Business Law Exam Review

Explain how a business can analyze risks, assess risk management strategies, and use legal techniques to deal with those risks.

• Three step process: identifying, evaluating, and responding to risk

• Analyze/identify: 

  • Legal risks (breach of contract, liability in tort)

  • Property risks (damage, theft, loss)

  • Regulatory risks (violating statutes)

  • Operational risks (employees, agents, transactions) 

• Assess/evaluate: 

  • Likelihood of the risk occurring

  • Severity of the consequences

  • Prioritizes 

• Manage risks:

  • Avoidance → do not engage in the risky activity

  • Reduction → take steps to lower likelihood or impact

  • Transfer → shifts risk to another party

  • Acceptance → accepts risk when the cost of prevention is too high

• Legal techniques: 

  • Contracts: define rights and obligations clearly

    • Includes: limitation of liability clauses, indemnity clauses, clear terms to avoid disputes

  • Insurance: transfers financial risk

  • Business organization choice

    • Choosing a corporation limits personal liability

    • Partnerships and sole proprietorships expose owners to more risk

  • Compliance with law

    • Following statutes 

    • Avoids fines, lawsuits, and reputational harm

  • Agency control 

    • Clearly define actual authority

    • Avoid creating apparent authority unintentionally

Describe the law of God and what it means for our lives and businesses, and how we reconcile the law of God with the three sources of law above.

• Moral principles derived from Christian teaching, including: 

  • Honesty

  • Justice

  • Respect for others

  • Stewardship

  • Love of neighbour

• Governs intentions and character

• Acting with integrity, even when the law allows otherwise

• Treating employees, customers, and competitors fairly

• Avoiding exploitation, deception, and harm

• Pursuing profit ethically

• 3 sources of law: common law, statute law, and equity

• General harmony: 

  • Human law often reflects moral principles 

  • So there is usually an overlap between legal and moral duties

• When there is tension: a Christian approach is to follow the higher moral standard (law of God) and go beyond minimum legal compliance

• In business practice: 

  • Not exploiting loopholes

  • Being truthful in advertising (even if borderline claims are legal)

  • Treating stakeholders justify (employees, customers, communities)

• Key principle: legal compliance = minimum standard but law of God = higher ethical standard

Explain the importance of the court hierarchy.

• Court hierarchy refers to the structured system of courts organized by levels of authority and jurisdiction 

• Appeal process: lower court decisions can be reviewed by higher courts, which helps correct errors and ensures fairness in the legal system

• Consistency and predictability: higher court decisions are binding on lower courts, which promotes uniform interpretation and application of the law

• Efficient case management: different levels of courts handle different types of cases, which improves efficiency

• Development of law: appellate courts create precedents that guide future decisions and allow the law to evolve over time

• Ensures fairness, consistency, and an orderly development of legal principles

Discuss types of alternative dispute resolution.

• ADR refers to the methods of resolving disputes outside of the traditional court system

• It’s generally faster, less expensive, and more flexible than litigation

• Negotiation

  • The parties communicate directly (or through lawyers) to reach a voluntary agreement

  • Informal and flexible 

  • No third-party decision-maker

• Mediation

  • A neutral third party (mediator) helps the parties reach a mutually acceptable settlement

  • Mediator does not impose a decision

  • Focus on cooperation and compromise

• Arbitration

  • A neutral third party (arbitrator) hears both sides and makes a binding decision

  • More formal than mediation

  • Similar to a private court process

• ADR is important because it: 

  • Reduces costs and delays

  • Preserves business relationships

  • Provides more control and confidentiality for the parties 

• Offers efficient and flexible alternatives to litigation while still achieving legally enforceable outcomes (especially in arbitration)

Explain how torts are different from crimes and contracts and identify broad categories of torts.

• A crime is a wrong against society prosecuted by the state, often resulting in fines or imprisonment

• A tort is a wrong against in individual, where the injured party sues for compensation (damages)

• A contract involves obligations that arise from an agreement between parties

• A tort arises from a breach of duty imposed by law, not by agreement

• Intentional torts: when a person deliberately acts in a way that causes harm

• Negligence: occurs when a person fails to meet the standard of care expected, causing harm to another

• Strict liability torts: liability is imposed without proof of fault or intent

Explain how liability insurance and vicarious liability operate within tort law.

• Liability insurance:

  • A type of third-party insurance that protects a person or business against claims made by others for injury or damage

  • The insurer agrees to defend the claim and pay damages (up to policy limits) if the insured is found liable

  • It is an important risk management tool, since tort liability can be financially significant 

• Vicarious liability: 

  • One party is held liable for the torts of another

  • Most commonly applies to employers and employees

  • An employer is liable for torts committed by an employee in the course of employment

  • The employee must have been acting within their assigned duties

  • The employer does not need to be personally at fault

  • Justified on the basis that the employer controls the work and benefits from it

• Liability insurance helps manage the financial risk of tort liability 

• Vicarious liability extends responsibility to employers for harms caused by employees

Describe the business torts: conspiracy, intimidation, interference with contractual relations, and the unlawful means tort.

• Protect businesses from intentional economic harm caused by others

• Conspiracy: 

  • Occurs when two or more parties act together to harm another business

  • May involve lawful or unlawful acts

  • Key element: predominant purpose to cause harm

• Intimidation: 

  • Involves threatening an unlawful act to force someone to act in a certain way, causing loss to a business

• Interference with contractual relations

  • Happens when a third party knowingly induces one party to breach a contract with another

  • Requires knowledge of the contract and intentional interference

• Unlawful means tort

  • Occurs when a defendant uses unlawful conduct against a third party that results in economic loss to the plaintiff

  • Focus is on the use of illegal acts that indirectly harm a business

Explain how torts dealing with false statements—deceit, defamation, and injurious falsehood—affect businesses.

• Involve false statements that cause financial or reputational harm

• Deceit (fraudulent misrepresentation)

  • A false statement made knowingly or recklessly with intent to mislead, causing the plaintiff to suffer loss

  • Businesses may be liable if they intentionally mislead customers or partners

• Defamation

  • A false statement that harms a person’s or business’s reputation

  • Includes libel (written) and slander (spoken)

  • Businesses can sue or be sued if reputation is damaged

• Injurious falsehood

  • False statements made about a business's products or services that cause economic loss

  • Focus is on financial harm rather than personal reputation

Explain how torts related to land—occupier’s liability, nuisance, and the rule in Rylands v Fletcher—affect businesses.

• Responsibility for land and activities conducted on it

• Occupier’s liability

  • Businesses that occupy or control property have a duty to take reasonable care to ensure visitors are safe

  • Applies to customers, clients, and others entering the premises

• Nuisance

  • Occurs when a business’s use of land unreasonably interferes with another person’s use or enjoyment of their land

• Rylands v Fletcher rule

  • Imposes strict liability when a person brings something dangerous onto their land that escapes and causes damage

  • No need to prove negligence

  • Businesses engaging in hazardous activities face higher risk

• Important for businesses because they create liability for economic harm, false statements, and land-related risks, making risk management and legal compliance essential 

Describe the nature and function of a duty of care.

• A duty of care is a legal obligation requiring a person to avoid conduct that creates a foreseeable risk of harm to others

• Arises where there is a sufficiently close relationship (proximity) between the parties

• Harm must be reasonably foreseeable

• Courts may also consider policy factors to determine whether a duty should be recognized

• Function: 

  • Acts as a threshold requirement in negligence

  • Limits liability by determining who is owed legal protection

  • Ensures people and businesses take reasonable precautions to avoid harming others

Describe the standard of care and explain how it applies in cases involving professional services or products liability.

• The standard of care is the level of care that a reasonable person would exercise in similar circumstances

  • If the defendant falls below this standard, they are in breach of the duty of care

• Professional services

  • Professionals are held to the standard of a reasonable professional in that field

  • Must meet accepted practices and competence within their profession

• Products liability

  • Manufacturers, distributors, and retailers owe a duty to ensure products are reasonably safe for use

  • Standard includes:

    • Proper design

    • Careful manufacturing

    • Adequate warnings and instructions

• Failure to meet any of these areas may constitute a breach of the standard of care

Explain how courts assess causation in negligence cases.

• Causation determines whether the defendant’s breach actually caused the plaintiff’s harm

• Primary test: “but for” test

  • The harm would not have occurred but for the defendant’s negligence

• Courts may also consider:

  • Whether the harm was too remote

  • Whether there were intervening events (novus actus interveniens) that break the chain of causation

• The plaintiff must show that the defendant’s conduct was a significant contributing cause of the injury

Identify and explain defences available for a claim of negligence.

• Contributory negligence

  • The plaintiff contributed to their own harm

  • Damages are reduced proportionally

• Voluntary assumption of risk (volenti non fit injuria)

  • The plaintiff knowingly and willingly accepted the risk

  • May result in complete defence

• Illegality (ex turpi causa)

  • The plaintiff was engaged in illegal conduct related to the harm

  • May bar recovery

• Inevitable accident

  • The harm could not have been avoided even with reasonable care

Explain the general nature of a contract and identify the essential elements of an enforceable contract.

• A contract is a legally enforceable agreement between two or more parties that creates binding obligations

• Essential elements of an enforceable contract:

  • Offer → a clear proposal to enter into an agreement

  • Acceptance → an unqualified agreement to the terms of the offer

  • Consideration → something of value exchanged between the parties

  • Intention to create legal relations → parties must intend the agreement to be legally binding

  • Capacity → parties must have legal ability to contract

  • Legality → the contract’s purpose must be lawful

• Without these elements, a contract may be void or unenforceable

Describe intention to create legal relations and explain how the courts decide whether the parties intended to create legal relations.

• Intention to create legal relations means that the parties intended their agreement to be legally binding, not merely social or informal

• Courts determine intention using an objective test

  • What would a reasonable person conclude from the parties’ words and conduct?

• General presumptions: 

  • Commercial agreements → presumed to have legal intent

  • Social or domestic agreements → presumed not to have legal intent

• These presumptions can be rebutted with evidence showing the parties did or did not intend legal consequences 

Define “offer” and explain how offers operate in contract creation.

• An offer is a clear and definite statement of willingness to be bound on specific terms, made with the intention that it will become binding upon acceptance

• How offers operate: 

  • Must be communicated to the offeree

  • Must be certain and complete in its essential terms

  • Can be made to a specific person, group, or the public

  • Distinguished from: 

    • Invitations to treat (e.g. advertisements, store displays) which are not offers

• Termination of an offer can occur by: 

  • Revocation (withdrawal before acceptance)

  • Rejection or counteroffer

  • Lapse of time

  • Death of incapacity of a party

Define “acceptance” and explain how acceptances operate in contract creation.

• Acceptance is the final and unqualified agreement to the terms of an offer

• How acceptance operates: 

  • Must mirror the terms of the offer (no changes)

  • Must be communicated to the offeror (with some exceptions, e.g., unilateral contracts)

  • Can be expressed through words or conduct

• Key rules: 

  • A counteroffer is not acceptance; it rejects the original offer

  • Acceptance is generally effective when received, except in some cases (e.g., mail rules)

  • Once acceptance is validly made, a binding contract is formed

Explain the nature of consideration and its role in contract formation.

• Consideration is something of value that is exchanged between the parties to a contract

  • It may be a benefit to one party or a detriment to the other

  • Can include money, goods, services, or a promise to do (or not do) something

• Role in contract formation: 

  • Consideration is essential for a binding contract (in common law)

  • It distinguishes enforceable agreements from mere promises or gifts 

  • Each party must provide consideration → this is called mutual exchange

• Key principles: 

  • Consideration must be sufficient but not necessarily adequate (courts do not assess fairness of value)

  • Past consideration is not valid (something done before the promise cannot count)

  • Performing an existing legal duty may not be valid consideration unless something extra is given

Explain the importance of the doctrine of privity and identify ways to work around the doctrine.

• The doctrine of privity states that only parties to a contact have rights and obligations under it

• Importance: 

  • Prevents third parties from enforcing or being bound by contracts they were not a part of

  • Provides certainty about who can sue or be sued under a contract

• Ways to work around privity

  • Assignment: a party may transfer contractual rights to a third part

  • Agency: an agent can enter contracts on behalf of a principal, allowing the principal to enforce the contract

  • Trusts: a contract may be structured so that one party holds benefits in trust for a third party

  • Statutory exceptions: some laws allow third parties to enforce certain rights (e.g. insurance contexts)

  • Collateral contracts: a separate contract may exist between one of the original parties and the third party 

• Consideration ensures there is a bargained-for exchange, while privity limits enforcement to the contracting parties, though several legal mechanisms allow this parties to benefit directly

Explain the nature and effects of pre-contractual misrepresentations.

• A misrepresentation is a false statement of fact made by one party that induces another party to enter into a contract

• Nature: 

  • Must be a statement of fact (not opinion or sales puffery, unless expertise is involved)

  • Must be false and relied upon by the other party

• Types and effects: 

  • Fraudulent misrepresentation (deceit): made knowingly or recklessly → allows rescission and damages in tort

  • Negligent misrepresentation: made carelessly → allows rescission and damages

  • Innocent misrepresentation: made without fault → allows rescission, but typically not damages

• Remedies: 

  • Rescission (contract is set aside and parties returned to original positions)

  • Damages (in some cases)

Explain how contractual terms arise and how they are interpreted.

• Contractual terms are the promises and obligations that form the content of a contract

• How terms arise: 

  • Express terms: clearly stated in words (oral or written)

  • Implied terms: interested by courts, statutes, custom, or prior dealings

• Interpretation of terms 

  • Courts use an objective approach → what a reasonable person would understand

  • Consider the plain meaning of words, context, and purpose of the agreement

  • Ambiguities may be interpreted against the party who drafted the contract (contra proferentem rule)

Identify types of boilerplate clauses and explain their significance.

• Boilerplate clauses are standardized provisions commonly included in contracts to address recurring legal issues

• Common types: 

  • Exclusion or limitation of liability clauses → limit or exclude responsibility for certain losses

  • Entire agreement clauses → state that the written contract represents the complete agreement, excluding prior statements

  • Termination clauses → set out how and when the contract can be ended

  • Force majeure clauses → excuse performance due to unforeseeable events

  • Choice of law and forum clauses → specify which laws apply and where disputes will be resolved

• Significance: 

  • Increase certainty and predictability 

  • Help manage risk and liability

  • Reduce disputes over interpretation or external statements

Identify parties who lack contractual incapacity, in whole or in part.

• Minors (under age of majority)

  • Contracts are generally voidable at the minor’s option

  • Exception: contracts for necessities are enforceable

• Persons with mental incapacity

  • Contract may be voidable if the person did not understand the nature and consequences of the agreement and the other party knew (or ought to have known)

• Intoxicated persons

  • Similar to mental incapacity if they cannot understand the transaction and the other party is aware

• Corporations

  • Capacity may be limited by incorporating documents or statute (though modern law gives broad capacity)

Explain types of unfair bargaining that may entitle an innocent party to rescind the contract.

• Unfair bargaining may justify rescission

• Duress → illegitimate pressure that forces a party to enter into a contract

• Undue influence → abuse of a special relationship of trust or power to influence another party

• Unconscionability → occurs when there is inequality of bargaining power and a substantially unfair bargain; courts may set aside such agreements

Explain types of contractual mistakes and their associated remedies.

• A mistake is an incorrect belief about a fundamental aspect of a contract

• Common mistake

  • Both parties share the same misunderstanding

  • May render contract void if it goes to the root of the agreement

• Mutual mistake

  • Parties misunderstand each other (cross-purposes)

  • May prevent formation of a valid contract

• Unilateral mistake

  • One party is mistaken and the other knows or should know

  • Contract may be voidable

• Non est factum

  • A person signs a document fundamentally different from what they believed

  • Contract may be void (applies narrowly)

• Remedies: 

  • Rescission (set aside contract)

  • Rectification (correct written document to reflect true agreement)

Explain the rules that govern contracts that must be evidenced in writing, the nature of the writing requirement, and the consequences of non-compliance.

• Some contracts must be in writing or evidenced in writing 

• Nature of the requirement:

  • There must be written evidence of the essential terms

  • Must be signed by the party to be charged

• Purpose:

  • Prevent fraud and misunderstandings

  • Provide reliable evidence of the agreement

• Consequences of non-compliance: 

  • The contract may be unenforceable (not void, but cannot be enforced in court)

  • Exceptions may apply (e.g. part performance in land transactions)

Define “contractual illegality” and explain how Canadian courts have reformatted traditional rules.

• Contractual illegality occurs when a contract involves illegal purposes or activities or violates a statute

• Traditional rule: 

  • Illegal contracts are void and unenforceable

  • Courts will not assist a party involved in illegal conduct

• Modern Canadian approach:

  • Courts take a more flexible, policy-based approach

  • Consider factors such as: 

    • The purpose of the law that was violated

    • Whether denying enforcement would be fair and proportionate

    • The conduct of the parties

• This approach allows courts to avoid overly harsh results and reach outcomes that better reflect justice and public policy

Explain how a contract can be brought to an end through performance, including payment of the price.

• A contract is discharged by performance when both parties have fully carried out their obligations

• This includes complete performance of all terms

• Payment of the agreed price is a key form of performance

• Key points: 

  • Performance must generally be exact and complete

  • Substantial performance may be sufficient in some cases, with a deduction for defects

  • Payment must be made in the agreed manner and time

• Once performance is complete, the contract is terminated and no further obligations remain

Explain how parties can bring a contract to an end through agreement.

• Parties may be mutually agree to end a contract

  • Mutual rescission: both parties agree to terminate the contract and release each other from obligations

  • Accord and satisfaction: one party agrees to accept something different (usually less) than originally promised, and the other provides it

    • Accord = agreement

    • Satisfaction = performance of that agreement

  • Novation: a new contract replaces the old one, possibly involving a new party → original contract is discharged 

Explain how a contract can be brought to an end through operation of law.

• A contract may be discharged automatically by law in certain situations

• Frustration: an unforeseen event makes performance impossible or radically different from what was agreed

• Limitation periods: if a party waits too long to sue, the right to enforce the contract is barred by statute

• Bankruptcy or insolvency: may affect contractual obligations and lead to discharge

• Merger: when a lesser right is absorbed into a greater right (e.g. contractual obligation replaced by a judgement)

Differentiate among conditions, warranties, and intermediate terms.

• These are types of contractual terms, classified by their importance: 

• Conditions: 

  • Essential terms

  • Breach allows the innocent party to terminate (discharge) the contract and claim damages

• Warranties: 

  • Minor terms

  • Breach allows for damages only, not termination

• Intermediate (innominate) terms: 

  • Fall between conditions and warranties

  • Remedy depends on the seriousness of the breach

  • Serious breach → termination and damages

  • Minor breach → damages only 

Explain when a plaintiff is entitled to discharge a contract for breach.

• A plaintiff may discharge (terminate) a contract when there is a serious breach

  • Breach of a condition

  • Repudiation: one party indicates they will not perform their obligations

  • Fundamental breach of an intermediate term: breach deprives the innocent party of substantially the whole benefit of the contract

• Effect of the discharge:

  • The innocent party is released from future obligations

  • They may also claim damages for losses suffered

Define “damages” and explain how they are calculated following a breach.

• Damages are a monetary award intended to compensate the innocent party for losses caused by a breach of contract

• Purpose: to put the plaintiff in the position they would have been in if the contract had been properly performed (expectation interest)

• Calculation principles: 

  • Expectation damages: primary measure → value of what was promised minus what was received 

  • Reliance damages: compensate for expenses incurred in reliance on the contract

  • Consequential damages: cover additional losses that were reasonably foreseeable at the time of the contracting

• Limits on damages: 

  • Remoteness: only losses that were reasonably foreseeable are recoverable

  • Mitigation: plaintiff must take reasonable steps to reduce their losses

  • Certainty: losses must be provable and not speculative 

Explain how exclusion clauses operate and when they will not be enforced.

• Exclusion clauses are contractual terms that limit or exclude liability for certain types of loss or breach

• How they operate: 

  • Must be clearly incorporated into the contract

  • Must be clearly worded to cover the type of liability in question

  • Courts interpret them strictly, often against the party relying on them (contra proferentem)

• When they will not be enforced

  • Improper incorporation: clause was not adequately brought to the other party’s attention

  • Ambiguity: unclear wording will be interpreted against the party relying on it

  • Fundamental breach (modern approach): courts may refuse enforcement if it would be unfair or unreasonable, though this is now treated as an issue of interpretation rather than an automatic rule 

  • Unconscionability: significant inequality of bargaining power and unfair terms

  • Public policy: clause attempts to exclude liability in a way that is contrary to law or statute 

Differentiate among co-ownership, joint tenancy, and condominium ownership.

• Co-ownership: (Tenants in Common)

  • Co-owners each hold an undivided interest in the same property, but their shares do not have to be equal

  • Each co-owner can sell or transfer their interest independently, and when one dies, their share passes through their will or intestacy rules, not automatically to the others

• Joint Tenancy:

  • Joint tenants also hold an undivided interest in the whole property, but they key feature is the right of survivorship

  • When the one joint tenant dies, their interest automatically passes to the surviving joint tenant(s)

  • This form is commonly used by married couples.

• Condominium Ownership: 

  • Condominium ownership combines individual ownership and shared ownership

  • An owner has exclusive ownership of their unit, along with a share interest in common areas 

  • These shared areas are collectively owned with other unit holders

Identify different types of leases and leasehold agreements.

• A lease is a contractual property interest that gives a tenant exclusive possession of land for a period of time

• Types of tenancies (leased):

  • Periodic tenancy: 

    • Continues for a fixed period

    • Automatically renews unless proper notice of termination is given

  • Fixed-term tenancy: 

    • Runs for a set period

    • End automatically at the end of the term unless renewed

  • Tenancy at will: 

    • Has no fixed duration

    • Can be terminated at any time by either party

  • Tenancy at sufferance: 

    • Occurs when a tenant remains in possession after the lease has expired without the landlord’s consent

• Assignments and subleases:

  • Assignment: 

    • Tenant transferred entire lease interest to a third party

    • Unusually requires landlord’s consent

    • Original tenant may still be liable unless released

  • Sublease:

    • Tenant transfers part of the lease term to another person

    • Original tenant becomes a landlord to the subtenant

    • Still remains bound to the original lease

• Commercial lease features (key points):

  • Tenant pays rent and maintains premises in a “tenant-like manner”

  • Landlord maintains structure and common areas

  • Landlord must provide quiet possession

  • Remedies for breach include damages, eviction, or distress

Differentiate between a registry system and a land titles system.

• Registry:

  • Ownership is determined by searching the chain of title (typically 40 years back)

  • Purchaser’s lawyer must verify that ownership was validly transferred at each step

  • No guarantee of title: risk remains of something was missed

• Land Titles: 

  • Ownership is confirmed through a government-issued certificate of title

  • The system provides a virtual guarantee of ownership and listed interests

  • Less risk and no need to investigate historical chain of title

Identify risk management issues that arise in the purchase of land.

• A purchaser must actively investigate because of caveat emptor (buyer beware)

• Key risks include: 

  • Defects in title → solved by title search or Land Titles system

  • Unpaid property taxes → buyer may become responsible

  • Writs of execution (liens) → check Sheriff’s records

  • Easements or utility rights → inspect property and contact utilities

  • Adverse possession or prescriptive rights → look for signs of occupation/use

  • Misdescription of property → obtain a survey

  • Physical defects (e.g. cracked foundation) → conduct building inspection

  • Environmental hazards → use an environmental audit

  • Overpaying → obtain multiple appraisals

  • Tenants or occupiers on land → inspect before purchase

• Important principle: 

  • Vendors generally do not have to disclose defects

  • Exceptions: must disclose latent defects that are dangerous or make property unfit, and cannot actively conceal defects

Describe a mortgage, including key terms and remedies for default.

• A mortgage is a security interest in land used to secure repayment of a loan

• Mortgagor = borrower

• Mortgagee = lender

• Registry System: lender receives title, with obligation to return it when loan is repaid

• Land Titles System: lender receives a charge on title, removed when repaid 

• Key terms: 

  • Obligation to repay the loan

  • Acceleration clause: entire loan becomes due if a payment is missed

  • Prepayment privilege: allows early repayment (common in open mortgages)

  • Taxes: mortgagor must pay (often collected by lender)

  • Insurance: mortgagor must insure property and name lender as beneficiary

• Remedies for default: 

  • If the borrower defaults, the lender may: 

  • Power of sale → sell the property and use proceeds to repay the debt (most common in Ontario)

  • Foreclosure: lender takes ownership of the property after a court process

  • Possession: take control of the property

  • Action on the debt: sue borrower personally for unpaid amount

• Practical takeaways: 

  • Borrow within your means

  • Larger down payments reduce risk

  • Shorter amortization = less total interest

Identify how personal property rights can be acquired and lost.

• Personal property = movable property (can be tangible or intangible; e.g. patents, copyrights)

• Ways to acquire personal property: 

  • Purchase

  • Gift

  • Possession of ownerless property

  • Finding property → rights are good against everyone except the true owner

    • Keeping known property can lead to tort of conversion

  • Creation → e.g. producing art, music, inventions

• Ways to lose personal property:

  • Sale

  • Gift

  • Abandonment → e.g. leaving items on the curb

  • Fixture → attaching a chattel to land/building (exception: tenants may remove fixtures if no damage is caused)

Explain the nature of bailment and the rules that determine when a bailor or bailee may be held liable.

• Nature of bailment: 

  • A bailment arises when: 

  • A bailor voluntarily gives possession (not ownership) of property

  • To a bailee

  • For a specific purpose

  • With the expectation that the property will be returned

  • Examples: storage, repairs, rental cars, consignment sales, borrowing items

• Duties and liabilities: 

  • Bailor’s duties: 

    • Must use reasonable care to provide safe and suitable goods

    • Must pay for services (if applicable)

    • Bailee may have a lien or right of sale if not paid

  • Bailee’s duties:

    • Must return the property in good condition

    • Must meet the standard of reasonable care, based on: 

      • Terms of contract, custom, and statute

      • Who benefits from the bailment:

        • Sole benefit of bailee → higher standard of care

        • Gratuitous bailment → higher care than paid situations

      • Value and nature of the property

    • May be liable for: 

      • Negligence (loss or damage)

      • Conversion (e.g. unauthorized sub-bailment)

• Bailment vs license

  • Bailment: possession/control is transferred, duty of care exists

  • License: only permission to use property, no duty of care

• Example: parking lots

  • If keys are handed over → likely bailment

  • If driver keeps control → likely license 

• Key takeaway: liability depends on who had control and whether they met the required standard of care in the circumstances

Explain the competing interests that intellectual property laws seek to balance.

• Intellectual property (IP) law balances: 

  • Creators’ interests: 

    • Provides time-limited monopolies

    • Allows creators to profit from their work (sell, license, reproduce)

    • Encourages innovation and creativity

  • Public interests: 

    • Requires creators to share their work with the public

    • Ensures ideas eventually enter the public domain 

    • Prevents permanents monopolies and promotes access and competition

• IP law creates artificial scarcity to incentivize creation, while ensuring long-term public benefit

Outline the scope of copyright protection and how copyright law protects against infringement.

• Scope: 

  • Protects original creative works, including: 

    • Literary, dramatic, musical, and artistic works

    • Software and other intellectual creations

  • Governed by legislation (e.g. Copyright Act)

  • Protection lasts for life of the author +70 years

  • Registration is not required, but helpful

• Rights provided:

  • Economic rights: 

    • Reproduce, sell, adapt, and license the work

  • Moral rights:

    • Attribution (right to be credited)

    • Integrity (prevent harmful distortion)

• Infringement:

  • Occurs when someone uses all or a substantial part of a work without authorization or legal justification

  • Defence → fair dealing

    • Permits limited use for purposes such as: research, private study, news reporting

  • Protection mechanism:

    • Copyright law prohibits unauthorized use

    • Remedies include:

      • Damages

      • Injunctions

      • Accounting of profits

      • Delivery up (seizure of infringing goods)

Outline the protection offered under trademark law and determine whether an action for trademark infringement or passing off may succeed.

• Trademark protection:

  • A trademark is a word, symbol, or design used to distinguish goods/services in the marketplace

  • Governed by statute (Trademarks Act) and common law

• Types of protection:

  • Registered trademark: 

    • Protected for 15 years (renewable indefinitely)

    • Strong, nationwide protection

  • Unregistered trademark:

    • Protected under common law (passing off)

    • Limited to geographic area where reputation exists

• Trademark infringement (registered marks):

  • Occurs when someone uses a mark that is confusingly similar to a registered trademark

• Passing off (unregistered marks):

  • A claim succeeds if the plaintiff proves

    • Goodwill in the mark

    • Misrepresentation by the defendant (confusing consumers)

    • Damage to the plaintiff’s business

  • Key determinant: the central issue is likelihood of confusion in the marketplace

Outline the business problems arising from the domain name system.

• The domain name system creates several legal and business risks

  • Cybersquatting: someone registers a domain name that is identical or similar to a business’s trademark to profit from it

  • Confusing similarity: domain names that are slightly altered versions of trademarks can mislead consumers and divert traffic

  • Bad faith registration: domains may be registered to compete unfairly or block legitimate businesses

  • Delay in registration: if a business does not register key domain names early (e.g. .com, .ca), others may take them

• Dispute resolution: 

  • Businesses can use systems like the CIRA Domain Name Dispute Resolution Policy (CDRP)

  • To succeed, the complainant must prove: 

    • The domain name is confusingly similar to their mark

    • It was registered in bad faith

    • The registrant has no legitimate interest

• Risk management: 

  • Register key trademarks and variations early

  • Secure both generic (.com) and country-code (.ca) domains

Explain the key components of terms of use and privacy policy.

• Terms of use: 

  • Structured as a unilateral offer accepted by using the website

  • Should include: 

    • Clear acceptance mechanism

    • User obligations (rules for using the site)

    • Limitations of liability 

    • Restrictions on misuse (e.g. illegal activity, infringement)

  • Must ensure that users explicitly agree, so contract is enforceable

• Privacy Policy (PIPEDA compliance):

  • Businesses must:

  • Obtain consent to collect, use, or disclose personal information

  • Use information only for the stated purpose

  • Allow individuals to access and correct their data

  • Follow a reasonable person standard

  • Must have a clear, accessible privacy policy

  • Subject to oversight by the Privacy Commissioner of Canada

Identify the benefits and risks of allowing user-generated content.

• Benefits: 

  • Engages customers and builds community

  • Provides free marketing and content creation

  • Encourages brand interaction and visibility

• Risks:

  • Loss of control over brand identity

  • Legal liability for: 

    • Defamation

    • Copyright infringement

    • False or misleading advertising

  • Difficulty monitoring content due to volume

• Risk management strategies:

  • Moderate content actively

  • Require users to: 

    • Warrant ownership of content

    • Indemnify the business

  • Provide clear content guidelines

  • Remove unlawful or inappropriate content promptly

• Even if content is user-generated, a business may still face liability if it encourages or facilitates harmful content

Explain how an agency relationship can be created and terminated.

• Creation of agency: an agency relationship exists when an agent act on behalf of a principal for specific purpose

• It can be created by:

  • Agreement (express or implied) between principal and agent

  • Conduct showing intention to create the relationship

  • Appointment to a position that normally carries authority (implied agency)

  • Ratification: principal approves a contract entered into without authority

    • Principal approves a contract entered into without authority

    • Must be clear and within a reasonable time

    • Principal becomes bound to the entire contract

• Termination of agency: 

  • An agency relationship can end by: 

    • Notice by either party

    • Expiry of a fixed time period

    • Completion or impossibility of the task

    • Loss of capacity (e.g. mental incapacity)

Distinguish between actual and apparent authority of agents to enter into contracts on behalf of principals.

• Actual: authority the agent actually has from the principal

• Created by:

  • Express delegation

  • Implied authority based on role or circumstances

  • Position-based authority (e.g. manager of sales)

• Apparent: authority that third parties reasonably believe the agent has, based on the principal’s conduct

• Created by: 

  • Principal’s representations or actions

  • Allowing the agent to act as if they have authority

  • Appointing the agent to a position that normally carries authority

• Key differences: 

  • Actual → relationship between principal and agent

  • Apparent → protects third parties’ reasonable reliance

Identify the obligations that a principal owes to their agent.

• A principal must: 

  • Provide reasonable remuneration (pay for services)

  • Indemnify the agent for reasonable expenses incurred while acting on the principal’s behalf

Explain how a principal can manage the risk of being held liable for the actions of their agents.

• A principal can reduce liability risk by: 

  • Managing actual authority

    • Use clear agency agreements

    • Limit and define the agent’s authority explicitly

  • Manage apparent authority

    • Carefully control representations to third parties

    • Avoid creating the impression than an agent has more authority than intended

    • Notify third parties when an agent’s authority is terminated

  • Supervision and selection 

    • Carefully select and train agents

    • Monitor their conduct and hold them accountable

  • Understand liability risks

    • Principal may be vicariously liable for torts committed by employees in course of employment

    • Principal is liable for fraud or negligent misrepresentation if agent acts within actual or apparent authority

• Liability often turns on authority and perception—what the agent was allowed to do and what third parties were led to believe

Describe strategies for managing the risk of being a partner.

• Partnerships carry significant risks (e.g. personal liability for debts and torts, and liability for partners’ actions)

• These risks can be managed through:

• Use a detailed partnership agreement, clearly defining: 

  • Capital contributions

  • Profit-sharing arrangements

  • Roles and responsibilities

  • Decision-making processes

  • Exit and dissolution

• Helps avoid disputes and uncertainty 

• Choose the right partnership structure

  • Consider a LLP, which protects partners from liability for negligence of other partners

  • Or consider incorporation to limit liability

• Carefully select partners

  • Since each partner is an agent of the partnership, you can be bound by their actions

  • Choose partners who are trustworthy, competent, and aligned in goals

• Limit authority where possible

  • Define and restrict partners’ authority in the partnership agreement

  • Reduces risk of being bound by unauthorized contracts

• Maintain insurance coverage

  • Obtain liability insurance to protect against

    • Negligence claims

    • Business-related risks

• Avoid “holding out” 

  • Do not represent yourself as a partner if you are not one

  • Otherwise, you may be liable as if you were a partner

• Monitor and participate in the business

  • Stay informed and involved in operations

  • Helps detect and prevent risky or negligent conduct

• Because partners have joint liability and agency powers, risk management focuses on clear agreements, careful partner selection, and limiting exposure to others’ actions

Explain the division of power among shareholders, directors, and officers to manage and control the corporation.

• Shareholders:

  • Owners of the corporation

  • Key powers: 

    • Elect directors

    • Appoint auditors

    • Vote on major corporate matters

  • Do not manage day-to-day operations

• Directors: 

  • Manage or supervise management of the corporation

  • Set overall strategy and policy

  • Delegate authority to officers

• Officers: (e.g. CEO, CFO)

  • Handle day-to-day operations

  • Exercise authority delegated by directors

• Ownership (shareholders) is separate from control and management (directors and officers)

Explain whether and how the Canada Business Corporations Act includes corporate social responsibility as part of the fiduciary duty.

• Under s.122(1)(a) of the Canada Business Corporations act (CBCA):

  • Directors and officers must act honestly and in good faith with a view to the best interests of the corporation

• The law allows (but does not require) consideration of:

  • Employees

  • Customers

  • Communities

  • Environment

• 2019 amendments confirm that directors may consider stakeholder interests when determining the corporation’s best interests

• Permitted within fiduciary duty, but not mandatory

• Directs have discretion, as long as decisions are made in good faith and with reasonable care

Describe strategies for managing the risk of being a director or officer.

• Exercise diligence

  • Attend meetings

  • Stay informed

  • Review materials carefully

  • Conduct risk assessments

• Rely on the business judgement rule

  • Courts defer decisions if:

  • Decision-making process was reasonable

  • Decision falls within a range of reasonable alternatives

• Avoid conflicts of interest:

  • Disclose conflicts

  • Do not take corporate opportunities

  • Do not compete with the corporation

• Ensure legal compliance

  • Monitor obligations (e.g. wages, taxes, environmental laws)

  • Avoid personal liability for regulatory breaches

• Seek indemnification

  • Corporation may indemnify directors/officers if they acted honestly, in good faith, and lawfully

• Be aware of personal liability risks

  • Unpaid wages (up to 6 months)

  • Improper dividends or share purchases

  • Torts or statutory violations

Explain when a corporation will be liable for contracts and torts.

• A corporation is liable for contracts when:

  • An agent acts with:

    • Actual authority, or

    • Apparent authority, or

    • Is held out as having authority

  • Indoor management rule:

    • Corporation cannot rely on internal rules (e.g. bylaws) to avoid liability if third party reasonably relied on the agent’s authority

• Direct liability for torts: when the directing mind (senior decision-maker) commits the tort

• Vicarious liability for torts: for torts committed by employees in the course of employment

• Corporate liability depends on authority, role, and scope of employment, with broad exposure through both direct and vicarious liability

Explain how creditors can manage the risk of default by people who have obligations to them.

• Creditors reduce the risk of non-payment using two main strategies

• Security interests:

  • A security interest gives the creditor rights in the debtor’s personal property

  • Examples: chattel mortgages, conditional sales, leases (over 1 year), assignments of accounts receivable, General Security Agreement (GSA) over all assets

  • Effect: if the debtor defaults, the creditor can seize and sell the secured asset and apply proceeds to the debt

• Guarantees:

  • A third party promises to repay the debt if the debtor defaults

  • Effect: provides an additional source of recovery

• Secured creditors are in a much stronger position that unsecured creditors in the event of default

Explain how to protect security interests under Personal Property Security (PPS) Legislation.

• A creditor must perfect its security interest to ensure protection and priority

• Perfection of security interest: 

  • Achieved primarily through registration in the PPS registry

  • Involves filing a financing statement

• Priority rules:

  • Priority is generally given to the party who: registers first (first-in-time rule)

  • A perfected security interest has priority over: unperfected interests

• Consequence of not registering: an unperfected interest is subordinate to perfected ones

• Remedies on default: a creditor may: 

  • Seize the collateral (often through a bailiff)

  • Sell the asset

  • Apply proceeds to the debt

  • Pay any surplus to other creditors or the debtor

• To protect a security interest, a creditor must perfect it (usually by registration) → otherwise, they risk losing priority to other creditors

Describe the main legal options by which an insolvent business can deal with its creditors under the Bankruptcy and Insolvency Act (BIA).

• An insolvent business (debts exceed assets or cannot meet obligation) has two main options

• Bankruptcy (liquidation):

  • The business is formally declared bankrupt (voluntarily or by creditor application)

  • A trustee in bankruptcy takes control of assets

  • Assets are sold (liquidated) and proceeds distributed to creditors

  • Business usually ceases operations 

• Proposal (restructuring)

  • A court-approved arrangement between debtor and creditors

  • Allows the business to continue operating while restructuring debts

  • Creditors may agree to: 

    • Accept less money

    • Extend time for payment

    • Accept shares or other arrangements

  • Requires approval by:

    • Majority of creditors in each class

    • Holding 2/3 of the value of claims 

• Proposals are preferred when the business has viable future prospects

• Bankruptcy is used when continuation is not feasible

Identify the steps in a bankruptcy proceeding, the categories of creditors, and the rights of each to share in the bankrupt’s assets.

Steps:

1. Debtor becomes insolvent or is declared bankrupt

2. Trustee in bankruptcy is appointed

3. Trustee seizes and liquidates assets

4. Proceeds are distributed to creditors according to priority rules

• Categories of creditors

  • Secured creditors: have a security interest in specific assets; can:

    • Seize and sell collateral

    • Keep proceeds up to the amount owed

    • Claim any deficiency from remaining assets

  • Preferred creditors: given priority by law; include:

    • Employees (wages)

    • Government (taxes)

    • Support payments, rent, bankruptcy costs

  • Unsecured (general) creditors: no security interest and share remaining assets pro rata (proportionally)

  • Key rules:

    • Secured creditors are paid first (from their collateral)

    • Preferred creditors are paid next

    • Unsecured creditors receive what remains

Identify when a court-approved arrangement under the Companies’ Creditors Arrangement Act (CCAA) would be used instead of bankruptcy under the BIA.

• The CCAA is used when: 

  • The business has total debts over $5M

  • A flexible, court-supervised restructuring is needed

• Key features of the CCAA:

  • Allows customized arrangements between debtor and creditors

  • Focuses on restructuring rather than liquidation

  • Debtor typically continues operating during the process

  • Courts have broad discretion to tailor solutions

• When preferred over BIA:

  • Large, complex businesses

  • Situations requiring flexibility beyond standardized BIA procedures

  • When preserving the business has greeted value than liquidation

• BIA → structured, standardized (bankruptcy or proposal)

• CCAA → flexible, large-scale restructuring for major companies

Describe the restrictions that the Competition Act imposes on agreements and activities.

• Competition Act aims to promote competition and prevent anti-competitive conduct

• Types of restrictions:

  • Criminal offences (always illegal)

    • Price fixing (e.g. agreeing on minimum prices)

    • Bid-rigging

    • Pyramid selling

    • These are serious offences with fines and possible imprisonment

  • Civilly reviewable matters

    • Not automatically illegal—assessed based on anti-competitive effect

    • Mergers (may reduce competition)

    • Abuse of dominant position (e.g. predatory pricing)

    • Refusal to deal

    • Exclusive dealing

    • Bait-and-switch advertising

    • Reviewed by the Competition Tribunal

  • Dual-track matters

    • Can be civil or criminal, depending on intent

    • Misleading advertising

    • Criminal if knowingly false or reckless

• The law targets conduct that substantially lessens competition

Describe the main categories of consumer protection requirements imposed on business and when they are applied.

• Consumer protection laws come from common law, provincial legislation, and federal statutes

• Contract and tort protections: 

  • Sellers must not be negligent

  • Courts will not enforce: 

    • Unconscionable terms

    • Clauses excluding liability unfairly

• Sale of goods protection

  • Implied conditions

    • Goods must be of merchantable quality

    • Must match description/sample

    • Must be fit for intended purpose

• Protection against misleading practices

  • Prohibits: 

    • False or misleading advertising

    • Bait-and-switch tactics

    • Deceptive telemarketing

• Disclosure and contract requirements

  • Must provide written contracts in certain situations

  • Must disclose: credit terms

  • Consumers may have cooling-off periods

• Product standards and labelling

  • Laws require: 

    • Accurate labelling (English and French)

    • Proper packaging and safety standards

• Online consumer protection:

  • Protection against keystroke errors

  • Rules of electronic transactions

• Consumer protection laws ensure fairness, transparency, and safety in transactions

Identify the main features of environmental protection laws in Canada and how to manage the risk of liability under those laws.

• Main features: 

  • Common law torts (e.g. nuisance) project neighbouring landowners

  • Federal law (CEPA)

    • Regulates activities that are:

      • Interprovincial/international

      • On federal lands or waters

    • Promotes sustainable development

  • Provincial and municipal laws:

    • Regulate land, water, and local environment impacts

• Duty to consult Indigenous Peoples

  • Require where business activities may affect: land use or wildlife and resources

• Risk management strategies:

  • Conduct environmental assessments/audits before projects

  • Ensure compliance with all regulations

  • Implement pollution control and monitoring systems

  • Obtain necessary permits and approvals

  • Stay informed about regulatory changes

• Environmental liability is managed through proactive compliance, monitoring, and risk assessment, especially given overlapping federal and provincial regulation

Identify business strategies to ensure that pre-employment practices comply with employment legislation.

• Businesses can manage legal risk in preemployment by:

• Avoiding misrepresentation

  • Employers must not make false or misleading statements during interview or in job ads, since misrepresentation can allow the other party to rescind the contract or even lead to tort/criminal liability

• Complying with human rights legislation

  • Job advertisements and hiring practices must not include discriminatory requirements (e.g. requiring a driver’s license unless it is a bona fide occupational requirement)

  • Discrimination can occur even if unintentional

• Using accurate and lawful job postings

  • Clearly describe the job requirements and ensure they are legitimately connected to the role

• Documenting the hiring process

  • Maintain records of hiring criteria and decisions to show compliance if challenged

Distinguish between employees and dependent and independent contractors.

• The distinction matters because it affects rights, obligations, and liability

• Employee:

  • Works under significant control of the employer

  • Employer: 

    • Selects and supervisors the worker

    • Controls how, when, and where work is done

    • Provides tools/equipment

  • Worker is integrated into the business (organization test)

  • Entitled to protections (e.g. notice of termination, overtime, vacation pay)

  • Employer is vicariously liable for torts committed in the course of employment

• Independent contractor:

  • Operates their own business with less control from the employer

  • Typically: 

    • Uses own tools

    • Has chance of profit and risk of loss

    • May work for multiple clients

  • Not entitled to employee protections (e.g. no guaranteed notice or benefits)

  • Employer is generally not liable for their torts

• Dependent contractor:

  • A hybrid category recognized by courts

  • Technically an independent contractor but has a long-term, exclusive relationship with one organization

  • May be entitled to some employee-like protections, such as reasonable notice of termination

• Key tests used by courts:

  • Control test → how much control the business has over the worker

  • Organization test → whether the work is integral to the business 

  • Additional factors:

    • Ownership of tools

    • Chance of profit/risk of loss

    • Ability to delegate work

    • Regularity of work