outlines - Natural Law v. Positive Law Social Aspects ofLa...

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Unformatted text preview: Natural Law v. Positive Law Social Aspects ofLa w: - 50 areas 01" Law Civil Law Common Law Equity Statutory Law Canadian Constitution Section 91 Section 92. INTRODUCTORY CLASS Retributive Justice — punishment ie. criminal law Distributive Justice — social welfare, health care, education, public works Civic and Commercial Efficiency — tort law, contract law, much of what we call “business law” Holy Roman Empire “Civil Code” of rules Still exists in much of Europe, Quebec, Louisiana Source is in England Emerges out of feudalism and systems of courts set up by the King “judge-made” law Importance of case law, establishing precedents which bind lower courts parallel system based on “fairness”; now combined with common law passed by legislatures and over—rules judges (subject to the limits of the Constitution) Federal distribution of powers Federal Powers Provincial Powers Charter Rights and Freedoms idea that government can’t interfere with certain basic rights of Canadian people TORTS Split into two areas: — Intentional torts; and - Negligence Torts are civil wrongs. They involve a failure to act in a manner meeting minimum social standards and causing injury to others. Later we’ll study another kind of civil wrong, breach of contract, which involves failure to abide by private terms set by the parties. Generally, no societal minimum standards are involved in breach of contract, just standards set by the parties. Same torts may also be crimes, which are punishable (with fines, imprisonment, etc). With torts, we’re not concerned about punishment but rather compensating the victim; finding a remedy that will restore the victim to the position he was in before. Bases for tort liability Fault Strict Liability Vicarious Liability No—Fault :PP’NT‘ Measure of Damages 1. Special Damages 2. General Damages 3. Punitive Damages Intentional Torts: Torts involving an intentional act, as opposed to carelessness. There may not be an intention to harm, but involves an intentional act. Examples — Trespass to person — assault (threaten unwanted physical control) — battery (unwanted physical contact is made) — Trespass to land — Defamation — untruthful words that are published and that damage of person’s reputation — defences — truth, privilege, fair comment — Passing off — intentional creation of confusion in public’s mind about nature of products NEGLIGENCE As opposed to intentional torts, there is negligence, caused by careless conduct rather than an intentional act, negligence is of much greater legal significance. Analysis of a negligence case: 1) 2) 3) 4) 5) 6) Is there a duty of care? Has the duty been fulfilled ie. has the standard of care been met? Is there causation? Is the chain of causation too remote? Can the plaintiff prove damages? Is there some partial or complete defence by reason of the plaintiff’s conduct? Important concept — the “Reasonable Person” or the “Reasonably Prudent Person” Duty of Care American case: English case: Standard of Care: - Causation: Remoteness Palsgraf Donaghue v. Stevenson - establishes a duty of care beyond direct contractual relationships to include any person who might reasonably be expected to be affected by our actions - basis for a manufacturer’s liability to a consumer the “reasonable person test” sometimes called the “reasonably prudent person test” - not the “average” person, but an especially careful person - “but for” causation — can you say that “but for” the defendant’s action would the plaintiff suffered injury — Problem: too inclusive a test — attempts to put some limits on the “but for” test - “proximate cause” “Res ipsa Loquiter” Plaintiff’s Conduct very complicated case law on this subject, involving where to draw the line of causation for our purposes the basic test is reasonable forseeability; That is, was it reasonably forseeable that: the defendant’s conduct would result in this injury to the plaintiff? “The thing speaks for itself” contributory negligence voluntary assumption of risk PROFESSIONAL NEGLIGENCE Traditionally, the courts were hesitant to find professionals liable for negligence where: (a) there was no contractual relationship; (b) no fiduciary obligation; and (e) no physical property damage The concern was potential liability that was too broad, for What was called “pure economic loss”. The court did not want a huge rush of people claiming for negligent words, because they couldn’t be sure where it would stop. Hedly Byrne & Co. v. Heller & Partners The House of Lords recognizes that a professional may be liable to a person who is not his client by reason of negligent words The test is whether the defendant could reasonably expect that the plaintiff would rely on the skill and expertise of the professional resulting in a loss to the plaintiff. Case ultimately dismissed because of a “disclaimer” contained in the correspondence. Canadian Case. Haig V. Bamford Accountant was held liable to a third party user of negligently prepared financial statements where that person was one of a class of persons who might reasonably be expected to rely. How do you protect against professional liability? ~ insurance — oversight by many colleagues — us of “disclaimers” as in Hedly Byrne, like “Notice to Reader” on financial statements A contract is a promise that a court will enforce. The law of contracts is designed to protect the CONTRACTFORJM'ATION reasonable expectations of bargaining parties. A. C. Elements of a Contract l. ’90 B. Offer Acceptance Consideration Capacity Legality of Object Intention to Create Contractual Relations Writing (sometimes) Offer contains all of the information necessary to form the contract capable of acceptance to create a contract minor terms may be "filled in" by the Court, but not major terms offer expires: — when it is revoked - when there is a counter~offer - if the offer contains a time limit for acceptance, when that time expires - if not, after a reasonable time Acceptance unconditional acceptance of the offer to create a contract must be unconditional; if it changes the terms of the offer, it is not an acceptance but a counter—offer (which revokes the offer) crossed-offer situations where there is no acceptance ' the mailbox rule: "Where acceptance by mail is reasonable, an acceptance is effective at the moment it is placed in the mailbox but a revocation of the offer is not effective until it is actually received by the offeree" Consideration ' The bargain element of a contract. The value given to support the contract. ' The court will not enforce a gratuitous promise. " Prior existing duty is not consideration ' Past consideration is not consideration ' Options ' Promissory estoppel ' Paying less to satisfy a debt ' Settlement out of court ' Sealed Documents Unilateral Contracts " Carlill v. Carbolic Smoke Ball Company Capacity ' Infants: — necessaries of life — beneficial contract of service ' Insanity / Drunkenness Legality illegal contracts contracts against public policy Intention ' family relations " social relations " business relations ' exaggerated claims Writing ' Statute of Frauds 4. 5, FACTORS AFFECTING THE CONTRACT Mistake ~ Misrepresentation Duress Undue Influence mistake as to terms (reasonable person test) mistake as to meaning of words (reasonable person test) mistake in recording terms (occasionally court will rectify the written document) mistake in assumptions (mistakes as to the existence of subject matter may result inn the court voiding a contract. Mistake as to the value of the subject matter will not) mistake and innocent third parties (court will favour an innocent third party purchaser for value without notice) mistake as to the nature of the document ("no/z eyz‘fan‘zzm” or "not my act") - can be innocent, negligent or fraudulent if a misrepresentation induces the contract, the party who was misled can set the contract aside must be a misrepresentation of fact, not opinion (unless it's an expert opinion) - actual or threatened Violence or imprisonment as a means of coercing a party to enter a contract contract can be set aside by the Victim of the duress - domination by one party over another's mind or will to such a degree as to deprive the person of ability to make an independent decision look for special relationship between the parties like: — parent / child - child / elderly parent — doctor/ patient — lawyer / client the person who's been influenced can get the contract set aside unless the other party can show that the contract is fair. Importance of Independent Legal Advice Performance 10 DISCHARGE 0F CONTRACTS substantial performance tendered performance (“ready, willing and able to close”) Conditions v. Warranties (or major clauses v. minor clauses) Exemption Clauses fundamental breach Repudiation choices: accept the breach and sue or don’t accept breach, continue to look for performance risks: — must be able to perform - frustration Frustration: Remedies contract rendered practically impossible by events out of the control of the parties rescission reliance interest expectation interest Limits of Expectation Interest Mitigation of Damages Equitable Remedies specific performance injunction quantum meruit ll EMPLO WEN T Employment v. Independent Contractor - “control” test - “organization” test End of the Employment Contract - just cause for termination - termination with notice - termination with pay in lieu of notice - constructive dismissal What is Proper Notice? (avoiding wrongful dismissal) — Employment Standards Act - common law requirements; considerations include Non-Competition Covenants - reasonableness in terms of (a) proscribed actions (b) time (c) geographical limits seniority education degree of skill age 12 AGENCY Relationship between Principals and Agent - ability of agents to bind principals to contracts with third parties Actual Authority of the Agent — the authority the principal has actually given to the agent Apparent Authority of the Agent - the authority that a reasonable person would believe the agent to have, given the words or actions of the principal Estoppel - why a principal can be bound to a contract even when agent has exceeded actual authority — if the agent acts within his apparent authority, the principal cannot deny the third party the benefit of the contract. Breach of Warranty of Authority Ratification of Contracts by Principals - where principal likes the contract he may accept it even if the agent exceeded his authority in making it. Undisclosed Principals Duties of Agents — duties to account - fiduciary duties l3 BUSINESS 0]? GANIZA TI 0N5 - PAR T I 1. Sole Proprietorship Partnership A. Partnership contrasted with corporation B. Partnership is a relationship that subsists whenever two or more persons carry on business in common with a View to profit. C. The Partnership Act D. Creation of Partnership (a) by inadvertence (b) by agreement E. Importance of the Partnership Agreement F. Partnership Dealings with Third Parties - actual authority — apparent authority ~ estoppel G. Liabilities of Partner H. Partners as Fiduciary Limited Partnership 14 BUSINESS ORGANIZATIONS — PART II Corporations A. The Process of Incorporation — Articles of Incorporation - By—laws B. The Corporation as 2 Separate Legal Person C. Abuses of the Corporate Vehicle - Solomon’s Case - Taxation - Fraud - Creditor — Proofing D. Corporation Finance (Debt/ Equity Structures) E. Protection of Third Parties - Indoor Management Rule - I’m—incorporation Contracts - Protection of Creditors - Actions after Dissolution E Directors and Officers - Duty of Care — Standard of Care — Fiduciary Duties - Conflict of Interest - Derivative Action G. Shareholders - Shareholder Rights - Shareholder Obligation — Shareholder Agreements - Auditors 15 CORPORATIONS A corporation is a separate legal person. Unlike a sole proprietorship or a partnership, it has a separate existence in law, it owns its own assets and is responsible for its own debt. Unlike a partnership it can't be created inadvertently but must be created by registration. Limited Lia biliqy In a sole proprietorship or a partnership, we saw that the proprietor or the partners had unlimited liability, which means that they risk their personal assets for the liabilities of the business. In a corporation, the "owners" are shareholders, their liability is limited to the amount of money they have paid for their shares or committed to paying for their shares. This is what makes the corporate structure so flexible for attracting capital investment. Since partners have unlimited liability they insist on being involved in the management of the business. However, since shareholders have limited liability, they can simply treat their commitment to the corporation as an investment and take no further role in the management. Limited liability creates a separation of management and ownership. Although in most small corporations the shareholders do participate in management, they don't really need to. Very large businesses, like publicly traded companies, can have professional managers with a relatively small ownership stake and thousands of shareholders who play no role in management whatever. Therefore, the creation of corporations created opportunities for generating large amounts of capital from larger numbers of people and therefore let businesses become much larger. The order in which people are paid in a corporation: Secured Creditor \ Preferred Creditor — — Creditors Unsecured Creditor / Preferred Shareholder \ — - Owners (in a partnership there would be partners) Common Shareholder / Soloman ’5 Case The key to the case was Soloman was able to incorporate his business to obtain limited liability. He was also able to become a secured creditor for a portion of his investment by investing debt rather than equity, so he was able to be paid ahead of unsecured creditors when the corporation subsequently went bankrupt. l6 Lifting the Corporate Veil Courts will occasionally deny the protection allowed by the corporate vehicle. However, Soloman's Case shows that they don't do it often. Limited to situations like fraud or tax abuse. Voting V. Non—voting shares Preferential rights to dividend Redeemable Retractable Conversion rights 17 C otpotations — Share Features 18 CORPORATIONS — CONTINUED Directors E The affairs of a corporation are managed by directors (not shareholders). l Directors are elected by shareholders once a year. Officers Directors may delegate some of their authority to officers — example, President, Secretary, Treasurer. Fiduciary Duties of Directors and Officers — duties not to compete - duties to avoid conflicts of interest Normally, shareholders do not have fiduciary duties to the corporation. Shareholder ‘ - most important rights are to (a) elect directors, appoint auditors - no other rights to participate in management unless: - they also are elected as a director; or — there is a unanimous shareholders agreement 1 Unanimous Shareholder Agreement (U. SA. 2 When 31 of the shareholders of a corporation enter into an agreement, they may take over some of the powers of the directors thereunder. T o the extent they take over the power of a director, the shareholder also assume the liabilities of the directors, so they would become fiduciaries of the corporation through the U.S.A. Other Protection from Shareholders Derivative Action 1 - if a shareholder thinks the directors aren't acting in the best interests of the corporation, they can't really do anything since the right to sue the director belongs to the corporation and the directors are the ones who can cause the corporation to act. Directors aren't likely to sue themselves. 19 - if a shareholder gives the directors notice that he wants them to act and they refuse, the shareholder may convince the court to let the shareholder sue in the name of the corporation — Shareholders must convince the court that the shareholder is acting in the best interests of the corporation. Oppression Remedy - if a minority shareholder is being mistreated by the directors or the majority of the shareholders, he may convince the court to make an order to remedy the situation - the court has broad powers to make orders such as: - ordering the corporation to buy back the shares; - ordering the corporation to pay money; - appointing a receiver l":\USlCRS\gclinns\Bmck\l .ucturc ()utlinus#4 (Nov.()4'l)5).doc ...
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outlines - Natural Law v. Positive Law Social Aspects ofLa...

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