Midterm Notes - Business Law Midterm Exam Notes Chapter 1...

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Business Law Midterm Exam Notes Chapter 1 Risk Management – the process of identifying, evaluating and responding to the possibility of harmful events. Credit Risk – a risk of a customer defaulting on a loan Market Risk – a collateral change in the value of a loan Political Risk – a change in government decisions that change standards.IT Risk – technology dependency Operational Risk – physical risks created by human interference Legal Risk – Potential legal liabilities arising from legal issues Reputational Risk – the effect of something on the reputation of the company in the eyes of public/customersManaging Legal Risks Steps:1.Identification – Recognizing the legal risks 2.Evaluation – Assessment of the legal risks 3.Response – Reacting to legal risks. Applying the risk management strategies Risk Management Strategies -Risk Avoidance – avoid risk all together -Risk Reduction – precautions should be taken to accept risk -Risk Shifting – shifting the risk onto another party -Risk Acceptance – simply accepting the risk-Insurance – a contract in which on party agrees, in exchange for a price, to pay a certain amount of money if another party suffers a loss-Exclusion and Limitation Clauses – a clause is a contractual term that changes the usual rules of liability-Incorporation – the company itself may be held liable for debts and not the directors or shareholders. Law = a rule that can be enforced by the courts. -All laws are rules, however not all rules are laws -Moral wrongs are informally sanctioned (undefined consequences) -Legal wrongs are formally sanctioned 1.Civil Law – systems trace their history to ancient Rome (Only found in Quebec with respect to Canada) -Based on “code” of legal principles
2.Common Law – systems trace their history to England ( All other provinces and territories in Canada) -Based on judge-made case law and doctrine of precedent Jurisdiction – is a geographical area that uses the same set of laws Source of Law 1.Legislation – “government made law” = any laws made by federal, provincial, municipal governments -Uses powers given by constitution, federal parliament and provincial legislatures (these are created by parliament or legislature) a.Statues – are made by federal parliament/ provincial legislatures Use powers to make law given by ConstitutionStatue sets out general rulesGives power to government ministers, commissions, or tribunalActs are statue Requires federal Legislative Process b.Regulations – Set out specific rules Power is given to government ministers, commissions, or tribunals to create regulations “Subordinate legislation”c.By-Laws – created by municipal councils Provincial legislature creates municipality and gives them the power to make by- lawsAlso considered a “subordinate legislator”2.Courts They interpret and apply constitution Interpret and apply legislation Create and apply “common law” (judge-made law)

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