BU231 EXAM AID

Tutors: Prasana Devanand

Co-ordinator: Rachel Mahal
1

Laurier SOS raised over $15 000 last year to

build a primary school in Cero del Padre,
Nicaragua. This could not have been done
without generous donations like yours.
Kevin and James are the sons of the
community leader, Jose Domingo. They
became like brothers to the volunteers who
participated on this outreach trip.
The affection among their whole family was
inspiring and made the volunteers feel more
than welcome, like they too were part of the
community. Laura & Charlie, SOS
Outreach volunteers, 2011
Contact: Trip@LaurierSOS.com for more information about these amazing outreach
opportunities!

Agenda
Chapters:
15,17,18,24,25,26,27,31 & 32.
Review of concepts, translation from
legal terms and examples.

BU231 Chapters 14 and 15

Breach of Contract
Sometimes it can discharge a contract however a breach
must be of the entire contract or an entire term of a
contract which makes performance inadequate
Essential terms are known as conditions
Non-essential terms are known as warranties
There are a few types of breaches
Minor: Non-essential term of a contract. It could be a breach of a
major term but of a minor aspect
They can sue but they still have to finish/act out the contract
Major: Breach of the whole contract or an essential term of the
contract where the essential point of the contract is defeated
Non breaching party has the option to 1) Discharge or 2)
Continue to bind both parties to the contract

How a Breach May Occur?

A party to a contract may break it by:
Expressly repudiating its liabilities
I am telling you up front that I cannot perform
Option to non-breaching party: A fine, but they reserve the
right to sue OR they can insist on performance and wait till it
comes due They run the risk of an intervening event and losing
the right to sue. It depends on the remedy sought
Acting in a way that makes its promise impossible to perform
Failing to perform at all, or tendering inadequate performance of
its promise

Whenever breach occurs before time agreed for

performance, it is known as anticipatory breach
Can use immediately and does not need to wait
for performance to be due

How a Breach May Occur?

Party Renders Performance Impossible: A
deliberate or negligent act that makes
performance impossible amounts to repudiation;
Rather than words in express repudiation this is often implied by
conduct, such as a form of self-induced frustration

Only a willful or negligent act of the promisor

constitutes a breach of contract, doesn t include
acts that are beyond their control

Failure of Performance
Usually becomes apparent only when the time for
performance arrives or during performance itself
Doctrine of Substantial Performance / Test for
seriousness of breach
States that a promisor is entitled to enforce a contract when it has
been substantially performed, even though its promise doesn t
comply in some minor way with requirements
Promisor s claim is subject to a reduction for damages caused by its
defective performance
Effect is that a promisor can t seize upon a trivial failure to avoid its
own obligations
For example, when building a house You broke the contract by
putting on the wrong shutters doesn t entitle you not to pay
for the whole house

Failure of Performance
When the Right to treat a Contract as
Discharged is lost
Two situations where an aggrieved party is entitled only to damages:
1) Aggrieved party has elected to proceed with the original
contract and accept benefits from it despite the breach
2) Aggrieved party may have received benefits and not learned of
the breach until performance was complete

Possible Criminal Consequences of Breach occur when

parties break the contract with knowledge that their
breach will endanger human life, expose valuable
property, etc.

(cont)
Exemption Clauses
A clause in a contract that exempts a party from
liability for failing to perform some of all of its
contractual obligations
Firm may insists on an exemption clause, excluding
itself from any liability for the risk and transferring
the risk of harm to its customer
Courts have developed techniques to cut down the
advantage of parties drafting exemption clauses
Need to post adequate notice
Strict interpretations
Fundamental Breach

Types of Remedies**
1) Damages: Primary remedy in contracts
The purpose of an award of damages
Mitigation of Damages
Prerequisites for an Award of Damages

(cont)
2) Equitable Remedies: Sometimes common law remedies
are just not good enough
Equitable remedies are discretionary (must fulfill these
criteria)
Damages are inadequate
Plaintiff must come to court with clean hands
If plaintiff delays unreasonably, court will deny equitable
remedy
No innocent third party involved
Will not grant remedy when plaintiff has not paid substantial
consideration for defendant s promise (if its seal, you only
receive damages)

(cont)
Specific Performance
Order requiring a defendant to do a specified act, usually to
complete a transaction

Injunction
Court order restraining a party from acting in a particular manner,
such as committing a breach of contract (Also known as a negative
covenant
Interlocutary Injunction: Temporary restraining order
Injunction against an Employee

Mandamus: Opposite of injunction such as apologize

Declaration: A public declaration to demonstrate to the
public youre right
Rescission: Restoring parties to the positions they would
have been before they entered a contract

Chapter 17

Bailment
Def: Transfer of possession of personal property ONLY (not
including land but can include documents (notes, bonds, stocks,
etc.)) without a transfer of ownership
Transferor / owner of property is the bailor Still have
possession, and that the item will go back in the hands of
the bailor eventually
Party that receives custody is the bailee
Can be contractual or non-contractual, contractual and
involuntary

Bailment
Benefit of Bailment
A gratuitous bailment may benefit both parties such as
when a car is left with a friend for safekeeping, but the
friend has permission to use it occasionally
A bailment for value can go both ways as well such as
when a car dealership gives you a car to play with for a
weekend (and hopefully buy) so you can enjoy it

Liability Under Contract and

Tort
The bailee has a duty of care to take care of the
possession
In contract often the terms (express or implied) outline
the duties and liabilities of the bailee
Exemption clauses written into contracts for liability of
bailees are construed very strictly by the court
If goods are damaged for any reason not related to
performance related to the contract, bailee is not
protected by the exemption clause

The standard of care required by the law of torts

applies in circumstances not covered expressly or
impliedly by the bailment contract

(cont)
Law of bailment places the burden on bailee of showing
they were not negligent, must offer a reasonable
alternative explanation (reverse onus)
Easier to sue in bailment vs. tort
Eg. You send your car in for repairs and it gets blown up
there, you need only establish the condition of the car
when you dropped it off, and the condition it was in when
you received it

(cont)
A sub-bailee is when a bailee gives the objects to
another person
Eg. Lady took her ring to a jewelry store in Sault-Ste
Marie. Jeweler was unable to do the repair on the ring
and gave it to another jeweler in Toronto. The ring was
valued at $11,000. When the ring was courier, the custom
of the trade was to list the value as $100. The lady sued
everyone. As bailees (Sub or regular), they all owed a
duty to the lady.

Standard of Care
Gratuitous bailment for benefit of Bailor
Lowest standard of care is owed on the gratuitous benefit
where the benefit is to the bailor (Not being paid for the favour
No benefit to you, just the bailor)
Bailee should not be under a particularly high duty towards
bailor because the bailee is doing a favour for bailor
Eg. Can I put my car in your garage for the winter?
Gratuitous bailment for benefit of Bailee
Bailor receives no consideration, thus the bailee should
compensate the bailor when damage occurs to goods as result
of any slight carelessness
Eg. Can I borrow your lawnmower?

Standard of Care
Bailment for Value Contractual bailment Standard
fails between gratuitous bailment for the bailor and
bailee
Falls between the two above where the bailee for value is
expected to take the same care of goods as a prudent and
diligent person should take care of goods
Eg. My car will be at your shop while you service it
**Standard of care is higher if product is very valuable, easily stolen
and easily damaged**

Liens
Repair and Storage Liens Act
Liens give the bailee a right to retain possession of
goods until the bailor pays what is due for the services
Allows the bailee to retain possession until the bailor
pays the price requires.
If they obtain the goods back lawfully without fraud,
the right of lien is lost. The rights of possession must
still be in the bailee
Arises only when the service has already been performed and
payment is past-due

Right of Sale (Still in the Liens)

There is no common law right of sale The only way to
get this right is when its under the statue or you
contract for it
For a gratuitous situation, you cannot get the right of
sale
Bailees now have a statutory right to sell the goods
Certain time needs to elapse after payment is due (Notice is
set-out Pay up or we are going to exercise our right to sale)
Advance notice must be given to bailor of the intention to sell
Sale must be advertised or held by public auction

Note: The proceeds of the sale first go to reimburse

bailee for costs of sale, then the overdue charges, any
in excess goes back to original bailor

Special Types of Bailment - STIR

1) Storage and Safekeeping
Standard of care depends on the circumstances in the contract
but the owner is still required to exercise due care of the goods
Not required to insure unless it is listed in the contract but
normally, insurance sits on the bailor unless the bailor was
negligent
Not customarily obliged to insure goods against fire, but when
expressly contracted to do so and they fail, they owe the bailor
the insured value of the goods
Warehouse owners in Canada have a lien on goods, and may sell
by public auction
However for professional storages, they have the right of lien
but the lien must be put it in the contract

(cont)
2) Repairers
They are required to effect the repair in proper
manners and expect a due care (It is seen as a
professional because you are paying for it and people
are relying on it)
Failure to performance = Breach of contract
Bailor is entitled to get back the goods, might not have to pay
for service done and can use for damages

Standard of care is same for warehouse

Ordinarily, a bailor gives repairers implied authority to
order replacement parts unless stipulated in contract
Common law gives the repairers a lien on goods, some
provinces do not allow for sale, but in Ontario, they
allow sale if payment is three months overdue

(cont)
3) Transportation
Gratuitous Carrier Help Andrew move down the street
Private Carrier Move a specific kind of thing and they
don t do it all the time, reserve the right to choose their
clients
Common Carrier Move anything anywhere Anyone that
holds themselves out to public as a carrier to get rewards
or payment Holds the highest standard of care: They are
an insurer and a bailee. They indemnify the customers
regardless of fault
All three have a duty of care, even the gratuitous care and
must reach the standard of a reasonable person. They must
be competent and diligent in their line of business

(cont)
3) Transportation (Cont)
Liability:
Shipper (Bailor) need only prove that the carrier received the
goods in condition, and delivered them in bad condition. Unless
otherwise agreed, common carriers are liable for the full value
of the good
Thus, the burden is on the carrier to establish cause of loss
within a recognized defence

Defences against liability:

Act of God Fire is not an act of god, unless lightning started
Cannot work as a defense if the carrier took the risk known
about the potential damage it may cause
Inherent Vice in the Goods Something is wrong with the goods
itself
Default by Shipper
Contract contains implied promise that the goods are safe to
carry, thus make the movers pack everything themselves -Implied duty on the shipper that the goods must be safe for
transportation

(cont)
4) Innkeepers
Innkeepers are any people who maintain a
establishment offering lodging to any member of the
public As long as you can pay, you can stay there
Must keep the belongings of their guests and patrons
safe. They have duty to take reasonable care of the
guests belongings They must avoid negligent acts of
themselves and their employees from suffering from
lost or thief

(cont)
4) Innkeepers (cont)
The Innkeepers Act limits their liability to $40 and
they must illustrate that they make a contractual
agreement with the guests listing the liability to $40
If a customer specifically states that they would want
something to safe-keeping, they are fully liable BUT
they are free from liability if they can prove that it was
the negligence of the guests for their loss

(cont)
Liability:
Innkeepers are typically only liable where the goods have
been stolen, lost or injured through the willful act,
default, or neglect of the innkeeper or an employee, or
where goods have been deposited expressly for
safekeeping
If a hotel refuses to accept a guests goods for safe custody
then it loses the benefit of reduced liability

Burden is on hotel guest (bailor) to demonstrate

carelessness of employees
Often less responsible for damages, therefore it is better
to have something stolen than damaged

Only have a lien, some provinces can sell goods If

there is no payment, they can take the customer s
goods and sell them.

Pledges of Pawn
Pawn is a bailment of personal property for security
for a repayment for a loan where the possession is
transferred to the creditor
Borrower is pledgor; creditor is pledgee (eg. Bank,
pawnbroker)
Pledgee is similar to bailee for value in their exercise of a
standard of care

Pledges of Pawn
Pledgee s obtain liens on the property pledged, and
the pledgor gives authority to the pledgee to sell the
pledged goods upon default

They can obtain the costs and debts, but any

surplus funds remaining belongs to the pledgor
Same things as the lean-holder
However, pawn actually obtains title of the
good pledged
Must post notice and advertise the final notice to the
pledgor After they receive they take title of the
item and can keep all surplus funds
Governed by the Pawn Broker s Act in Ontario

Chapter 18

Nature of an agency
Agency is a relationship in which one person, known
as an agent, is authorized to bring its principal into
contractual relations with third parties
Agents can be people who enter into a contractual
relationship for their principle under the principle s
authority
Very hard to draw the line between the employees
and agents
Employees have very limited opportunity to bind their employer to
a contract

They act for the principle

An exception to privity rule, allows insurance company to sue you
for default of payment.

Agents
Dependent Agents Act exclusively for a single principal
Functions of agency and employment may be entirely
separate, ie. an agent need not be an employee just as an
employee need not be an agent
By law, the employer must give the employee notice They
have a vicarious liability

Agents
Independent Agents Not an employee and acts on behalf of
several principals or clients. Eg. Lawyers or stock brokers who
act as agents for their clients when dealing with purchases of
land, buildings, shares
So called real-estate agent does not have authority to sell the
property of a client and thus is not a true agent
Real estate agent can also act on behalf of buyer and seller
which creates a conflict of interest

Note: Once a person begins to act as an agent in a particular

transaction, that person is bound by all the duties of a
contractual agent.

Agency relationships
*An agent s power to contract on behalf of her principal is
limited to the capacity that the principal possesses*
Agent and Principal Agency Agreement
Agent act under the principal
It is a normal contract
The authority of the agent must be expressly set out in
the agreement
If it includes issuing notes and signing checks, they must be in
writing
Power of attorney: Able to sign the documents on behalf of the
principle This also must be in writing
If there is something not included in the contract, and the
agent has the right to do something similar, it is implied that
they are able to do the similar thing.

(cont)
Principal and third party
Agent makes contracts between these two parties on
principal s behalf
Principal must ratify the contract
If the principal becomes insane or dies, the ratification is
not valid
Ratification must be timely and the principal has to interact
with the third party.
A principal need not ratify it expressly, it can do so
impliedly by assuming the benefits of a contract
Conditional acceptance is not ratification

Estoppel
Apparent Authority
In apparent authority, circumstances may make it appear to third parties
that an agent has authority to make the bargain, when in fact they don t
have any real authority
Agents may exceed their real authority by venturing into sideline activities
or act in violation of special restrictions
So when can a principal legally refuse to be bound by a contract?
Test is whether a third party should have been aware of the agent s
lack of authority, or had reason to be suspicious
A third party is expected to act with a reasonable measure of business
acumen and common sense
Presumption of authority of agent.

Holding Out
When a business impliedly represents someone to be
their agent and will not be permitted to deny the
existence of an agency
It is the responsibility of a principal to inform third
parties that the agency has ended. If not, you are
bound by their contracts

Agent by Necesscity
Agent has to act in dire circumstances and it is not
recognized as legitimate authority
Eg. Neighbours roof collapses
While there may be a moral duty to ratify, as a general
rule our law does not force liability on a person against
his will

Duties of Agent to the Principal

1) Duty to comply with the contract
Determined by terms, explicitly and implied of the contract
Punished by breach of contract
Agent has a duty to be diligent in keeping her principal
informed about important developments

2) Duty of Care
Agent owes duty of care to principal
Reasonable care, diligence and skill when dealing with
transactions of the principal
Will depend on their own degree of knowledge, skill and
their task

Personal Performance
Another duty to principal
Cannot delegate agency status to another party without
telling the principal
When an agent can act through a sub agent, there is
only privity between:
The agent and sub agent
The principal and the original agent

Good Faith
Fiduciary Relationship
Agents must place the interest of the principal ahead of their
own interest
Duty also requires that an agent inform the principal of any
information that may influence the principal s decisions
Acting for two principals
Generally not acceptable nor very wise
An agent can act for both parties in a transaction if they are aware
of the arrangement and have agreed to it

Duties of Principal to Agent

Any principal that uses agent implies that they
will reasonably pay the renumeration by
quantum merit or whatever was enlisted in the
contract
Translation:
You will pay them for their services
You will reimburse their expenses

Who Is Liable?
An agent should have no liability in a properly
constructed contract because the contract is between
the principal and third party
An agent alone is liable if contracting for an undisclosed
principal, and acts as the principal themselves.
Both are liable if the agent acts as the principal, but
then discovers the actual principal.
Can sue the agent or the principal, but not both.
If real principal is discovered during litigation, can terminate
the lawsuit and sue the real principal.

Liability for Torts

If agent is guilty of fraudulent misrepresentation, the
contract becomes voidable and the third party may
rescind it
Can also sue for deceit

If the agent was operating within apparent authority,

the third party can sue the principal as well as the
agent for deceit
Agents can be liable to negligent misrepresentation
because they owe a duty of care to the third party.

Breach of Warranty of Authority

There is no contract if a person holds themselves out as
an agent but has no authority (actual or apparent) and
principal doesn t ratify
In this case a third party can take the so-called agent to
court for a tort known as breach of warranty of
authority
Damages are awarded to put the third party in the
position in which they would have been if representation
was true.

Terminating an Agency
Relationship
Authority is terminated when:
End of time specified in the agency agreement
With no specified time, it can be terminated by any party at
any time.
If the agency is not ended by insanity or death, then the agency
can still be seen as a parent-authority and the principal may
still be liable to the third party
Completion of particular project for which agency was formed
Notice by principal or agent that they wish to end the agency
Death or insanity of principal or agent
Bankruptcy of principal
Event that makes the performance of the agency impossible
Loss of capacity

Relationship of Employer and

Employee
Employment contract is what governs the relationship between the
employer and employee. It is a contractual relationship
Relationship of employer and employee is established by a contract
that gives one party, the employer, the authority to direct and control
the work of another party, the worker.
Additional terms are implied relating to
Common law (termination, notice)
Statute (Statutory minimums, worker s rights)

Terms of Contract
Job Description (from HR)
Provides standard against which to evaluate your performance
Rate of Pay
Term Option to terminate (discussed later)

(cont)
Compare with Independent Contractor
If an individual is found to be an independent contractor
rather than an employee then the relationship is governed by
the terms of the contract and the general principles of
contract law
IMPORTANT: You have to look at the whole picture to see if
they are an independent contractor or an employee It
makes a difference because the liability of an employee are
different from that of an independent contractor

(cont)
Distinction is important as it affects agency and vicarious
liability
When a firm undertakes work as an independent contractor, any
liabilities that it incurs are almost entirely its own, however the
contractor must take reasonable precautions to avoid endangering
third parties
Injured party sues both the employee and the employer for tort
liability because of vicarious liability The employers usually have
the more money
They can be sued because of bad hiring, wrongful referrals,
careless references (For one employee to another company),
vicarious performance where the person doesn t have to
perform personally but it is the employer who remains liable.
Employers have a duty to pay, implied duty of a safe workplace
Employees have a duty to obey any reasonable and lawful request,
duty to exercise skill and care in their job, duty of good faith and
fidelity to the employer

Amending Terms of Employment

Contracts
The ability of an employer to amend the
terms of the employment contract will be
impacted by the terms of the contract
A unilateral substantial change to an
important term (I.e. salary, job position)
can result in constructive dismissal
Constructive dismissal - an employee claims
wrongful dismissal based on the unilateral
change of the terms of employment which
amounts to repudiation of the employment
contract

Employer s Liability
Liability in Contract
Employers are held responsible for improper work
done by employees just as a promisor is liable for
work that it subcontracts

Liability in Tort
A business is vicariously responsible for damages to
any third party for the consequences of any tort
that an employee commits in their course of
employment
All the injured party need establish is that the
employee caused the damage while engaged at
their work (ie. on-delivery etc)
Employers can still sue the employee if it deems it
worthwhile

Notice of Termination of Ind.

Employee Contracts
Most employment contract tend to be continuous in nature, in
order to terminate, a notice is required by both parties to end
the contract
First off, when an employer has hired an employee for a stated
period of time, and that time has elapsed, no notice of
termination is required
In common law, reasonable notice is required and it depends on
the circumstances of each individual

Notice of Termination of Ind.

Employee Contracts
Employment Standards Act They are minimums and not
sufficient by common law Notice = Time = $$
If the hiring is general or indefinite reasonable notice depends
on the circumstances of employment
In most provinces the minimum length of required notice is
specified by statute, any attempt to undermine this is void
Often 1 wk / year of employment
Allowed to have an option to terminate, terminate you at any
time provided you give me $###,###.00

Grounds for Dismissal Without Notice

(MIDD)
Dismissal without further obligation by the employer
when the employee s conduct amounts to a breach of
contract (A major term in a major way) and they can sue
for damages.
If they tried to terminate for a minor breach, they can
be sued

Grounds for Dismissal Without Notice

(MIDD)
The Contractual Basis
An employer need not give notice when it can show that the
employee was dismissed for cause (ie. when an employees
conduct amounts to breach of the contract of employment)
Employer then becomes discharged from any further
obligations

The courts have classified the breaches into different

breaches that are accepted grounds for cause of
dismissal

(cont)
Misconduct
Not cause a economic loss and it must be sufficient that the
employee cannot be trusted.
Anything illegal or immoral that would bring business into public
disrepute, and or cause employer financial loss are grounds of
dismissal without notice

Disobedience
Willfully disrespecting reasonable chain of command, boss wishes
Does not require notice

(cont)
Incompetence
Expressed term requiring competence
Employee has stated specifically in their resume that they
possess the certain capabilities or that they are licensed =
Expressidly stated
It can also be implied that requires a certain skill in the nature
of the job
If the employer does hire someone and discovers that they are
incompetent, then the notice is not required to dismiss.
If you have condoned the act, then the Doctrine of Condonation is
applied
You have to give them the opportunity to change and learn that
skill
Cause for dismissal becomes more difficult to justify the longer an
employee is hired for

(cont)
Illness Frustrating event
Reality is that if it is a serious illness or a recurring illness, it is by
frustration because it is outside of the employer s contract
You can fire people, but it looks bad better to hand over to
insurance You still pay them
You also have a duty to accommodate, if you can accommodate the
person (flex-time, accessibility) you must!
In a layoff condition, the statue states that the employer must give
notice. However, if it a short term layoff (3 months), you don t
have to give notice and giving money or providing them certain
time

Non-Competition Clauses
Courts are hesitant to enforce these as they
often violate public policy with respect to
restraint of trade
Exceptions are sale of business and employee/
employer (trade secrets or using old contacts to
better yourself)

Terms of clause must be reasonable with

respect to time, geography and the activity
itself

Wrongful Dismissal
Either they didn t cause the breach of contract,
they didn t give enough time to train, and they
didn t give notice
The employer s defense includes: They were
dismissed because of cause, or when adequate
notice is given

Wrongful Dismissal
Even though the employer has given money instead
of notice, even though it is found after the fact,
they can still use to get that money back because of
a breach (Illegal activity, fraud, etc.)
Usually, the employer should keep a file in order to
avoid complications when there is a lawsuit
Building the document/evidence in the HR file

(cont)
Damages
For an employee to succeed in an action against her
employer for wrongful dismissal, they must show that
the employer has broken the contract by failing to give
employee notice they were entitled
As for adequate notice, the courts can believe that the
industry standard isn t enough notice, therefore they
give it themselves. How do they decide?
Task of court is to first determine the length of time
that should have been reasonable given circumstances
Employment Standards legislation is just a minimum

(cont)
Next, court reviews whether bad faith adds to the harm
caused, the court may award extra damages (Wallace v.
United Grain)
Finally, the court will consider any other damages
flowing directly from breach, such as the transportation
costs of finding a new job
How the courts will examine the case of the notice
period is by the Bardel factors listed above How
much money would they have gained if they ?
Note:
Party s injured by the breach of contract are expected to
mitigate their losses by taking other (similar) job opportunities
if possible
If they didn t mitigate, the amount that they would have
gained if they didn t get enough notice and received damages,
this amount can be reduced from the damages amount

Change in Employment Law IMPORTANT

Realized that some contracts became a personal element
Courts have realized that this can apply in employment as well
Wallace vs. United Grain Grower
He was promised security till retired He was convinced to take
the job and quit his old one
Shortly after he was hired, his new manager started to harass him
and it became intolerable and Mr. Wallace was fired It was done
in a humiliating and high-handed manner This was bad faith from
the employer
The Supreme Court of Canada stated that the employer acted in
bad faith, harshly, cruelly, or high-handedly and the employee has
suffered from terrible mental distress and additional award above
notice was granted
He didn t get much money but this opened the door
HUMAN ELEMENT MUST BE CONSIDERED NOW IN EMPLOYMENT
LAW

(cont)
Damages that are considered above and beyond notice
include:
Ruined reputation
Physical health is damaged
Expenses incurred when looking for another job

Equitable Remedies of Reinstatement

Symmetry fails but is permitted
Employee can obligate the employer to reinstate them
They allow this because of the impersonal nature of
corporations. They can just them in a different
department
To put people in the position in close and personal
relations in a small company, the courts will not allow
this and they will state that damages is sufficient

Employee Welfare Legislation

Employee Rights
Human Rights (Human Rights Code Ontario)
Can t ask questions during interviews about age, race, gender,
disability, religion, sexual orientation, marital status, family
status, or conviction when a pardon is granted
Have to hire people if they re capable of doing the work

Employee Welfare Legislation

Newest problem is the wrongful failure to hire when
you feel you were discriminated against in some form
when you really deserved to be hired
Pay Equity
Equal pay for equal work , prohibiting different levels of pay for
the same kind of work in the same establishment
Comparative value with respect to skills / training in addition to
the type of work set up a scorecard on different aspects of jobs
when jobs aren t identical but have equal value
Trying to amend between women and men, but the changes have
been really slow and there are still discrepancies

(cont)
Employment Equity
Employment equity act require employers with over 100 employees
and under the federal jurisdiction based on the Constitution Act to
obtain relevant information about personal characteristics of their
employees in order to determine under-representation of
designated groups, results in preferential hiring
They can pick someone over another if they require it to even out
the group

Mandatory Retirement
No longer any mandatory retirement in Ontario

Regulation of work conditions (Employment Standard Act)

General work conditions
All provinces now provide annual vacations with pay, stat
holidays
15 minute break, every 4 hrs
1 yr. Maternity/Paternity leave
Working hours for older people/ No child labour
Minimum wage

(cont)
Employment Insurance
Employment Insurance act requires employers and employees
to contribute to the government controlled fund that entitles
the employee to collect these funds they are unemployed
Does not apply to: Retired and self-employed people , people
working for their spouse or on strike
Employer must account for all contributions and send them to
the government

Occupational Health (Occupational Health and Safety

Act)
Proactive / preventative approach to preventing dangerous
situations
There are areas that must be considered in employment
situation and now they are talks if the industry or government
should control these standards
Firefighters have respiratory problems because of the fire
they inhale

(cont)
Worker s Compensation (Workplace Safety & Insurance Act)
No-fault system, keeps employer-employee relations
better after injury
All the employer must prove is that the injury was caused
by a contributory negligence for the employee and they
don t need to pay
If the employer can prove that another employee
caused the harm They need to make sure that they
are competent and did training
If there is a voluntary assumption of risk, then the
employer is off the hook Because they accepted
these risks when they took the job

(cont)
Worker s Compensation (cont)
Employers must contribute to the fund which is then used
to pay claims however, if it was willful misconduct on the
part of the employee, then the employee cannot claim
for these funds. However if they become severely disable
or die, the family members can still use even if there was
willful misconduct on the part of the employee

Chapter 24-26

Sole Proprietorship
Unincorporated business owned by a single
person
Subject to many regulations common to all
businesses.
Must have a license to carry on that type of
business
Must keep proper accounts and tax deductions
Must observe human rights and safety
regulations
76

Partnerships
Relation between two or more people
carrying on a business with a view to profit
Advantages:
Pool knowledge and skills
Physical and financial resources

Disadvantages:
Disagreements & incompetence
Lost time in arguments
77

The Partnership Act

Partnership rules under a body of law.
Developed over numerous cases supported
by general legal principles

78

Nature of a Partnership
Four basic elements to a partnership:
1) The partnership relationship
Consentual and contractual agreement
Without written agreement, found to be partners if
they have acted as such

2) Between persons
3) Business Nature
4) Profit Motive

79

Legal Nature of a Partnership

Legal Personality
Partnership has no independent existence
Adding/subtracting partners makes a new partnership

Continuing Relationship
Partnership assumed to continue
Can make express terms for adding/subtracting partner

Property
No partner owns the property, each have an interest

Creditors
Cannot distribute wealth until creditors are paid

80

Creation of a Partnership
Partnership Agreement
An agreement between persons to create a partnership usually
setting out the terms of the agreement
Partnership comes into existence by the agreement, explicit or
implied
Deals with:

Identity of partners
Name of firm
Nature of business
Duration of relationship
Method of termination
Etc

Limited partnership formed by registration

Do not have to register if partner names are in company title.
81

Liability of a Partner
Contractual liability
Agency Principles
Every partner is an agent of the firm & other partner

Joint Liability
If firm is sued, both partners are liable
If one partner is sued, can be indemnified by the firm and
can then sue co-partner personally

Apparent Partners
For partner to leave firm, must have novation (waiver) of all
other partners and must notify creditors.

Breach of Trust
Similar to vicarious liability, firm is liable for partners actions
82

Termination of a Partnership
Express Provision
Agreement includes a provision to terminate the
partnership

Implied Statutory Rules

Without express provision, Partnership law has:
Termination by notice or expiry
Termination on death of insolvency

83

Partnership Dissolution by Law

A court can dissolve a partnership if:
A partner is found to be mentally incompetent
A partner becomes permanently incapable of
performing his part of the agreement
A partner has been guilty of conduct likely to
prejudicially affect the business
A partner commits a breach of the agreement
It is just and equitable that the partnership be dissolved

84

Effects of Dissolution
Must sell off all assets in partnership, pay
creditors, then divide surplus between
partners.
Sequence of payments is:

Payment of the debts of the firm owed to non-partners

Repayment of loans made to the firm by partners
Repayment of capital contributed by partners
Sharing any surplus among the partners according to
their entitlement to share in profits
85

Joint Ventures
A business venture undertaken by two or
more parties (usually companies)
Comes in two forms:
Contractual Joint Venture
Does not create a separate legal entity

Equity Joint Venture

Create a jointly owned corporation owned by both
companies

Ability for recourse changes with each

86

Limited Partnerships
Covered under the Limited Partnership Act
A partnership in which some of the partners limit their
liability and amount of capital contributions
General Partner
One who has unlimited liability, and takes part in the day to day
functions of the business.

Limited Partner
Has limited liability to the amount invested in capital. Cannot take
part in the day to day functions.

If a limited partner interferes with the day to day

functions too frequently, he can be sued as a general
partner.

87

Limited Liability Partnerships

(LLP)
A partnership in which non negligent
partners are not personally liable for losses
caused by the negligence of a partner
Used primarily for professional organizations
Limits fiduciary duty of partners to the one
who breaches/creates the error
88

Chapter 27

Corporations
Corporations create some of their own rules
in their bylaws and articles.
Differ from other forms of companies on:
Identity
Liability
Transfer of Ownership
Participation in Management
Continued Existence
Separation of Ownership and Management
Fiduciary Duty
90

Corporations - Identity
Have a separate identity, recognized as a
legal person
Legal Person:
An entity recognized by law as having its own legal
personality and having rights and duties of its own.
Distinct from natural person (human being)

Corporation:
A legal person formed by incorporation
according to a prescribed legal procedure
91

Corporations - Liability
Liability of owners (shareholders) is limited
to the amount of their capital contribution
Large advantage to incorporation

92

Corporations Transfer of
Ownership
Allowed to sever ownership, unlike sole
proprietorship and partnerships
Ownership is transferred without issue by
simply selling shares

93

Corporations - Management
In partnerships, each partner can be an agent
for the company.
Corporation owners cannot contract for the
company
Officers/management contract for the company

Management in corporations is delegated to an

elected board of directors
Separation of ownership and management allows
shareholders to receive a return on their
investment without risking loss further than their
initial investment.
94

Corporations Continued
Existence
Partnerships, if a partner dies or leaves the
partnership is dissolved
Corporations exist on their own irrespective
of death or sale of an owners share

95

Corporations Fiduciary Duty

Shareholders owe no fiduciary duty to the
company
Company owes no fiduciary duty to the
shareholder.
However, managers must still act in good faith
to the shareholder

96

Consequences of Separate Legal

Personality
A corporation can only act through its human agent.
The question then arises whether the agent had authority
to contract.

Saloman vs Saloman
The one man company
States that employees assets have nothing to do with the
corporation
The agent is not liable for anything if acting in good faith

Exceptions are:
CBCA
Bankruptcy and Insolvency Act
Lifting the Corporate Veil

97

Exceptions to Limited Liability

Canadian Business Corporations Act
If a dividend payment is made without any profit,
shareholders are liable for other debts

Bankruptcy & Insolvency Act

Receiving payment from a property right before bankruptcy,
may have to repay amount paid to them.

Lifting the Corporate Veil

Sometimes courts will disregard incorporation to lift the
veil and get to assets.
Must:
Control the corporation
Exercise control to commit a wrong
Cause injury to plaintiff

98

Methods of Incorporation
Corporations Act
Letters patent

Ontario Business Corporations Act (OBCA)

Canada Business Corporations Act (CBCA)
Both state articles of incorporation and bylaws

99

Incorporation Process
CBCA/OBCA
Articles of Incorporation:

Corporation name/number
Head office
Share structure/class
Number of directors
Type of business

Corporation Bylaws:

Who the officers are/how the company runs

Qualify as a director
Calling a meeting
Notices
Quarum (# of people necessary to make a meeting legally functional)
Signing authority
Job description of officers
Dividend process
100

Types of Corporations
Public
Widely held, shares are traded by those of the
general public

Private
Closely held, shares cant be offered to the public
and there are no more than 50 shares.
All corporations start this way

Professional Corporation
Special type of corporation formed by members of
the professional community (doctors, lawyers, etc)
101

Raising Capital
Equity
Issue shares
Initially has par value at prospectus date

Preferred shares vs common shares

Dividends, share repurchases and restructuring

Debt
Bonds and debentures
Options and redemption dates

102

Chapters 31 and 32

E-Commerce
The delivery of information, products, services
and payments by telephone, computer or other
automated media.
Largest percentage of transactions are from
business to business
Not just the internet

E-Commerce Act (2000)

Rules on forming a contract

Consumer Protection Act

Same rules that protect online consumers

104

Establishing an Online Business

Negotiate a Web site development agreement
Negotiate a Web site hosting agreement
Usually with an internet service provider
Liability for interruption of service

Negotiate internet access agreement with the internet

access provider
Register a domain name (trademark issues)
Want security and reliability among service

105

E-Commerce Contracting
Issues
Acceptance
Capacity
Proof
Jurisdiction
Amending Contract

106

Accepting Online Contracts

Click Wrap vs Browse Wrap
Click Wrap: Having an I agree button for
terms and conditions
Browse Wrap: Having terms and conditions on a
separate page that the user needs to navigate
to

For exemption clauses, click wrap is easier

to prove case as it is more difficult for the
plaintiff to browse past.
107

Online Capacity & Proof Issues

Issues with proving capacity.
What if the person is under 18?
What if they did not mean to click the button?

Must prove requisite intent and capacity to

purchase an item. Which is very difficult to
do.
Proof that it was the plaintiff that
purchased is difficult to find.
108

Jurisdiction Issues
If the seller is in Ontario, but the buyer is in
Texas, where is the case heard?
Different laws from different areas mean
that each side may want the case to be
tried in a different area.
Court decides where the dispute will be heard
and which laws and rules will be used.

109

Amending an Online Contract

Kanitz v. Rogers Cable
Kanitz sued for poor service. Rogers countered
by saying that there was a term that forced
binding consumer arbitration.
Outcome was Ontario government placed a new
law saying binding consumer arbitration is a
void legal term.

Proves that amending an online contract is

difficult.
110

E-Commerce Tort Issues

Negligent Misrepresentation
Cannot misrepresent product in order to gain a sale.
Must have knowledge of product

Fraud
Intentional deceit is punishable in the same way as a
physical sale

Defamation
Defamation for inflammatory comments on your site
Possible defamation for linking to a site with
defamatory statements

Duty to protect clients information

Privacy

111

E-Commerce Intellectual
Property Issues
Copyright Infringement
Easier to prove as it is written and available online

Conversion of Intellectual Property

Covers patented information transferred to the internet

Trademark Infringement
Under the tort of passing off

Cybersquatting
Address or name.
Using someone elses trademark to gain popularity/hits
for your website.
I.E. If I used studentsofferingsupport.com to sell my
112
goods

Copyright
The right or ownership that exists in original works
of authorship in any medium of expression.
Includes literary, musical, etc
Protects expression, not the idea.
Allowed to build on an original idea, but protects
profiting off of the original idea.

Works for published or unpublished work, as long

as it is copyrighted.
Exists for the life of the author + 50 years
Remedy is damages ($$$) or injunction (halting
production)

113

Trademarks
Distinctive mark used to distinguish
products or service.
Can be a word, name, symbol, package, etc
Needs to be registered

Under the tort of passing off

Intentionally using another idea and making
yours similar to profit.
114

PIPEDA
Personal Information Protection and
Electronic Documents Act
Information includes any personal information
that is used for identification (name, address,
etc)
Imposes restrictions on the use and misuse of
personal information
Applies to every organization that collects
information.
115

PIPEDA II
Limits on collection and consent for information:
Collection:
Cannot collect more information than is needed.
Must be able to explain why you are collecting it

Consent
Need to have written consent for the collection and use of the
information you take

Use of information
Can only use information for the purpose it was collected

Disclosure
Must tell the person if you are sharing it with someone else

Security
Must keep the information safe
Must appoint person for policy, check accuracy and research breaches
116

Conducting International
Business
Three basic types, each has different laws
you need to follow
Export/import
Licensing
Direct Foreign Investment
Branch Plant
Foreign Subsidiary
Joint Venture

117

Export/Import Issues
Proper law of the contract
Intent, which laws are used

Common understanding of terminology

Commercially accepted standard

Currency
Price, payments, countertrade

Time
Dispute resolution
118

International Business Contract

Issues
Delivery Issues
Delivery (responsibility and risk)
EXW (ex works seller released at warehouse)
FOB (Free on board)
Buyer arranges own shipper and seller delivers to buyers carrier

CIF (cost, insurance, freight paid for)

DDP (delivery and duty paid)

119

International Business Contract

Issues II
Jurisdiction
Where the lawsuit is commenced and heard

Standing
Does the plaintiff have the right to start an action in the
jurisdiction (I.E. Canadian in the US?)

Choice of Law
Which law of the contract will be applied (Canadian vs US
law)

Enforcement
Collection, assets in the jurisdiction, recognition of foreign
judgements
Recognition is bringing claims and assets from other
jurisdictions to your own
120

Commercial Arbitration
Sometimes used to settle international business
disputes.
Voluntary and must be stated in original contract
Advantages:
Pick the arbitrator and panel (no home advantage)
Speed & cost are better
Agree on enforcement (both agree to honour
outcome)

Disadvantages:
No appeal (decision is final)
Bound by outcome of agreement

121

International Legislation
GATT
General Agreement on Tariffs and Trade
Gives member countries goods and services most favoured
nation status

NAFTA
North American Free Trade Association
Regional free trade area & dispute resolution

WTO
World Trade Organization
Dispute resolution process between countries. Appoints a
judicator to see if there was a breach in the agreement.
If a breach, the country that suffers can retaliate
122

That is the END!

Thank you so much for your support!
So study hard and good luck!

123