Untitled Flashcards Set

Introduction to Tort Law

• Definition: A wrongful act against a person or property of another.

• Difference from Criminal Law:

  • Tort: Wrongdoing between individuals.

  • Crime: Public wrongdoing between government and individuals.

  • Torts and crimes may arise from similar situations.

Liability in Tort Law

• Types of Liability:

  • Strict Liability: Involves inherently dangerous activities where entities are liable regardless of precautions.

  • Vicarious Liability: Actions of one person attributed to another (e.g., employer-employee relationships).

  • Fault: Conduct deemed unjustifiable by law. Covered by insurance.

Types of Torts

• Intentional Torts: Committed on purpose without intention to cause harm (e.g., assault, battery, defamation, trespass).

• Business Torts: Include unfair practices, deceit, and injurious falsehood.

Defamation**

• Libel: Written defamation.

• Slander: Spoken defamation.

• Defenses: Include absolute and qualified privilege, fair comment, responsible communication, and truth.

Negligence and Duty of Care

• Elements of Negligence:

  • Duty of care owed.

  • Breach of this duty.

  • Causation of injury.

  • Foreseeable damages.

• Standard of Care: Must align with a reasonable person’s actions under similar circumstances.

Damages in Tort Law

• Types:

  • Economic Loss: Includes lost wages, medical costs, rentals.

  • Physical Loss: Bodily injuries or property damage.

  • General Damages: Compensation for non-monetary harm.

  • Punitive Damages: For malicious behavior.

• Thin Skull Rule: Defendant is liable even if injury severity is unexpected due to a pre-existing condition.

Professional Liability**

• Definition: Professionals must adhere to a standard of care relevant to their profession.

• Fiduciary Duty: Professionals must act in the best interest of clients, avoid conflicts of interest, and maintain confidentiality.

Limits and Defenses

• Defenses against tort claims:

  • Contributory Negligence: Plaintiff’s liability can impact their claims.

  • Voluntary Assumption of Risk: Accepting known risks.

• Statute of Limitations: Time limitations on bringing a claim.

Case Examples**

1. Mischief Maker: An example to illustrate liability involving physical confrontation in a public place.

2. Debates in Public Forums: Analyzing the legal implications of statements made by public officials.

3. Product Liability: Examining manufacturer liability through case studies.

Conclusion**

• Tort law serves to hold individuals and entities accountable for harming others, providing a framework for seeking remedies through compensation.

AGENCY

• Agent: Person appointed to act on behalf of another, typically in contractual matters.

• Principal: Individual for whom the agent acts.

Nature of Agency

• The agent facilitates the transaction between the principal and a third party.

• Dependent Agent: Works for a single principal.

• Independent Agents: Operate an independent business.

• Corporations can only contract through their agents.

Common Terms

• Agent

• Principal

Creation of Agency Relationship

• Forms include:

  • Express Agreement: Can be oral, written, or in writing under seal; must be in writing if the term exceeds one year.

  • Ratification: Adoption of a contract made by an agent acting without authority.

  • Estoppel: Creation of an agency by not stopping an agent.

  • Necessity: Emergency situations where agency arises automatically.

Agency Creation - Detailed

Express Agreement

• Must clearly define the agent's authority and limits regarding third-party contracts.

• Can provide broad authority to negotiate contracts.

Agency by Conduct or Estoppel

• Conduct: Actions create an impression of authority.

• Estoppel: Permitting an agent to act creates authority.

Ratification

• Requirements include the entire contract must be ratified, rights of outsiders must not be affected.

Agency by Operation of Law

• Arises in emergencies, allowing certain individuals to bind the principal under necessity.

Duties of an Agent

• Comply with the contract and inform the principal.

• Perform duties personally, maintaining confidentiality.

• Standard must be met if special skills are required.

• Duty of good faith in fiduciary relationships.

Duties of Principal

• Pay agent a fee for services rendered and indemnify for expenses incurred.

Authority of Agents

• Apparent Authority: Authority assumed by third parties.

• Actual Authority: Authority explicitly granted to the agent.

• Holding Out: Representing someone as an agent even without formal authority.

Mini Case Studies

Case of Alex

• Alex is an agent for dancers, arranges a joint theater event without disclosing sharing of proceeds with clients.

• Confidentiality breached; advise dancers on potential claims against Alex.

Case of Chelsea Pets Ltd.

• Kent acts as an agent without disclosing his status while negotiating a rabbit sale.

• Lawyers need to advise Chelsea and Somerset on contractual obligations and potential litigation outcomes.

Rights and Liabilities

• Contracts can bind either the principal, the agent, or both if the agent fails to specify authority.

• Principals are liable for torts committed within the agent's authority.

• False claims of agency can result in breach of warranty.

Termination of Agency

• Can occur as specified in agreement:

  • Upon notice.

  • Upon task completion.

  • Frustration of the contract.

  • If either party loses capacity.

  • Bankruptcy of the principal.

Contracts Overview

• Contracts defined as agreements between two or more capable persons for legal consideration to undertake lawful acts.

Definition of Contracts

• Agreement Components: Legal agreement between capable parties for consideration.

• Characteristics: Must be lawful and genuinely intended.

Parties Involved in Contracts

• Offeror: The person making the offer.

• Offeree: The person receiving the offer.

Types of Contracts

Unilateral Contract

• Only one party makes a promise for a performance.

• Acceptance occurs through performance of specified act.

Bilateral Contract

• Mutual promises between two parties.

• Performance occurs when each party fulfills their promise.

Six Elements of Contracts

1. Intent: Parties' intention to enter into a contract.

2. Legality: The contract's purpose must be lawful.

3. Capacity: Parties must have the legal ability to contract.

4. Consideration: Something of value exchanged between parties.

5. Acceptance: Must be clear agreement to the terms.

6. Offer: Must be present and valid.

Offers

• Offers must be communicated to the offeree and cannot be vague.

• An advertisement itself is not an offer; it serves as an invitation to negotiate.

Conditions for an Effective Offer

• Must be clearly communicated.

• Should not be vague or ambiguous.

• Can be communicated orally or in writing.

Termination of an Offer

• Occurs through:

  • Revocation: Offeror retracts offer before acceptance.

  • Lapse: Failure to accept within a specified period.

  • Rejection: Offeree rejects the offer.

  • Counter-Offer: Offeree proposes different terms.

Lapse and Revocation

• Lapse: When no acceptance is made within specified period, or if one party dies.

• Revocation: Can happen at any time before acceptance, must be communicated.

Acceptance

• Acceptance must be:

  • Positive in form (unconditional)

  • Communicated to the offeror

  • Made in the manner specified in the offer

  • Occurred within the stipulated time frame.

Contracts at a Distance

• Acceptance is effective when received by offeror.

• Communication methods (like fax, email) determine the effective moment of acceptance.

Electronic Business Contracts

• Valid offer and acceptance must be present.

• Click-wrap agreements signify acceptance through internet click boxes.

Laws Surrounding Mail Acceptance

• Under the mail rule, acceptance is effective when posted.

• Exceptions exist if a faster response method is specified.

Bilateral vs Unilateral Contracts

• Bilateral Contracts involve promises on both sides.

• Unilateral Contracts require performance for acceptance to occur.

Ambiguity in Offer

• Lack of certainty makes agreement unenforceable.

• Courts do not enforce agreements that are vague or unclear.

Case Study Example - Auction Scenario

• A buyer's raised hand signifies an acceptance of the auctioneer's offer, forming a binding contract.

Case Study - Carbolic Smoke Ball Company

• Advertised payment for using a product did constitute a unilateral contract under certain conditions, affirming acceptance through reliance on the advertisement.

Consideration

• Refers to what is exchanged in a contract:

  • Essential Rules:

    1. Promises must have consideration to be binding.

    2. Consideration need not be adequate but must hold value.

    3. Past consideration is invalid.

• Gratuitous Promises: Not legally binding unless supported by consideration.

Capacity to Contract

• Individuals without legal capacity to contract include:

  • Minors

  • Individuals of diminished capacity (e.g., mentally incompetent)

  • Certain groups, like enemy aliens and bankrupt debtors.

Minors and Contracts

• Contracts made by minors are voidable, except for necessaries or beneficial contracts.

Misrepresentation in Contracts

• Involves false statements that induce a party into a contract, can be innocent, negligent, or fraudulent.

Undue Influence and Duress

• Contracts may be voidable by individuals who act under undue influence or desperate circumstances.

Enforcement of Contracts

• Third parties usually have no rights unless exceptions apply, such as in trusts or life insurance policies.

Discharge of Contracts

• Can occur through performance, written agreement, frustration, or breach.

Breach of Contract

• Defined as failure to perform rights and obligations under a contract.

• Remedies include:

  • Damages

  • Specific performance

  • Rescission (voiding a contract).

Conclusion

• Understanding these principles provides a framework for analyzing contractual relationships and enforcement.

Introduction

• Employee vs Contractor

  • Understanding the differences and legal implications.

  • Factors impacting the classification: 5 Factor Test, Contractual Relationships, Legislation, Human Rights, Privacy, Workers Compensation.

  • Focus on: Bona Fide Occupational Requirement, Undue Hardship Test, Termination with/without Cause, Notice Period.

Employee vs Contractor 5 Prong Test

• 5 Factors:

  • Control: Level of control over work performed.

  • Ownership of Tools: Who provides the necessary tools?

  • Share of Profits/Risk of Loss: Financial stakes in the success/failure?

  • Exclusivity: Are they working exclusively for one client?

  • Organization Test: How integrated is the worker into the organization's structure?

Characteristics of Independent Contractors

• Hired to complete specific tasks for a fee.

• Own their own tools and equipment.

• Control their own working hours.

• Have autonomy in work methods.

• May work for multiple clients.

• No employment benefits such as tax deductions or pensions.

• Responsible for their own business expenses and assumes risk.

Relationship of Employer & Employee Compared to Contractors

• Independent contractors have limited rights based on their contract.

• Liabilities incurred by independent contractors are primarily their own.

• Vicarious Liability: Not applicable to contractors.

• Dependent Contractors: Operate between employees and contractors, primarily reliant on a single client but retain some protections typical of employees.

• Entitled to reasonable notice of termination.

Contracts

• Every independent contractor and employee is bound by a contractual relationship with the business.

Contract Review

• Essential Elements:

  • Offer

  • Acceptance

  • Capacity

  • Legality

  • Intent

  • Consideration

Consideration

• Definition: What a party receives for their service or promise.

• 3 Key Rules:

  • Non-sealed promises must include consideration.

  • Consideration does not need to be equal, but must have value.

  • Past consideration is not binding.

• In employment law, consideration includes wages for services rendered.

Restrictive Covenants

• Types include:

  • Non-solicitation

  • Non-competition

  • Non-Disclosure Agreements (NDA)

Legislation

• Key Laws Related to Employment:

  • Employment Standards Code

  • Occupational Health and Safety Act

  • Privacy Act

  • Workers Compensation Act

  • Alberta Human Rights Act

Employment Standards Code

• Key Provisions:

  • Minimum wage requirements

  • Vacation pay regulations

  • Severance conditions

  • Resignation protocols

  • Contracts cannot offer less than the Standards Code but may offer more.

Occupational Health and Safety

• Employer obligations under safety legislation:

  • Provide necessary safety equipment.

  • Train employees adequately.

  • Penalties for violation include personal fines for supervisors.

Privacy Act

• Employer must disclose:

  • Information collected, purpose, and usage.

  • Require employee's consent before collection.

  • Information must be collected lawfully and only what is necessary.

Workers Compensation Act

• Offers compensation for workplace injuries via a no-fault insurance scheme.

• Employees may claim without proving fault and waive the right to sue their employer.

• Employers contribute to the compensation fund.

Pay Equity Legislation

• Common law prohibits paying females less than males for the same role.

• Jobs assessed on value based on:

  • Skill

  • Ability

  • Education

  • Working conditions

Alberta Human Rights Act

• Prohibits discrimination based on:

  • Race

  • Disability

  • Gender, gender identity, expression, and sexual orientation

  • Age

  • Ancestry

  • Family and marital status

  • Income source

  • Religious beliefs

Human Rights in the Workplace

• Key concepts: Discriminatory Practices, Accommodation, Undue Hardship, Workplace Rules.

• Accommodation Duty: Employers must accommodate employees unless it causes undue hardship.

Bona Fide Occupational Requirement

• Justification for discriminatory workplace rules via a three-part test:

  • Rational connection to job performance.

  • Honest belief in necessity.

  • Reasonable necessity in achieving work-related purpose.

Duty to Accommodate

• Determining if there is a duty to accommodate involves:

  • Protected characteristics under Human Rights Act.

  • Establishing adverse impacts related to the characteristic.

Case Study: Igor at Creative Advertising Ltd.

• Igor suffered a stroke affecting his speech, prompting termination.

• Advising on potential legal issues and options available post-termination.

Employee Duties

• Obey reasonable orders of employer.

• Dedicate agreed-upon hours to work.

• Use employer’s information and property responsibly.

• Maintain confidentiality and act in the company's best interest.

Termination Types

• Just Cause: Breach or misconduct.

• Constructive Dismissal: Unilateral changes to employment terms.

• Without Cause: Termination without valid reason.

Notice Period for Termination

• Just Cause: No notice required.

• Constructive Dismissal: Reasonable notice required.

• Without Cause: Reasonable notice required.

Determining Reasonable Notice

• Assess notice based on:

  • Contract terms

  • Employment Standards Code

  • Common law factors.

Common Law Factors for Reasonable Notice

• Considerations include:

  • Type of employment.

  • Length of service.

  • Age of employee.

  • Availability of similar employment.

Employee Obligations

• Mitigate damages: Look for new employment actively.

• Cannot refuse work to extend notice period.

• If constructively dismissed, the employee should continue working where feasible.

Additional Question Scenario

• Situation regarding an employee's visible tattoo and company professionalism expectations.

• Consideration of legal and ethical implications in addressing the situation.

Corporate Structure

• Author: Amber Bishop B.A., MBA, JD

Business Types

• Consider risks, liability, funding needs, and expected earnings.

• Types of Businesses:

  • Sole Proprietorship: One owner.

  • Partnership: Two or more persons.

  • Joint Venture: Collaborative project.

  • Corporation: Separate legal entity.

Sole Proprietorship

• Definition: Simplest business form with one owner.

• Regulations: Must follow public health, tax, and zoning laws. May need a license.

• Employment: Can hire employees but must comply with regulations.

Sole Proprietorship Naming

• Must register if the business name differs from the owner's.

• Must be distinguishable from existing names.

Advantages of Sole Proprietorship

• Freedom in decision-making.

• Flexible operations.

• Quick decision-making.

• Ability to enter contracts.

Disadvantages of Sole Proprietorship

• Unlimited personal liability.

• Limited capital-raising ability.

• Proprietor's management skills impact success.

• Personal tax rate applies, but business expenses can be deducted.

Partnerships

• Definition: Two or more individuals working for profit.

• Legal Governance: Governed by The Partnership Act and partnership agreement.

• **Types: **

  • General Partnership: No formal registration.

  • Limited Partnership: Requires registration.

  • Limited Liability Partnership (LLP): For professional use.

Advantages of Partnerships

• Shared knowledge and resources.

• Inexpensive to create.

• May own property.

Disadvantages of Partnerships

• Joint and several liabilities.

• Actions of one partner can bind others.

• Profit sharing and capital raising challenges.

Creation and Liability of Partnerships

• Anyone representing as a partner is liable for credits extended.

• Partnerships can face breach of contract claims.

Partnership Agreement

• Can be written or oral; terms can be negotiated as long as legal.

Apparent Partners

• Liability extends only to obligations incurred during partnership.

• New partners not liable for previous debts.

• Retiring partners remain liable for past obligations.

Partnership Act Guidelines

• Governs partner third-party relationships.

• Property brought into partnerships belongs to the partnership.

• All partners have equal decision-making rights.

Rules of Partnership Act

• Equal profit and loss share; partners cannot expel others without majority consent.

• Majority decisions made but nature of partnership cannot change without consent.

Fiduciary Duties

• Partners must act in the best interest of the partnership and disclose any personal benefits.

Retirement Steps for Partners

• Notify clients, remove from registers, and alter letterheads.

Dissolution Agreement

• Occurs due to specific terms, death, insolvency, or breaches.

Specialized Partnerships

• Limited Purpose: For investments; general and limited partners involved.

• LLP: Limited liability for professional negligence.

Joint Ventures

• Collaborative effort for a specific project; limited duration and profits are shared.

Corporation Overview

• Independent legal entity; separate from shareholders and directors.

• Can be incorporated federally or provincially.

Historical Development of Corporations

• Originally controlled by the state; established rights under the British North America Act in 1867.

Advantages and Disadvantages of Corporations

• Advantages: Limited liability, capital raising potential, lower tax.

• Disadvantages: Highly regulated; complex structures.

Characteristics of Corporations

• Liable for own debts; continuous existence independent of shareholders.

Limited Liability

• Shareholders' losses capped to their investment in the corporation.

Exceptions to Limited Liability

• Improper asset receipt can incur personal liability; fraud can lift corporate veil.

Term of Operation

• Corporations have perpetual existence, unaffected by shareholder changes.

Corporate Structure

• Hierarchy includes Shareholders, Directors, and Officers.

Shareholders

• Approve budgets, acquisitions, and dividends.

• Rights include voting on director elections and actions against unfair treatment.

Directors’ Responsibilities

• Manage corporate affairs; act in the best interest and fiduciary duties towards the corporation.

Officers

• Handle management; follow legal obligations of confidentiality and good faith.

Incorporation Types

• Corporations can be public, private, or cooperatives. Professional corporations offer tax advantages.

Corporate Name Regulations

• Must be unique, including designation like Ltd. or Inc.

• Name must avoid confusion or obscene terms.

Corporation By-Laws

• Procedural rules governing operation, including meetings and duties.

Corporate Financing Sources

• Raising capital through issuing shares (equity) or borrowing (debt) like bonds and debentures.

Public vs. Private Corporations

• Public: More than 15 shareholders, shares publicly traded.

• Private: Limited shareholders, no public trading.

Raising Capital Strategies

• Exemptions allow private companies to issue shares without public registration.

Investigation and Enforcement

• Provincial authorities enforce securities regulations; penalties for non-compliance include fines or imprisonment.

Dissolution of Corporations

• Corporations can cease operations if insolvent or unable to profit; process dictated by statute.

Corporate Governance Overview

• Purpose: Processes and structures directing business to enhance long-term shareholder value and financial viability.

• Stakeholders Impacted: Shareholders, board of directors, management, employees, customers, suppliers, communities.

Historical Context

• 1990: First corporate governance change in the U.S. due to savings and loan scandals.

• 2002: Sarbanes-Oxley Act enacted post-Enron bankruptcy, leading to shareholder losses of $74 billion.

• Resulted in increased regulations in Canada following U.S. reforms.

Canadian Corporate Governance Influences

• Factors impacting governance include company size, capital market size, ownership concentration, and access to U.S. markets.

• Emphasis on disclosure, transparency, and audit committees to maintain investor confidence.

  • Audit Committee Requirements:

    • Review public disclosures of financial documents.

    • Procedures for accounting complaints and whistleblowers.

Recommendations for Improvement

• Majority of directors should be independent.

• CEO should not hold the chair position.

• Establish independent committees for executive compensation and board nominations.

• Publish a corporate code of ethics.

• Regular self-assessment of the board.

Board Structure

• Public Companies: Minimum of 3 directors, typically 10-15, majority independent.

• Private Companies: Typically 1-3 directors.

• Committees include audit, finance, HR, compensation, and governance.

• New directors go through orientation and continuing education.

Board Elections

• Typically elected for one-year terms; historically staggered three-year terms promote stability.

Board Responsibilities and Role

• Monitor and evaluate corporate activities and performance.

  • Oversee strategy, acquisitions, financial practices, risk management, and stakeholder relations.

• Ensure transparency, accountability, and ethical standards in decision-making.

Duties and Responsibilities of Directors

• Duties:

  • Compensation can include salary, bonuses, grants, and options.

• Legal Responsibilities:

  • Fiduciary Duty: Prioritize the interests of the corporation.

  • Duty of Care: Make informed decisions and act as a reasonable person would.

Conflicts of Interest

• Types: Actual and potential conflicts; must declare and abstain from discussions.

• Examples of conflict scenarios with high stakes outlined.

Defences against Liability

• Due Diligence Defence: Based on reliance on counsel opinion.

• Business Judgement Rule: Courts defer to board decisions made in good faith and with reasonable care.

Criminal and Regulatory Liability

• Directors can face criminal liability; legislation imposes strict liability for certain offences.

• Types of Offences

  • Mens Rea: Intentional wrongdoing.

  • Strict Liability: Presumption of guilt unless proven otherwise.

  • Absolute Liability: No defence possible.

Securities Legislation and Investor Protection

• Mandates disclosure and compliance to prevent fraud.

• Outlines requirements for IPOs, prospectuses, and public offerings.

Insider Trading and Famous Cases

• Insider trading leads to severe penalties; notable cases include:

  • R. Foster Winans, Martha Stewart, and Samuel Waksal.

  • Disclosure obligations; consequences for violations.

Learning Points from Cases

• Securities regulation aims to protect investors and maintain market integrity.

• Tippees: Hold a special relationship that imposes duties when sharing insider information.