patentable: ○ Scientific principles or abstract theories, Products designed for illegal purposes, Computer programs (Canada) Creation ● Inventions must be registered with Patent Office before patent is granted ● The first to apply in their own country has priority ● Employers are permitted to patent the inventions of their employees ● Process of obtaining a patent: ○ Patent records searched to see if a patent already exists and application submitted, Patent office assigns examiner, Patent granted when all conditions met ● Patent grants monopoly for 20 years ● Inventor can license patent to others for manufacture Trademarks ● Trademark: Protects terms, symbols, designs, sounds or colours that identify a product or company and distinguishes it from a competitor ● Purpose is to protect consumers from deception ○ Goodwill: reputation, ongoing relations with customers, and product identification ● Registration protects trademark (but not REQUIRED) ○ Owner have an exclusive right to use it throughout Canada for 15 years (renewable indefinitely) ● Must be distinctive ○ Cannot be obscene, scandalous or confusing with a known mark ● Injunctions available against knock-offs ● Surnames may not qualify as trademarks (there are exceptions) Use: ○ Trademark loses status as it becomes a generic term for a type of product (i.e. Kleenex) ○ If trademark is not used, may be lost due to abandonment ● Remedies are the same as copyright infringement Industrial Designs and Integrated Circuit Topography ● Registration of a unique shape, design, or pattern under the Industrial Design Act ○ No legal protection against imitation unless an industrial design is registered ● Must take place within one year of publication ● Protection lasts 15 years ○ Must pay maintenance fee after 5 years ● Must be original and not a copy of existing product ● Integrated Circuit Topography Act protects 3-D design of integrated circuits ○ Registration protects for 10 years ● Remedies for infringement include: 17 ○ Damages and injunction, Payment of royalties, Punitive damages, Seizure and destruction of the offending product Trade Secrets ● Trade secret: particular kind of confidential information that gives a businessperson a competitive advantage ○ Information must be valuable to the business ○ Not commonly known or readily available ● Disclosure may be prohibited by contract ● Non-disclosure agreements protects employer Remedies ● Plaintiff must show that the disclosure of information has caused harm ● Remedies: Injunction, Damages, Accounting ● Non-disclosure provisions will provide grounds for remedies for breach of contract Additional Challenges ● Combating Counterfeit Products Act ○ Expands definition of trademark, Creates additional criminal offenses, Expands powers of enforcement ● Still difficult to enforce Intellectual Property Summary Chapter 14: Property Law - Real and Personal Property and Protection of the Environment Types of Property ● Real property and fixtures: land and anything permanently attached to it ● Personal property: ○ Chattels (goods): tangible personal property that is moveable (ex. Laundry machine, fridge, stove) 18 ○ Chose in action: An intangible right/claim one person has against another (as a claim for debt) Fixture v. Chattels ● Fixture Is part of (or affixed to) the land, and is therefore included in the APS, even if not expressly stated so. Unless expressly excluded, it is part of the real estate ● Chattels Personal property that is not land and not included in the sale unless expressly included in the APS. Shake Test Fixture v. Chattels Cases ● Bowling Alleys: Re. Davis: alley held in place by clips and screws chattel North West Trust: Core purpose of building was to be a bowling alley fixture ● Microwaves: Young v. McKinlay: it matched appliances and was affixed sufficiently; any purchaser would naturally conclude that it was fixed to the kitchen fixture ● Stained Glass Windows: Young v. McKinlay: not permanently in place chattel ● ● ● ● Estates in Land: the right of possession to land granted by the Crown Fee Simple: the right to use and sell land subject only to local restrictions – ownership (also described as freehold estates) Life Estate: upon the death of a life tenant property reverts back to original owner – (also described as freehold estates) Leasehold Estates: land leased to a tenant for a specific period of time Lesser Interests in Land ● Easements: gives person right to use a portion of another’s land for a particular purpose but does not give possession Tenancy in Common and Joint Tenancy ● Owning property together may be joint or in common ● Joint Tenancy: two or more people own the entire property ● Tenancy in Common: two or more people share an undivided interest in property with each owning a designated portion of title ● Will does not matter, it goes to the survivor Condominiums ● Condominiums: ○ Own a “unit”, share ownership of the common elements ○ Common elements – lobbies, hallways, elevators, amenities, etc. Declaration ● The order of priority Condominium Act, Declaration, By-Laws, and the Rules of the Corporation ● Declaration The basic documents creating the condo corporation ○ Description of the unit, provisions dealing with common elements ○ Restrictions on sales or leases of the unit ○ Restrictions limiting use of the unit ■ Prohibition against pets 19 By-Laws ● Similar to the by-laws of a corporation ○ Set forth the rules for running a corporation ○ Specifies number of directors Rules of the Corporation (Condo Rules) ● S.58 use of comment elements and units, but needs to be reasonable (Sudbury Condominium Corp v. Level, 1985) ● S.58(10) requires all persons bound by the rules to comply with them ● Rule becomes effective 30 days after notice ○ Unless 15% of the owners put in a demand for the rule to be reconsidered ● Owner/occupant breaks rule mandatory mediation and arbitration, or order of compliance Mortgages ● Mortgage involves the debtor borrowing money and giving the creditor a claim against their property (land and buildings) as added security in the event of default ● Historically title was transferred to lender and borrower stayed in possession (Land Registration Reform Act) Mortgages Defaults ● Contractual Power of Sale, Judicial sale, Foreclosure The Landlord-Tenant Relationship ● Residential Tenancies Act, 2006 Responsibilities of Landlords ● S.20 Providing and maintaining unit in a good state of repair and fit for habitation and complying with health, safety, housing and maintenance standards ● S.21 Shall not withhold supply of vital service ● S.22 Shall not interfere with reasonable enjoyment of unit ● S.23 Shall not harass, obstruct, coerce, threaten or interfere with tenant ● S.24 Shall not alter locking system Responsibilities of Tenants ● S.33 Ordinary cleanliness of the rental unit ● S.34 Repair of undue damage to the rental unit caused by willful or negligent conduct ● S.35 Shall not alter locking system ● S.36 Shall not harass, obstruct, coerce, threaten or interfere with landlord Termination of Lease - Tenant ● Generally cannot terminate a lease early unless: ● S.3 Landlord and Tenant have agreed to terminate ● S.47.1 Tenant has experienced violence ● S.29 If LTB has issued an order for termination Termination of Lease - Landlord ● Has to be justified: 20 ● ○ S.59 Non-payment of rent ○ S.60 Misrepresentation of income ○ S.61 Illegal Acts ○ S.62 Causing damage ○ S.64+S.65 Disturbing or interfering with other tenants and landlord ○ S.67 Having too many people in the unit No fault reasons: ○ Landlord plans to do major repairs, and work cannot be done unless unit is empty ○ Member of landlord’s immediate family or caregiver is moving into the unit ○ Landlord has sold property Finders Keepers ● Law of finders: ○ Finder gets good title against all but the original owner ○ Rights depend on where item is found ■ If in a public place - the finder ■ If in a private space - the owner of the place ○ Finder has obligation to return found goods to proper owner when it is possible to do so Chapter 4 - Intentional Torts and Torts Impacting Business The Nature of Torts ● Tort: a social or civil wrong that gives rise to the right to sue and to seek one of several remedies (i.e. general or punitive damages or injunction) ● A tort has usually been committed when an intentional or careless act harms another. Injured party may sue for redress ● Tort law compensate victims, acts as a deterrent, and educates society ● Crimes are social wrongs that affect society as a whole ○ Prosecution for such acts is carried out by the state ○ Focus is to punish the wrongdoer ● Wrongful conduct is often both a crime and a tort ● Easier to successfully sue for tort as standard of proof in tort law is based on a “balance of probabilities” test ● Breach of contract may not stem from an act that is inherently wrong, but the breach entitles the victim to a remedy ● Tortious activity is inherently wrongful conduct ● May be intentional or unintentional (negligent) acts ○ Remedies differ ● Tort is a private matter - falls under civil law Remedies ● Damages (monetary compensation) ○ General: pain and suffering or for future lost wages ○ Special: reimburse the litigant for expenses or costs incurred before the trial 21 ○ Punitive: not to compensate the victim but rather to punish the wrongdoer Vicarious Liability ● Liability without personal fault ● Imposed on employers when they are held liable for torts committed by employees during the course of their employment Intentional Torts ● Intentional: means that the conduct was intended or deliberate (wilful) as opposed to inadvertent ○ Wrongdoer does not need to intend to do harm ● Trespass to Person (Assault and Battery) ○ Assault: conduct that makes a person think they are about to be struck. Includes threats ○ Battery: when someone intentionally makes unwanted contact with another person. Intent to harm is not required Defenses to Assault and Battery ● 1. Consent is a defense ○ Must be informed and voluntary (Halushka v. University of Saskatchewan) ○ Physical touching beyond that consented to is battery ● 2. Self-Defence ○ Necessary force (must be reasonable, not unrestrained violence) to defend self or eject trespassers is permissible Trespass to Land ● Being on another’s land without lawful right or the owner’s permission ○ Ignorance is not a defense ○ Permission implied for people acting in professional capacity or for business offering public services Trespass to Chattels, Conversion, and Detinue ● Wrongful interference with goods ● Trespass to chattels: ○ intentional interference with the possession of personal property ● Conversion: ○ more serious form of interference with another person's property rights, involving a substantial interference with the property itself ● Detinue: ○ Where a person is wrongfully retaining goods ○ May have come into possession of them legally but refuses to return them False Imprisonment *IMPORTANT FOR FINAL EXAM ● The unlawful and intentional restraint of persons against their will 1. Personal liberty is totally restrained 2. Restraint is unlawful ● Defence 22 Section 494 of the Criminal Code: restraint may be justified if persons have done something for which they may be arrested Poses a significant risk for businesses if customers are detained when suspected of wrongdoing ○ ● Section 494, CCC ● 494(1) Any one may arrest without warrant a) a person whom he finds committing an indictable offense; or b) a person who, on reasonable grounds, he believes i. has committed a criminal offense, and ii. is escaping from and freshly pursued by persons who have lawful authority to arrest that person. ● (2) The owner or a person in lawful possession of property, or a person authorized by the owner or by a person in lawful possession of property, may arrest a person without a warrant if they find them committing a criminal offense on or in relation to that property and a) they make the arrest at that time; or b) they make the arrest within a reasonable time after the offense is committed and they believe on reasonable grounds that it is not feasible in the circumstances for a peace officer to make the arrest. ● (3) Any one other than a peace officer who arrests a person without warrant shall forthwith deliver the person to a peace officer. Malicious Prosecution *IMPORTANT FOR FINAL EXAM ● Available to victims of improper use of criminal justice system ● Conditions (McNeil v. Brewers Retail Inc): 1. The defendant in the tort action must have initiated a criminal or quasi-criminal prosecution 2. Accused acquitted or prosecution abandoned 3. Prosecution motivated by malice 4. No reasonable grounds to have originally proceeded with criminal action Private Nuisance ● Private nuisance: when a party uses property in such a way that it causes damage to property or interferes with a neighbor’s use or enjoyment of their property ○ Neighbour does not need to be a direct neighbor ● Actionable only when property is being used in an unusual or unreasonable way ● Need to establish that this interference was 1. Substantial 2. Unreasonable in light of all the surrounding circumstances ● Focuses on the harm suffered by the victim rather than on whether the conduct by the defending party was wrongful ● Often involves offending substances, so one of the few common law tools that can be used to enforce environmental protection 23 Defamation ● Defamation: a detrimental false statement about someone; must be published or broadcast ● Once the plaintiff establishes that a derogatory statement was made, he need not prove it was false, burden on defendant to show it is true ● It is possible to defame a corporation or a product ● To “publish” means that the statement had to be communicated to a third party ● Damages for defamation can be substantial ● Cyber libel: occurs when someone posts on the internet or emails a statement that is untrue and damaging relating to another individual ● A court will consider the size of the audience and the time the defamatory material is available to be viewed when assessing damages ● Special, aggravated, and punitive damage awards may be ordered Libel and Slander ● Slander: spoken defamation ● Libel: usually written defamation Defenses ● Defenses to a defamation action: 1. Truth (defense of justification) ■ can still be derogatory if it contains an innuendo 2. Absolute Privilege 3. Qualified Privilege 4. Fair Comment 5. Public Interest Responsible Journalism Injurious Falsehood (Product Defamation) ● Injurious falsehood: protects an interest in a person’s property, products, or business ● Plaintiff must prove: 1. A false statement was made by the defendant, disparaging the plaintiff’s business, goods, or property; 2. It was published to a third person; 3. Maliciously and without just cause or excuse; and 4. It resulted in special damages in the form of pecuniary loss Successfully Establishing a Tort Claim Assault 1. Deliberate threat creating fear of imminent harm 2. No consent Battery 1. Deliberate physical interference (contact) with one’s body 2. No consent Trespass to Land 1. Deliberate interference with property 2. No consent/permission/lawful right to be there 24 Trespass to Chattels 1. Deliberate interference with goods of another 2. No consent Conversion 1. Deliberate appropriation of the goods of another Detinue 1. Deliberate possession (detaining) of another’s goods 2. Wrongful refusal to return the goods to the owner False Imprisonment 1. Deliberate restraint 2. Lack of lawful authority Malicious Prosecution 1. Initiation of prosecution on criminal or quasi-criminal charges 2. Subsequent acquittal of the plaintiff 3. Prosecution was motivated by malice Private Nuisance 1. Unusual use of property 2. Substantial and unreasonable interference caused to neighbor's enjoyment or use of property 3. Foreseeable injury Defamation 1. False statements made 2. Derogatory to the plaintiff’s reputation 3. Publication or communication to a third party Injurious Falsehood (trade defamation) 1. False statements made, derogatory to the reputation of the product or business of the plaintiff 2. Publication to a third party 3. Statements were made with malice, without just cause or excuse 4. Special damages in the form of a pecuniary loss Other Torts Impacting Business ● Inducing breach of contract: ○ Commonly, luring people to breach their current employment or supply contracts ● Intimidation: ○ Threat of violence or some other illegal activity forcing a party to do something that harms it ● Deceit (Fraudulent Misrepresentation): ○ Involves the fraudulent and intentional misleading of another person causing damage ● Conspiracy to injure: ○ takes place where two or more persons act together using unlawful means to injure the business interests of another ● Passing off ○ “piggybacking” by misrepresentation, with the defendant trying to capitalize on the goodwill created by the plaintiff ● Misuse of Confidential Information ○ Improper disclosure of information 25 Privacy ● Invasion of privacy: takes the form of a physical intrusion, surveillance, misuse of an image or name, or access to information ● Legislation at both the federal and provincial levels in place to control the collection, use, and distribution of personal information ○ Federal Privacy Act regulates government collection and use of private information ○ Personal Information Protection and Electronic Documents Act (PIPEDA) regulates collection and use of private information ● The tort of spoliation ○ Deliberately spoiled or destroyed evidence Chapter 5 - Negligence, Professional Liability, and Insurance Negligence ● Inadvertent or unintentional careless conduct that causes injury or damage to another person or their property ● All four required elements must all be established to succeed in a negligence action: ○ A duty of care ○ Breach of duty ○ Causation ○ Damage ● Table 5.1 Negligence: The Required Ingredients A: Duty to Exercise Care Must Exist ● We owe a duty to anyone we can reasonably anticipate might be harmed by our conduct ● Reasonable Foreseeability Test: ○ If it would be apparent to a prudent person that the conduct was likely to cause injury, a duty is owed ● Anns case: two-stage test for determining the existence of a duty of care 1. Foreseeable injury and proximity A 26 2. Provides for exceptions or modifications to the primary test for policy reasons Misfeasance vs Nonfeasance ● Misfeasance ○ An act that causes harm to another (wrongdoing) ○ Court will provide remedy ● Nonfeasance ○ A failure to prevent an injury ○ Courts reluctant to provide remedy B: Breach of the Standard of Care ● Once the existence of a duty is established the second issue is whether the defendant demonstrated sufficient care ● Reasonable person test: ○ What would a reasonably prudent person, in possession of all the facts of the case, have done in this situation? ● Reasonable care, not perfection, is required ○ Reasonable conduct varies with circumstances ○ Risk of injury affects standard ● Reasonable conduct varies with: ○ Expertise of person being sued ○ Expectations for children are lower ● Actions that fall below socially acceptable standards create liability for damages C and ● ● ● D: Causation and Damage Negligence requires a loss to person or property No injury—no negligence claim In the past, there had to be some actual physical damage but the court now recognizes economic and mental injury “But For” Test: Physical Causation ● Damage must be a direct result of the careless conduct Remoteness Test – Legal Causation ● Remoteness test: Whether the specific type of injury suffered was reasonably foreseeable ● Remoteness may arise twice in a negligence action ○ Proximity of the parties (Duty of Care) ○ As a factor in causation (Causation) ● Thin skull rule: We take our victims as we find them (one is liable for the full extent of injuries suffered) ● Crumbling skull rule Defenses ● Three defenses to a negligence claim: 27 ● 1. Voluntary assumption of risk (Volenti non fit injuria): ● The law will not assist those who volunteer to bear risk ● The defendant must show that the plaintiff assumed the physical risk and the legal risk ● A successful claim of volenti is rare today 2. Contributory negligence: ● Courts apportion the loss between the parties ● Last clear chance doctrine names one party completely responsible; not often used now Provincial statutes now allow court to apportion responsibility among plaintiff and defendants 3. Illegality (ex turpi causa): ● Courts will not hear a lawsuit brought by a party engaged in unlawful activity ● Illegal conduct must cause loss to the plaintiff before the defense will operate ● Justification is preservation of the integrity of the legal system ● Rarely successful Occupier’s Liability ● Refers to the legal duty of care owed by an occupier of land to individuals who come onto the property ● Occupier – someone who is in physical possession of the land and has control over it, regardless of whether they are legal title owner or not ○ Ex. Tenants, someone renting a venue ● Three categories of visitors: ○ Invitees, licensees, and trespassers ● Occupier’s liability to trespassers Strict Liability ● Liability when there is no fault ● Vicarious liability is a form of strict liability ○ Employer being held responsible for the wrongful acts of an employee even though the employer has done nothing wrong Insurance ● Purpose: to reduce the cost of loss by spreading the risk ● Insurance transfers the risk from the insured to the insurer ● Premiums increase with the amount of risk involved 1. Liability Insurance ● Covers damage caused by negligence of self or employees ● Does not cover wilful acts 2. Property Insurance ● Property 28 ● ○ Covers losses to buildings and their contents due to fire or other ○ Comprehensive covers everything except what is specifically excluded Coverage should correspond to actual value of the property 3. Business Interruption Insurance ● For an unforeseen event that causes a business to cease operation for a time ○ Covers lost profits and expenses of bringing business back into operation ● Puts insured in same financial position as if the loss had not occurred 4. Life and Health Insurance ● Life ○ Provides for dependants and/or Business associates (“key person”) ○ After death of insured ● Health ○ Medical: covers health care expenses ○ Disability: provides income for disabled worker ○ Overlapping extended benefits Chapter 6: The Elements of a Contract: Consensus and Consideration Definition of a Contract ● Contract: a voluntary exchange of promises, creating obligations which, if defaulted on, can be enforced and remedied by the courts ● Generally, parties have “freedom of contract” ○ They can enter into any contract they wish, with few restrictions Elements of a Contract ● Elements of a contract: 1. Consensus: mutual agreement 2. Consideration: the price each party is willing to pay to participate in the contract (offer and acceptance) 3. Capacity: legally capable of understanding 4. Legality: object and consideration involved in the agreement must be legal 5. Intention: must intend that legally enforceable obligations will result from contract ● Verbal agreements are as binding as written ones ○ Statute of Frauds Important Terms and Definitions ● Formal and Simple Contracts ● Express and Implied Contracts ● Valid, Void, and Voidable Contracts ● Unenforceable and Illegal Contracts ● Bilateral and Unilateral Contracts Consensus ● Essence of a contract is a meeting of the minds of contracting parties 29 ● ● ● ● Offer ● ● ● Share an understanding of the bargain struck Be willing to commit themselves to terms Terms must be unambiguous Failure to read a contract is no excuse Offer must contain: ○ All of the terms of the contract ○ A communication of willingness to be bound ○ All significant terms of the proposed contract ■ Terms can be implied An interim agreement may be binding An offer may contain a condition or “subject to” clause ○ Contract is not binding until conditions are satisfied Invitation to Treat ● Invitation to Treat: an invitation to potential customers to engage in the process of negotiation Typical Process to Create Communication of an Offer ● An offer must be communicated ● Only the person or group to whom an offer is made can accept it ● For a contract to be binding, all important terms must have been disclosed to the offeree ● Exemption clauses must be brought to the attention of the person granting it ● Fundamental breach may void exemption clause The End of an Offer 1. Offer ends at a specified time 2. After reasonable time (if time not specified) 3. At the death or insanity of the offeror 4. Revocation of offer (withdrawn) before acceptance and revocation is communicated to the offeree 5. When the offer is rejected 6. A counteroffer is put forward (A counteroffer is a form of rejection) ● If the subject matter is illegal ● If the subject matter is destroyed 30 Offers That Cannot be Revoked ● Option agreement ○ Keeps the offer open for a specific length of time ○ Subsidiary contract with separate consideration ● Tenders: Tendered bids cannot be revoked. Subsidiary contract is formed ● Unilateral offer can’t be revoked once performance begins Standard Form Contract ● An offer with fixed terms that the customer is invited to accept ○ i.e. airline tickets ● Usually contains one-sided terms favoring the business ○ Exemption clauses limiting the liability of the business ● Consumer protection legislation controls the worst abuses and courts tend to read ambiguity in favor of the disadvantaged party Acceptance ● The offeree’s intention to commit ● Must be unconditional ● The inclusion of new terms in an acceptance is a counteroffer ● Acceptance will not overcome the defect of an incomplete or defective offer ● When the wording of an offer is unclear, the courts will interpret the agreement to find the most reasonable construction Communication of Acceptance ● Acceptance of an agreement is usually accomplished by communicating it to the offeror ● Sometimes by conduct ● If you take the benefit of the offer, you are deemed to have accepted it, by conduct ● Unilateral contract accepted by completion of performance ● Silence is not acceptance (unless part of on-going business relationship) ● Acceptance is effective when and where received ○ Factor in determining which court has jurisdiction and which jurisdiction’s law will apply to the contract ○ UNLESS contract says otherwise The Postbox Rule ● When acceptance is mailed, it is effective when and where it is posted ● Rule applies only when response by mail is appropriate ● New methods of communication make the expansion of the post box rule unnecessary 31 Consideration ● Bargaining process: trading promises for promises and all parties derive some benefit ● Consideration: the price one is willing to pay for a promise of that benefit ● All parties must derive some benefit from the deal ● Gratuitous promise (gift): a one-sided agreement in which only one of the parties is getting something from the deal ○ Not enforceable Adequacy of Consideration ● Need not be fair, but: ○ Unfair consideration may indicate undue influence, insanity or fraud ● Courts show willingness to assist consumers ○ Consumer protection statutes ● Must have a material value and be stated specifically Gratuitous Promises Are Not Consideration ● Existing Duty: ○ A change in the contract requires new consideration ● Past consideration: ○ Past consideration is no consideration ● Paying less to satisfy a debt: ○ An agreement to accept less to satisfy a debt is not binding (subject to legislation stating otherwise) ● Contracts with illegal consideration are void Exceptions to Consideration Requirement ● Promissory estoppel: deals with a person making a promise or a commitment to do something in the future ○ Can only be used as “a shield, not as a sword” ○ Must show reliance on a gratuitous promise and resulting damage ● Sealed documents: ○ Sealed documents do not require consideration ○ Courts will not address the issue of consideration if contract has been executed under seal Promissory Estoppel 32 Promissory Estoppel Examples: Bob owns a bakery and his lease is $1000/month. His landlord Larry says because of Covid, Larry will agree/promise to accept only $500/month for the year of 2022. Bob is happy, he hires an additional worker in preparation for 2022. 2022 comes along and Larry changes his mind. • Larry sues Bob for the full $1000/month • Bob is successful (uses promise as a “shield”) Hai makes a promise to give all the students in MCS3040 an A+. Hai gives Bob, a student in MCS3040, a B+. • Bob sues Hai • Bob is unsuccessful (uses promise as a “sword”) SEALED DOCUMENT Hai makes a promise to give all the students in MCS3040 an A+ in the class using a sealed document. Hai gives Bob, a student in MCS3040, a B+. • Bob sues Hai • Bob is successful, sealed documents do not require consideration Chapter 7 The Elements of a Contract: Capacity, Legality, and Intention Capacity ● Contracting parties must have the capacity to contract (being legally able to make agreements) ● Lawmakers recognize that some people are more vulnerable and receive special protection ● Protections include having the ability to contract limited or eliminated completely in some cases Minors/Infants ● Minors (or infants): under age of majority, are not bound by their agreements ● Adults bound when contracting with minors; voidable by minor Necessaries and Beneficial Contracts of Service ● Minors are bound by contracts (except in BC) ○ For the acquisition of necessaries ○ Contracts of employment ○ c Infants’ Liability for Torts ● A breach of contract will sometimes also be the tort of negligence ○ If tort is a separate act from the breach of contract, then no bar to action Insanity and Drunkenness ● Insanity: 33 ● ● ○ No understanding of the nature of the transaction ○ Person claiming insanity has onus to prove it ○ Other person knew or ought to have known of insanity Drunk ○ Treated like insanity Weakened intellect ○ Unconscionable transaction Contracts Performed Illegally ● Agreements must be legal and not contrary to public interest ● Distinguish between illegality as to formation of the contract (the contract itself is illegal) and illegality as to performance (the contract is performed in an illegal way) ● If contract is performed illegally or against public policy, the Court may order ○ Contract is void and restore parties to their original positions ○ Enforcement, if violation is procedural and not substantive Contracts Formed Illegally ● The contract itself is illegal ○ Courts will not restore parties to original position unless one is innocent of wrongdoing ● Illegal contracts involves unacceptable or immoral conduct ● Object of agreement must be legal ○ Not contrary to law, eg drug deals ○ Not against public policy, eg Prostitution ● Courts may sever the illegal provisions of the contract, leaving the balance of the contract enforceable to avoid inequitable judgments ● Examples: ○ Contracts to commit a crime or a tort ○ Contracts involving immoral acts ○ Contracts in restraint of marriage or in favor of divorce ○ Contracts that promote litigation ○ Contracts that obstruct justice ○ Contracts that injure the state or public service ○ Contracts to fix prices or reduce competition What Constitutes Writing ● Essential terms must be in writing: ○ Indication of the parties, the subject matter of the contract, and the consideration to be paid ○ Other terms may become essential depending on the nature of the contract ● Can be actual agreement, receipt, note, email ● The document(s) must be signed or initialed but only by the person denying the existence of the contract Electronic Contracts ● Electronic records and communications have become more common 34 ● ● ● In many situations, a signed, printed document is needed to provide evidence in writing Electronic documents have legal effect and are enforceable Federal and provincial legislation passed to recognize electronic documents and signatures ○ Does not apply to wills, trusts, and powers of attorneys Contract Formation Chapter 8 Factors Affecting the Contractual Relationship Misrepresentation ● 3 types of misrepresentation: Innocent, negligent, and fraudulent and know the difference ● False statement of fact that persuades someone to enter into a contract ● Misrepresentation is a false statement of fact; cannot be an opinion (unless its from an expert) ● Half the truth statement can be a misrepresentation ● Common law equitable remedies vs. breach of contract ● Common law equitable remedies rely on the rule of misrepresentation ● Innocent: innocently making a false statement, fraudulent: When person knows that it was false, negligent: recklessly make a false statement Innocent Misrepresentation ● The person making it honestly believes it to be true ● Remedies are limited to rescission ● Rescission puts both parties back into original positions ● Rescission of contract is not available when ○ Where a contract is affirmed ○ Impossible to restore (where a third party is involved) ○ Plaintiff is not blameless 35 Negligent Misrepresentation ● Carelessly providing false information ● Must establish four elements of negligence ○ A duty of care ○ Breach of that duty ○ Causation ○ Damages ● Damages of negligence possible for misrepresentation Fraudulent Misrepresentation ● Fraud exists when the false statement was made ○ Knowingly or recklessly, not caring if true or false ● An innocent misrepresentation becomes fraudulent if not corrected when discovered ● Court remedies for established fraudulent misrepresentation include rescission or damages for deceit ● Difficult to establish Duress ● When someone is forced into a contract against their will ● includes threats: Of violence, Of imprisonment, Of criminal prosecution, To disclose scandalous information, To goods or property, Of loss of employment ● The threat must be the main inducement to enter into the contract Undue Influence ● More subtle than duress ● Pressure from a dominant and trusted person negates free bargaining ○ Makes it impossible to negotiate with free will ● Contract is voidable ● Court may find undue influence: ○ Presumption based on special relationships ○ Determined by facts ■ Must show the development of a relationship of trust and that trust was abused. Unconscionable Transactions ● Permits the court to set aside a contract in which once party has been taken advantage of ● Must be shown that ○ Bargaining positions of parties are drastically unequal ○ One party uses position of power to gain advantage ○ Agreement is substantially unfair to weaker party ● Agreement must be unreasonable to be unconscionable Mistake ● Error that destroys consensus ● Being negligent and fraudulent is not mistake 36 ● Mistakes can relate to: The major terms of the contract. An assumption upon which the contract is based (fact, future event, the law) Misunderstanding ● Neither party is aware of the other party's misunderstanding about the terms of the agreement ● Reasonable person test for the correct interpretation of the contract ○ If two interpretations are equally reasonable then the contract is void Rules of interpretation ● Reasonable person test ● Literal or liberal meaning imposed on written terms ● Parol evidence rule Privity of Contract ● Contract can only affect parties to it ● Exceptions: ○ When an agent acts on behalf of a principle in contract with a third party Assignment ● A person entitled to receive a benefit under a ● contract can transfer that benefit to a third party ○ Obligation cannot be assigned ○ Vicarious performance: contractual obligations can be performed by others; original party remains responsible for the work Chapter 9 The End of the Contractual Relationship The End of the Contractual Relationship ● Principal methods of discharging a contract ○ Performance, Breach, Agreement between the parties, Frustration Discharge by Performance ● Contractual obligations are discharged when each party satisfactorily completes its part of the bargain ● If failure to perform is insignificant or only involves minor term (warranty), contract is considered performed Conditions and Warranties ● Conditions: terms essential to substantial performance ○ Where breached, victim relieved of obligations ● Warranties: minor terms of contract ○ Where breached, performance still required Breach of Contract ● A contract is breached when there is: ○ Improper or incomplete performance 37 ○ ○ Refusal to perform May lead to discharge of the contract Breach by Refusal to Perform (Repudiation) ● One party indicated to the other an intention to abandon and altogether to refuse performance of the contract ● Anticipatory breach: refusal occurs before performance is due Discharge by Agreement ● Contracts can be modified or ended by agreement ○ Modifications must have consideration ● Bilateral or unilateral discharge ○ All rules of contract formation apply ● Where changes to a contract are significant, the original contract is discharged and is substituted by the new one. Frustration ● Outside, unforeseen event which ○ Makes performance impossible ○ Changes the nature of the contract ● Frustrating events end contractual obligations ○ Events that radically alter contractual obligations ○ Disability or illness of an employee ● Frustration does not occur when: ○ one party is responsible for an act that frustrates a contract (just a breach) ● Circumstances not constituting frustration: ○ Self-induced frustration is a breach of contract ○ Increased difficulty or increased cost ● Event must be unanticipated to be frustration ○ performance must be impossible or the foundation or purpose of the contract must be fundamentally or radically changed Effect of Frustration ● Determining who suffers the loss when the contract is discharged is major problem of frustration ● Legislation requires costs to be apportioned following a frustrating event ○ Formerly, “Let the loss lie where it falls” ○ Legislation now allows courts to: ■ order a party to pay the other ■ split a deposit to pay costs incurred Damages ● Court tries to put victim of breach in the position they would have been in if the contract had been properly performed ● In a breach of contract damages look forward in time 38 court asks what loss has been suffered by the plaintiff and compensates for those losses Damages awarded may be special, general, or punitive ○ Special damages: specific costs and expenses ○ General damages: estimate of what has been lost ○ Punitive damages: intended to punish the offending party rather than compensate the injured; rarely awarded ○ ● Equitable Remedies ● Recession: returning parties to their original position ○ Terminates the contract “ab initio” ● Rectification: court interprets and corrects wording of a document to reflect agreement of parties ○ Corrective remedy used to align the written contract with what the parties agreed to ● Specific performance: Court orders defaulting party to perform its obligations if damages are not suitable or adequate ○ Limited to situations where damages are inappropriate ● Injunction: an order to stop a party from breaching a contract ○ Usually involves an order to refrain from some offensive conduct ● Accounting: court may order breaching party to disclose all financial dealings and records and pay profits ● Quantum meruit: court may order payment for part performance Chapter 16 - Sales and Consumer Protection Moving Beyond the Common Law ● Contract law says we have the freedom to contract - when it comes to consideration, courts are not going to see if the contract is fair, so if you sign the contract and it is not fair, the courts will not care ● Caveat Emptor – buyer beware (you as a buyer have to make sure your contract is fair because the other party is trying to make money about you) ● However, in reality, imbalances in bargaining power are common -> Ex. If i bought an apple product, and as soon as i opened it it had a problem with it, i am not going to personally sue apple because they have more power as a business ● Common law remedies were costly and time consuming Purpose and Application of the Sale of Goods Act ● Sale of Goods Act implies terms into contract - We have a legislation that all goods must be useable - Has to be an implied legislation because for example if you are buying groceries, you are not singing a contract each time you scan an item ● Intended to fill the gaps in the terms of a contract ● Only implies missing terms ○ parties are free to override provisions of the Act by clearly stating a different intention in their contract 39 If you are buying a car and it says sold as is, you acknowledge that it it is sold as is, so you cannot sue under the Sale of Goods Act Not restricted to retail and consumer transactions; ○ Applies to commercial transactions ○ ● Goods and Services ● The Act applies only to the sale of goods: ○ Only tangible items ○ Does not apply to services ● Where both goods and services are involved with one another, the Act does not apply unless the sale primarily involves the delivery of goods (Borek V. Hooper) Ex. Borek commissioned Hooper to paint his house, and Hooper used low quality paint which chipped very fast, and the courts had to figure whether this was a good or service. Courts decided it was a service because he commissioned someone to paint his house and not a good ● Sale of Goods Act does not apply to: ○ Real property ○ Services (except when it involves the installation/delivery of goods (sitting down in a restaurant)) Ex. The sale was primarily based on the service of painting, and the second part was the paint itself Transfer of Goods for Monetary Consideration ● Title to goods must actually be transferred in order for the Act to apply ● If the transaction is not a sale, but is securing a loan, the Act does not apply Ex. if you are giving someone money to secure a loan, that is not a transfer until the money is actually transferred. Title and Risk ● Risk follows title: Anything that happens to the goods and it is under your title, you are responsible for it. Transfer of Title Rule 1. in deliverable state Goods 40 Ex. go to buy a car and is ready for delivery or to be picked up, the title has already passed. If i take too long and something happens to the car, the dealership is not responsible for the car because I own the car even though the car was not in my possession Rule 2. Seller to put goods into deliverable state. I agree to buy a car, the buyer has to go get it inspected, until the car is clear from inspection, I do not own it until it has passed the inspection Rule 3. Seller to ascertain price. Title would not pass until I am notified of the price? Rule 4. Goods delivered on approval Ex. if someone sends me something and i hold onto it past a certain period of time, the thing is now under my title Rights and Obligations of the Parties ● The Sale of Goods Act implies both conditions and warranties into the contract ● Breach of a condition: ○ Victim of the can ignore it and accept the goods (but loses the right of discharge), or consider themselves no longer bound to the contract ○ You essentially told them you are ok with this breech ○ You can stop the contract ● Breach of a warranty: ○ Victim is not released from obligations under the contract ● Manufacturers and retailers often try to override the implied conditions and warranties ○ Exemption clauses ● Parties may be free to contract out of all obligations and responsibilities ○ Several provinces have enacted legislation prohibiting the seller from excluding or limiting these provisions relating to fitness and quality in consumer sales transactions - What this means is the products that you buy have to be at least fit for use and be of decent quality Obligations of Seller ● Implied terms under Sale of Goods Act: ○ Seller must convey good title and quiet possession ○ Goods must: ■ Be usable ■ Be free of liens (if you are paying full price for something the seller must make sure there are no liens so that a third party cannot take it from you) ■ Match description ■ Be of merchantable quality and fit for purpose ■ Match sample and be free of hidden defects ■ Be durable (in B.C. but not Ontario) Other Implied Terms ● If terms are not stipulated in contract the Act implies: ○ No price: must pay a reasonable price ○ Time, payment, and place for delivery 41 ● ■ Delivery within a reasonable time, payment upon delivery ○ With bulk goods the purchaser can choose to return or keep goods when wrong quantity is delivered Above terms are usually conditions of the contract (very rare that the implied terms dont have these in there) Sellers’ Remedies on Default ● When buyer defaults seller can: ○ Retain or keep goods until paid ○ Stop delivery of goods ○ Recover goods after delivery within 30 days ■ Seller gets priority over other creditors in case of bankruptcy ● Sue for breach of contract and for damages Buyer’s Remedies ● Buyer’s remedies are the same as in contract law: ○ Damages for fraudulent misrepresentation ○ Withhold payment for breach of condition ● The buyer must go through with the deal if only a warranty is breached Online Sales and International Transactions ● Normal contract rules apply to online transactions ○ Problems arise concerning formation of contract and determining jurisdiction! ● All jurisdictions in Canada have enacted an International Sale of Goods Act ● Contract provisions override International Sale of Goods Act ● Consumer Protection Act: ○ Part I: Clarity (clear) ○ Part II: Consumer Rights and Warranties (reasonably acceptable quality. Also, Rogers cant charge you for new channels if you didn't ask for it) ○ Part III: Unfair Practices ■ Making false, misleading, or deceptive representations (pretending kim kardashian is sponsoring your face wash) ■ Making unconscionable representations; and ■ Pressuring consumers into renegotiating the terms of a transaction by holding on to their goods ○ Part IV: Rights and Obligations for Specific Transactions Collection and Debt Settlement Services Act ● Prohibits collection agencies from trying to collect a debt without first informing the debtot, in writing, that they have been hired to do so ● Prohibits harassing debtors or their friends and family members ● Prohibits giving false or misleading information ● Limits the time during which agencies may attempt to collect debts (not allowed to call you on the holidays, on sundays they cannot call you after 5 pm, and on weekdays they cannot call after 9 pm) 42 Competition Act ● Identify and prohibits anti-competitive business practices ● Conspiracy – when a person conspires, agrees, or arranges with a competitor to fix prices, allocate markets or control output or supply levels of goods or services Chapter 12: Employment What ● ● ● ● Ex ● ● is employment? Not all workers are employees Independent contractors must be distinguished from employees Each relationship imposes different legal rights and obligations on the parties Independent contractors vs. employees Advantages to be an employee ○ Health benefits ○ Employee standards acts, termination, pay Advantage to be independent contractor ○ No fiduciary duty Organization test, risk test, and tools test ● Organization test: is person an integral part of employers organization ● Risk tests examines whether the worker bears any financial risk or loss or stands to profit if work is completed efficiently ● Both independent contractors and employees may be agents of the party that engaged them ● Tools test: does worker provide their own tools ● Organization test: is person an integral part of employers organization ● Risk test examines whether the workers bears any financial risk of loss or stands to profit if work is completely finished ● Both independent The Control test ● Assess the degree of control exercised by the person paying for the service (how much control the employer has over the employee) - Greater ober an employee than an independent contractor ● Employment : employee agrees to serve the employer, who supervises and directs ● Independent contractor: contractor agrees to do a particular job ● Employees work for their employer; independent contractors work for themselves Reasonable Notice ● Legislation sets minimum standard for notice - Employment contract notice must meet legislated minimum ● In setting reasonable notice courts consider: - Length of service, Type of job, Age of employee, Qualifications, Availability of similar employment 43 Just cause ● Just cause dismissal required no notice ● Dismissal without notice must be based on employee wrongdoing or failure to perform the job including ○ Absenteeism and tardiness ○ Disobedience and insubordination ○ Incompetence ○ Harassing other ○ Immoral conduct Law of employment ● statutory /legislation, common law, contract law ● Obligations of employer: - Payment of wages or salary - Safe working conditions • Obligations of employee: - Competent, Honesty and loyalty, Punctuality - Act in Employer’s best interests, Fiduciary obligations Constructive Dismissal ● More advantageous for employee to resign for an employer ● Fundamental breach by an employer of an employment contract that entitles an employee to consider themselves dismissed and to sue the employer for wrongful dismissal - Employer’s treatment of employee (or tolerance of offensive conduct) makes continued employment intolerable - Employer makes a fundamental change to an employment agreement without consent (Constructive dismissal occurs when an employer breaches the employment contract in a way that gives the employee the right to consider themselves dismissed. This breach could be a fundamental change to the employment terms, the employer's toleration of offensive behavior, or making the work environment intolerable. In such cases, the employee may choose to resign and sue the employer for wrongful dismissal. This legal concept is advantageous for employees who find it better to resign due to significant breaches by the employer) Off duty misconduct ● Generally what employees do on their own time is not an employers concern ● However, off-duty misconduct may constitute just cause (usually limited) ○ Harmed employers reputation ○ Led other employees to refuse to be reluctant to work with that employee Wrongful leaving ● Employees must give employer reasonable notice before departing ○ Employment contract may set notice 44 ● ● Following serious breach of the employment contract, an employee may leave without notice Employees may be sued for ○ Breach of confidence ○ Breach of valid restrictive covenant ○ Breach of fiduciary duty ■ The legal responsibility to act solely in the best interest of another party Illness and Disability ● Illness may constitute frustration of contract ● Human rights and workers’ compensation legislation may require the employee to be accommodated ● This duty does not apply if resolution of the problem will cause employer undue hardship ● Most businesses offer some form of illness and long-term disability insurance or policy as part of their benefits package Remedies for Wrongful Dismissal ● Damages awarded based on what the employee would have received had proper notice been given ● Dealing with employees in good faith has benefits - Damages for defamation or intentional infliction of mental stress are possible ● Damages are the appropriate remedy for wrongful dismissal - Reinstatement is rare but possible Liability of Employer ● Vicarious liability of employer for torts committed by an employee in the course of employment - Only imposed on the employer for conduct that is closely and materially connected to the risks created or introduced by the employer (Bazley v. Curry) ● Protections: - Liability insurance Human Rights in the Workplace ● It is “public policy in Ontario to recognize the dignity and worth of every person and to provide for equal rights and opportunities without discrimination” ● Prohibited grounds: race, sex, ethnicity, marital status, gender identity, disability, etc.
