Property and Securities Law Quiz

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Questions and Answers

Which right allows property owners to prevent others from entering their land?

Right to exclude (correct)

Right to lease

Right to possess and use

Right to transfer

What limitation is placed on renters concerning property rights?

Right to possess freely

Right to exclude others

Right to transfer or dispose of the property (correct)

Right to modify the property

What does the tort of trespass allow a property owner to do?

Modify the property limits

Lease property to someone else

Transfer property rights

Exclude others from their property (correct)

What constitutes insider trading?

Share transactions based on undisclosed material information Signup and view all the answers

What is a primary responsibility of directors and officers under fiduciary duty?

To act in the best interests of the corporation. Signup and view all the answers

What does the duty of competence entail for directors and officers?

They must exercise appropriate care and skill. Signup and view all the answers

What does breaching fiduciary duty typically involve?

Taking opportunities meant for the corporation for personal gain. Signup and view all the answers

How does the law define the duty of care for corporate officers and directors?

They must act as a reasonably prudent person would. Signup and view all the answers

Which duty does a shareholder NOT have towards the corporation?

Act in the best interests of the corporation Signup and view all the answers

What is NOT a recommended action for directors regarding meetings?

Speak only when directly addressed Signup and view all the answers

How can directors meet the statutory standard of care?

By being attentive, active, and informed. Signup and view all the answers

How should directors approach their decision-making process?

Make informed decisions Signup and view all the answers

Which of the following is a key aspect of a director's role in company management?

Identify potential problems within the company Signup and view all the answers

What is a common misconception about shareholder liability?

Shareholders are liable for corporation debts Signup and view all the answers

What must incorporators decide regarding shares?

The class or classes of shares and their privileges. Signup and view all the answers

Which group is considered external stakeholders in a corporation?

Customers Signup and view all the answers

What is one of the key decisions to be made before incorporating a corporation?

Deciding on the characteristics for each of class of share Signup and view all the answers

What is a limitation placed on shareholders in a corporation?

They have rights attached specifically to their shares. Signup and view all the answers

Which of the following stakeholders is NOT considered internal to the corporation?

Customers Signup and view all the answers

What will happen if a corporation fails to comply with provincial reporting requirements?

Being struck from the corporate register Signup and view all the answers

Which of the following best describes the oppression remedy available to creditors?

A protection against unjust treatment by directors Signup and view all the answers

What right allows shareholders to participate in the election of the corporation's directors?

Right to vote Signup and view all the answers

Which type of corporation is characterized by shares that are not sold to the public?

Closely held corporation Signup and view all the answers

What does the term 'right of first refusal' imply for shareholders wishing to sell their shares?

They must offer the shares to existing shareholders before outsiders Signup and view all the answers

What distinguishes a widely held corporation from a closely held corporation?

Widely help corporation shares are traded on a public exchange; transfer of closely held shares are restricted Signup and view all the answers

Which of the following rights gives shareholders a share in the proceeds upon the dissolution of a corporation?

Share in dissolution proceeds Signup and view all the answers

What is a primary responsibility of directors concerning the corporation's affairs?

Receiving reliable professional advice when needed Signup and view all the answers

The rights and privileges associated with shares are determined by:

The class or classes of shares issued by the corporation Signup and view all the answers

Which factor must be decided by incorporators when establishing a corporation?

What type of shares will be available and to whom Signup and view all the answers

Which of the following best describes external stakeholders in a corporation?

People who engage with the corporation but do not control it Signup and view all the answers

Which of the following is NOT a requirement for patentability?

The invention must be publicly disclosed. Signup and view all the answers

In what context are software programs excluded from patent protection?

They are protected under copyright law. Signup and view all the answers

Which of the following factors was NOT considered in the decision that names were confusingly similar?

Market share of each company. Signup and view all the answers

Which document is crucial in defining the basic share structure of a corporation?

Articles of Incorporation. Signup and view all the answers

What is the purpose of the NUANS report in the incorporation process?

To check for similar names already in use. Signup and view all the answers

What geographic regions does Aquaterra Water operate in?

Across several locations, including Texas and Saskatchewan. Signup and view all the answers

What did the Court of Appeal determine in Wong v Pretium Resources Inc regarding material fact omission?

There was no omission of a material fact. Signup and view all the answers

What does the criminal code include concerning insider trading?

Insider trading and tipping offences. Signup and view all the answers

What is a key objective of the continuous disclosure regime mentioned in the context of Wong v Pretium Resources Inc?

To ensure that all market information is reliably disclosed. Signup and view all the answers

What must directors do to minimize personal liability according to statutory standards?

Exercise care, diligence, and skill Signup and view all the answers

In the context of corporate law, what does 'insider trading' refer to?

Using confidential information for personal gain Signup and view all the answers

Which characteristic defines the care that directors must exhibit in their duties?

Informed, active, and attentive behavior Signup and view all the answers

Which of the following best defines a lease?

A contract to transfer possession of property for a payment. Signup and view all the answers

What legal obligation might a property owner have towards their municipality?

To pay property taxes. Signup and view all the answers

What rights are generally included with property ownership?

The right to use, dispose, and transfer the property. Signup and view all the answers

Study Notes

The Corporate Form: Organizational Matters

A corporation is a separate legal entity, treated as a legal person.
Shareholders are not liable for a corporation's debts or liabilities.
The objectives of the chapter include understanding corporations as legal persons, share structures, federal and provincial incorporation, naming corporations, creating corporations, financing corporations, and securities regulation.

Landmark Case 15.1 (1)

Salomon v Salomon Ltd [1897] AC 22 (HL): Salomon created a company for his profitable shoe-manufacturing business.
He and his family were the only shareholders, with Salomon owning 20,001 shares.
The business suffered financial problems and became insolvent.
Creditors sought to collect their debts from Salomon personally, suggesting it was improper for one individual to conduct business through a one-person company to secure limited liability.

Landmark Case 15.1 (2)

Salomon v Salomon Ltd [1897] AC 22 (HL): The House of Lords confirmed there was nothing wrong with a shareholder being a creditor of the corporation, even when that shareholder essentially controls the company.
Creditors knew they were dealing with a limited liability company on an unsecured basis.

Stakeholders in the Corporation (1)

Stakeholder: One who has an interest in a corporation.
Internal stakeholders include shareholders, directors, and officers.
Officers: High-level management employees managing day-to-day operations. (Examples: president, secretary, treasurer)

Stakeholders in the Corporation (2)

External stakeholders have dealings with the corporation but no governance role.
Examples include customers, employees, creditors, and government.
Corporation law aims to regulate relationships between stakeholders.

Pre-Incorporation Issues

Decisions to be made before incorporation include the manner of incorporation (federal or provincial), type of shares and to whom, and naming the corporation.

Provincial and Federal Incorporation

Both federal and provincial governments have legislation for company incorporation.
Federally incorporated corporations have the right to operate in every province.
Provincially incorporated corporations are restricted to operating within the province in which they are incorporated.

Shares and Shareholders (1)

Incorporators must decide on a share structure.
A share represents ownership in a corporation.
Shareholders do not directly control or manage the corporation or its assets.

Shares and Shareholders (2)

A corporation may have one type or class of shares with all basic shareholder rights.
Rights include voting for directors, receiving dividends, and a share of proceeds upon dissolution.

Shares and Shareholders (3)

Share structures typically include various combinations of voting rights, financial rights, preference rights, cumulative rights, and redemption rights.
The number of shares can either be limited or left open-ended.

Availability of Shares (1)

Widely held corporations are traded on a stock exchange and are subject to securities legislation.
Shares are normally available to the public.

Availability of Shares (2)

Closely held corporations do not sell shares to the public.
They are commonly referred to as private corporations.
They are typically not subject to securities legislation but may be subject to lower tax rates.

Who May Own Shares?

Shares are typically transferable unless restricted.
In closely held corporations, transfers can be subject to board or shareholder approval.
Right of first refusal gives insiders preference to buy shares if offered to someone external.

Business Application of the Law 15.1 (1)

Rogers Communications and dual-class shares illustrate how dual-class structures affect control.

Business Application of the Law 15.1 (2)

Structure involved in a dual-class share and a trust structure.

A Corporate Name (1)

All jurisdictions require a distinctive name.
The name must not cause confusion with existing names or trademarks.
Essential elements, such as Ltd, Corp, Inc, must be included.

A Corporate Name (2)

Caution is required when selecting a name to avoid confusion with competitors.
Numbered names followed by 'Canada', 'Ltd', 'Inc', etc., are an alternative to distinctive names.
A "shelf company" is a pre-incorporated company suitable for future use by law firms.

Case 15.1 (1)

Aquatera Utilities Inc v Aquaterra Water Management Inc, 2018 ABQB 962: Aquatera Utilities sought the change in the name of Aquaterra Water because both names were confusingly similar.
The court upheld the registrar's decision to change the name, because it was confusingly similar and resulted in confusion.

Case 15.1 (3)

Aquatera Utilities Inc v Aquaterra Water Management Inc, 2018 ABQB 962: The court determined that identical names were not required.
Relevant considerations for deciding name similarity include name distinctiveness, time use, similarity in appearance and sound, and overlaps between where the names are likely to be used.

The Process of Incorporation (1)

The incorporation process varies but is similar across jurisdictions in Canada.
The incorporator sets the process in motion.
Articles of incorporation define the key features of the corporation.

The Process of Incorporation (2)

The process involves submitting articles of incorporation, a notice of registered office, a notice of directors, a NUANS report, and paying a filing fee.

Organizing the Corporation

Post-incorporation, directors take control over day-to-day operations and administrative tasks.
Bylaws provide directions for managing the corporation.
Directors adopt forms of share certificates, authorize the issue of shares, and name officers.
Shareholder meetings are critical for board elections.

Financing the Corporation

Two methods of financing exist: debt financing and equity financing.
Securities issued by a corporation include shares and bonds.

Debt Financing

A corporation secures money by borrowing from various sources like banks, family, or shareholders.
Bonds and debentures may be used to secure lender's interest in corporation assets if the debt isn't repaid.

Equity Financing

Corporations raise capital by selling shares to investors.
Shares result in an ownership position for the investors, and can lead to benefits from the corporation's expansion.
Companies can combine shares with bonds.

Business and Legislation 15.1 (1)

Crowdfunding involves raising funds from a diverse group of people online.
Three main crowdfunding models involve: donations, lending, and investment/equity.

Business and Legislation 15.1 (2)

In 2021, the Canadian Securities Administrators (CSA) created a harmonized national framework for start-up crowdfunding.
This involved allowing eligible issuers to fund up to 1.5millionper12−monthperiod,andforindividualstoinvestupto1.5 million per 12-month period, and for individuals to invest up to 1.5millionper12−monthperiod,andforindividualstoinvestupto2500 annually.
The framework also allows for increased investment amounts if a dealer gives advice.

Securities Legislation (1)

Securities legislation aims to facilitate trading of securities, provide informed decision-making for investors, ensure public confidence in the marketplace, regulate participants in securities trading, and remove unlawful trading behaviour.

Business and Legislation 15.2

Canada has territorial and provincial regulators for securities, and in 2013, the federal government launched the Cooperative Capital Markets Regulatory System to administer rules affecting the Canadian securities marketplace.
The Supreme Court of Canada unanimously ruled in 2018 that this system complies with the division of powers between federal and provincial governments.
The federal government has not been able to secure funding for the system due to opposition in Parliament.

Securities Legislation (2)

Canadian securities regimes mandate registration, disclosure, and restrictions on insider trading.
Registration is required for companies dealing securities to the public in a particular province.
Disclosure, often in the form of prospectuses, is a fundamental requirement for offering securities to the public.

Case 15.2

Wong v Pretium Resources Inc, 2022 ONCA 549: Investors claimed losses based on the company's late disclosure of unreliable information about a gold mining project.
The court of appeal asserted that there was no omission of material facts, and that the disclosure regime's objective is not to flood the market with unreliable information.

Insider-Trading Restrictions

Insider trading occurs when insiders transact in a corporation’s securities based on non-public information.
Insiders must report their transactions and not share sensitive information with others.

Case 15.3

Finkelstein v Ontario (Securities Commission), 2018 ONCA 61: Several prominent mergers and acquisition lawyers and investment advisors were convicted of tipping and insider trading.
The case resulted in penalties, costs, and disgorgement orders of $2.9 million against the defendants.
These actions also involved a 10-year trading ban and a lifetime ban on acting as an officer or director of a public corporation.

The Corporate Form:Operational Matters

Objectives include understanding the liabilities of a corporation, the duties and liabilities of corporate directors and officers, the rights and liabilities of shareholders and creditors, and termination of corporations.

Corporate Liability: Liability in Tort (1)

Corporations have liability in many situations.
A corporation is liable for its own actions, although human agents typically act on behalf of the corporation.
Corporations may face primary liability when the corporation itself made a mistake, or vicarious liability when mistakes are made by those who act in the interest of the corporation but aren’t its directing mind.

Corporate Liability: Liability in Tort (2)

Identification theory states the corporation is liable if the person who makes a significant mistake was a corporation’s ‘directing mind.’
Generally, high-level officials are considered “directing minds,” while lower-level staff are not “directing minds.”
A corporation can have more than one directing mind

Corporate Liability: Liability in Contract

Agency law determines when corporations are liable on contracts.
Corporations are liable if the agent making the contract has actual or apparent authority.
One way to avoid personal liability is to indicate in contracts that they are made on behalf of the corporation rather than individually.

Corporate Liability: Criminal and Regulatory Liability (1)

The identification theory applies to criminal law cases, too.
A corporation commits a crime if the individual who acted on the corporation’s behalf as a ‘directing mind’ is guilty of committing the crime.
Criminal law covers senior officers, too.

Corporate Liability: Criminal and Regulatory Liability (2)

In cases of intent, senior officers involved in the unsafe conduct, directing members of staff, or knowing the conduct but not acting are liable, if the event results in death or injury.
In cases of negligence, senior officers are liable if their actions deviate significantly from the reasonable standard of care needed to prevent a safety incident.

Business Application of the Law 16.1

Death in the workplace: Five parties were involved in a construction accident and convicted of safety-related offences.

Corporate Liability: Regulatory Offences

Regulatory offences are those contrary to the public interest.
Corporations are liable to pay damages from regulatory breaches.
Areas include taxation, human rights, pay equity, employment standards, consumer protection, unfair business practices, occupational health and safety, and environmental protection.

Duties of Directors and Officers

Directors manage corporation affairs and have specific legal duties and powers.
Duties include but aren't limited to declaring dividends, arranging shareholder meetings, adopting bylaws and issuing shares.
They hire officers for day-to-day tasks.

Business and Legislation 16.1 (1)

Canada's law mandates certain public corporations to disclose diversity details.

Business and Legislation 16.1 (2)

These amendments do not mandate quotas but establish a “comply or explain” framework.
Companies need to disclose their diversity policy.

Duties of Directors and Officers: The Fiduciary Duty

Directors must act in good faith and in the best interests of the corporation.
Personal interests cannot conflict with the corporation's best interest.
Directors cannot exploit corporate opportunities for their own benefit.

Landmark Case 16.1

Canadian Aero Service Ltd v O'Malley, 1973 CanLII 23 (SCC): Two corporate officials left to start their own company.
The court made the two officials liable for their profits to the previous employer despite leaving the company.

Ethical Considerations 16.1 (1)

Corporate social responsibility (CSR) is growing.
Businesses are accountable for a wider range of stakeholders.

Ethical Considerations 16.1 (2)

The Canada Business Corporations Act (CBCA) was amended in 2019 to expand directors' duties to include considering the interests of multiple stakeholders, such as shareholders, employees, environment, and long-term interests.

The Duty of Competence

Directors and officers must exhibit the care, diligence, and competence that a reasonably prudent person would in comparable circumstances.

Case 16.1 (1)

Peoples Department Stores Inc (Trustee of) v Wise, 2004 SCC 68: The Wise brothers' business practices, such as a joint inventory purchasing policy, were criticized in the courts and held to be negligence.

Case 16.1 (2)

Peoples Department Stores Inc (Trustee of) v Wise, 2004 SCC 68: The courts upheld the actions because the brothers had a duty of care to creditors of the business as a whole, and this duty to creditors was more significant than a duty of care to their own family business, according to the Supreme Court.

Case 16.1 (3)

Peoples Department Stores Inc (Trustee of) v Wise, 2004 SCC 68: The Wise brothers' did not owe a fiduciary duty to the creditors specifically, although they did owe a duty of care to the corporation.

Liabilities of Directors and Officers

Directors/officers are normally liable through identification theory for corporate torts and contract breaches.
There are situations where they face personal liability, though.

Liabilities of Directors and Officers: Liability in Tort

Courts disagree on when director actions result in personal liability in torts.

Liabilities of Directors and Officers: Liability in Contract

Directors/officers can face personal liability when they contract on their own behalf and for the corporation, or if they guarantee performance.

Liabilities of Directors and Officers: Liability by Statute

Statutes impose personal liability on directors/officers for regulatory breaches, with implications for things such as employee wage pay, tax remittances, and insider trading.

Case 16.2 (1)

Midwest Properties Ltd v Thordarson, 2015 ONCA 819: The court addressed legal challenges involving a property purchase subject to environmental contamination due to previous activities, and the liability of those responsible for the contamination.

Case 16.2 (2)

Midwest Properties Ltd v Thordarson, 2015 ONCA 819: In this case, the court upheld the conviction for environmental offences. The individual (Thordarson) who controlled the pollutants were also held liable for the damages.

Business Application of the Law 16.2 (1)

Avoiding personal liability requires careful practice, diligent study of materials presented in meetings, and responsible decision-making.

Business Application of the Law 16.2 (2)

Risk management strategies include informed decisions, learning about company matters, identifying potential issues, and seeking expert advice.
Using indemnification clauses and insurance for directors and officers (D&O) is also important.

Shareholder Liability (1)

Shareholders are generally not liable for corporate debts unless there is a specific claim for fraudulent conduct that creates an exception.
A shareholder can freely compete with the corporation.

Shareholder Liability (2)

Lifting the corporate veil is rare in practise.
The courts will only lift the corporate veil (making the corporation not legally separate from its owners) to prevent fraudulent actions.

Business Application of the Law 16.3 (1)

Yaiguaje v Chevron and Piercing the Corporate Veil: Texaco, later acquired by Chevron, dumped toxic oil.
The Ecuadorian Court ordered Chevron to pay damages, but Chevron refused because they no longer had assets in Ecuador.

Business Application of the Law 16.3 (2)

Yaiguaje v Chevron and Piercing the Corporate Veil: US courts refused to enforce the judgment against the Canadian subsidiary of Chevron because they were considered separate legal entities.
Canadian courts would not lift the corporate veil in this situation, as courts generally avoid lifting the corporate veil unless there's strong evidence that the business is operating as a mere facade designed to mislead creditors.

Shareholder Rights

Shareholder rights are categorized into voting, information, and financial rights.
Different classes of shares typically have different rights and levels of involvement.

Classes of Shares

Common shares generally have voting rights, dividend sharing, and distribution upon dissolution.
Preferred shares have precedence in dividend and dissolution distribution.

Shareholder Remedies

Shareholders can use remedies if dissatisfied with the corporation.
In public corporations, selling shares is a straightforward solution.
Dissent and appraisal rights allow dissenting shareholders to have their shares purchased at a fair price if there are significant changes to a corporation.
Derivative actions permit shareholders to pursue legal remedies on behalf of the corporation.
Oppression remedies are available to prevent injustices and prejudice to shareholder interests.

Other Shareholder Remedies (Optional)

Shareholders' agreement helps clarify relationships between owners.
Unanimous shareholders' agreements (USAs) restrict director powers to align with shareholder interest.

Case 16.3 (1)

Mennillo v Intramodal Inc, 2016 SCC 51: The dealing between parties in this case was highly informal, not meeting the requirements of Canadian corporate law.

Case 16.3 (2)

Mennillo v Intramodal Inc, 2016 SCC 51: Although formalities were not followed, the courts did not deem the oppression remedy to apply because there was no clear indication of unfair treatment, and the actions of the shareholders were in alignment with the business realities.

Business Application of the Law 16.4 (1)

Shareholders' agreements can help mitigate risk while setting boundaries for operations.

Business Application of the Law 16.4 (2)

Agreements should address management, protect minority shareholders, and set a method for resolving disputes.
They also should provide for methods and processes for capital contributions, and handling potential future disputes.

Creditor Protection (1)

A corporation has liabilities for its debts.
Shareholders cannot avoid responsibility or eliminate assets to avoid paying off creditors.

Creditor Protection (2)

The Canada Business Corporations Act prevents corporate actions that endanger ability to pay off debts, and it obligates directors to treat creditors fairly.
Courts are granted the power to alter a credit agreement when there is an implication of significant injustice.

Termination of the Corporation

Corporations can be terminated in several ways.
Lapse is a simple process where the corporation doesn't follow the reporting requirements.
Winding up involves dissolution and liquidation, usually based on a complex process.

Introduction to Property Law

Objectives include understanding the meaning and types of property, how to acquire property, and types of legal rights and obligations associated with property.
Property can be either real property or personal property.
Real property refers to land and fixtures permanently attached.
Personal property refers to anything not permanently attached to land.

Business Application of the Law 17.1 (1)

Aboriginal title recognizes the rights of Indigenous peoples to land and includes enjoyment, occupancy, possession, and economic benefits.
It's demonstrated by sufficient acts of pre-sovereignty occupation, which must be continuous and exclusive.

Business Application of the Law 17.1 (2)

Aboriginal title is distinct from other property interests such as fee simple and cannot be transferred or sold.
It grants Indigenous owners rights to use, enjoy, manage, and occupy land, as well as the economic return from land.

Business Application of the Law 17.1 (3)

The Crown's duty to consult is triggered when the Crown has knowledge of potential Indigenous rights.
The level of consultation varies depending on the strength of the claim and requires accommodation.
Once title is established, the Crown can only infringe on the rights of Indigenous peoples for a compelling reason.

Personal Property (1)

Personal property is everything that isn’t real property.
Tangible property has physical form (example: delivery truck).
Intangible property is based on legal rights (example: delivery records).

Personal Property (2)

There isn't a comprehensive system for registering title to personal property, though specialized registries exist for specific items like cars, patents, and trademarks.
Personal property can be mobile, so a provincial registration system would not effectively deal with all personal property.
Personal property value may rarely justify the cost of maintaining a registration system.

Business Application of the Law 17.2

The ownership of fresh water is largely under provincial rather than federal control, based on the Constitution Act, 1867.
The UN recognizes water as a human right, though.

Acquiring Property Rights

Land, goods, insurance, accounts receivables, intellectual property, and abandoned personal property can all be acquired.
The specifics vary.

Business Application of the Law 17.3 (1)

Donors challenged UBC about storing and destroying their sperm.
The courts ruled that stored sperm was considered “goods”.

Business Application of the Law 17.3 (2)

Sperm and ova from deceased individuals are not generally considered property, but they sometimes arise as part of a larger estate discussion.
In any event, consent is required to use or harvest sperm or ova from a deceased individual.

Legal Rights Associated with Property

Unlike US law, Canadian law does not grant constitutional rights to property.
Provincial laws protecting property rights are important.
Property rights are also protected by common law (through torts like nuisance and trespass).

The Bundle of Rights

The bundle of rights represents the collection of rights that come with property ownership.
Common property rights include the right to exclude others, use and possess the property, and transfer the property.
These rights may be subject to restrictions dependent on issues like renting.

Right to Exclude

Property owners can exclude others from their property.
Copyright and trespass laws, for example, help owners enforce their right to exclude others.

Case 17.1 (1)

Tŝilhqot'in Nation v British Columbia, 2014 SCC 44: The Supreme Court of Canada ruled there was sufficient evidence of ongoing use to establish Aboriginal title to the land.

Case 17.1 (2)

Tŝilhqot'in Nation v British Columbia, 2014 SCC 44: A valid Aboriginal title can only be infringed if it's for a compelling and substantial reason.

Technology and the Law 17.1 (1)

Drones can be subject to limitations on their use over private property, although it is not clear how far above land a property owner's right to exclude others extends.
The ownership of airspace over property is limited to the point of use required for the normal use of land ownership.

Technology and the Law 17.1 (2)

Transport Canada has issued regulations for how drones are allowed to be flown.
These regulations must be followed, because they limit altitude, airspace, and distance from people while operating drones.

Right to Possess and Use

The right to possess and use property is often associated with property ownership.
It’s possible to contractually separate ownership from use and possession for leases, licenses, or permits.
A business can be sued for misleading consumers by inappropriately applying the use of their name or goodwill.

Right to Transfer or Dispose

Ordinarily, the right to dispose of property is included in ownership.
The PPSA and Aboriginal title include exceptions, though.

Legal Obligations Associated with Property Ownership

Property ownership entails various legal obligations, including taxes, compliance with provincial land use rules if relevant, co-operation for intrusions and environmental protection.

Bailment of Personal Property (1)

A bailment is a temporary transfer of personal property possession from one person to another.
Examples include lending a friend a car, leaving goods with a retailer, and lending a neighbour a tool.

Bailment of Personal Property (2)

A bailment generally requires voluntary delivery of the personal property, intention to have custody by the bailee, and intention by both parties to return the bailed property.
The bailee has a responsibility to take care of the items.

Bailment of Personal Property (3)

The liability of a bailee is governed by common law and contracts.
Statutory regulations apply to special types of bailments like warehouses and storage facilities.
Bailees are liable for the intentional wrongdoing of their employees.

Common Law Liability of Bailees

A bailee’s duty of care depends on many criteria, such as payment, whose benefit is the bailment, nature/value of the property, special circumstances, and bailee’s expertise.

The Contract of Bailment

Bailment contracts can exist independently but are usually better as contracts.
A contract can have various terms for services, payment terms, seller/bailee responsibility for damages/loss, and remedies if a party fails to fulfill their obligations.

Specialized Bailments (1)

Specific regulations or rules apply to specific bailments such as transportation, storage, repairs, and lodging bailments.

Specialized Bailments (2)

Repairs: Bailees have a 'lien' over property to secure payment for the necessary work.
Storage: Bailees are expected to reasonably care for property and are liable in cases of damages/loss. A limited liability can be included in contracts to reduce liability.

Specialized Bailments (3)

Transportation (carriers) have high standards of care for delivered goods.
In some cases, limits on liability are included in agreements.
Innkeepers have a high liability for theft or damage to goods in their care.

Case 17.2

Letwin v Camp Mart, 2021 ONSC 4175: A recreational vehicle seller agreed to store a customer's holiday trailer for free and then the trailer was stolen.
The court ruled that a gratuitous bailee fulfills the duty of care by taking care of the property based on typical approaches taken by prudent owners under similar circumstances.

Business Application of the Law 17.4

Clauses limiting bailee liability should be clear and conspicuous.
If a term is not easily understood, a business can be challenged for not clearly explaining the term.
Fundamental contract breaches and unconsionability are considerations that can make contract clauses invalid.

Intellectual Property

Objectives include understanding the nature of intellectual property (IP), related rights, how property is acquired, and how to protect intellectual property rights for business use.
IP comprises creative outputs like ideas, expressions, formulas, schemes, trademarks, that are secured through patent, copyright, and trademark rights.

Patents

Patents are monopolies granted to inventors that allow them to make, use, or sell their inventions.
They’re beneficial to businesses in pharmaceutical, electronics, and manufacturing industries, enabling them to exclude others from using similar technologies.

Case 18.1 (1)

Monsanto v Schmeiser, 2004 SCC 34: Monsanto developed genetically modified canola resistant to Roundup, a pesticide.
A farmer cultivated their own canola seeds which involved seeds being blown onto the farmer's property.

Case 18.1 (2)

Monsanto v Schmeiser, 2004 SCC 34: The court ruled that the patented genes and cells in the seeds extend to the plants that incorporate those cells.

Exclusions from Patent Protection

Certain things are not subject to patent protection, such as software programs (protected by copyright law) and anything that's a basic scientific principle or not patentable for policy-related reasons.

Case 18.2

Canada (Attorney General) v Amazon.com Inc, 2011 FCA 328: Amazon applied for a patent for a one-click ordering system.
The Patent Act's requirement for the invention to relate to a process, machine, manufacture, or composition of matter (the “art”) was part of the decision whether or not to approve the patent application.

Requirements for Patentability

Patents require novelty (no prior disclosure, public use, or sale), usefulness, and unobviousness (not obvious to an expert).
A one-year grace period is available in Canada in certain cases.

Patent Protection and Application (1)

Patent protection in Canada does not automatically arise and must be applied for through the Canadian Intellectual Property Office (CIPO).
A patent agent can assist with application preparation.

Patent Protection and Application (2)

Inventors are typically the first owners of an invention.
Employees are usually not afforded ownership unless specified contractual arrangements exist.
Employees are usually required to seek permission of the company to use the invention.

Patent Protection and Application (3)

The patent application's content includes descriptions, claims, and specifications.
The claim's contents typically identify the exclusive rights granted under the patent to the inventor.

Patent Protection and Application (4)

The CIPO will review the application, and if accepted, the holder is granted rights for a period, such as 20 years.
The granting of a patent permits the owner to exclude others from making, selling, or using the invention.

Patent Protection and Application (5)

Patents are nationally recognized and are normally held in effect for 20 years but can become invalid.

Industrial Designs

Industrial designs pertain to the visual aspects (shape, configuration, ornamentation, and combination of features) of certain manufactured goods.

Requirements for Registration, Registration Process and Protection

A registered design grants the owner exclusive rights (making, importing, selling articles with the design/ornamentation).
Registration stops others from creating comparable products.

Trademarks

A trademark is a distinctive sign used to identify commercial goods or services.

Traditional and Non-traditional Trademarks (1)

Trademarks can be words, phrases, designs, symbols, colours, tones, or a combination of these.
Traditional trademarks include words, slogans, designs, and letters.

Traditional and Non-traditional Trademarks (2)

Non-traditional trademarks include symbols, three-dimensional shapes, holograms, moving images, modes of packaging, sounds, and scents.

Common Law Trademarks (1)

Unregistered trademarks also gain legal protection under common law.
Protection is valid in areas where the business has used the trademark.

Common Law Trademarks (2)

Common law trademarks receive protection via a "tort of passing off" when competitors adopt similar trademarks.
Registration is not required, but it creates more significant protections.

Trade Names

Trade names are adopted by businesses to identify their operations.
Trade names are protected under trademark legislation.

Trademarks and Domain Names

Cyber-squatting is the illegal practice of registering trade names of others as a domain name.
Domain name disputes are typically resolved through negotiation or court action.

Requirements for Registration of Trademarks (1)

An application for trademark registration requires: demonstration of ownership, and the identification of distinctive characteristics and purpose in relation to the goods or service.

Requirements for Registration of Trademarks (2)

Registration is not possible if the name primarily refers to an individual or is too descriptive/not original.

Case 18.3 (1)

Diageo Canada Inc v Heaven Hill Distilleries et al, 2017 FC 571: Diageo sells its rum under “Captain Morgan”, and a competing company sells their rum under “Admiral Nelson.”
Diageo sued based on unlawful comparative advertising and trademark infringement, and for damaging their goodwill.

Case 18.3 (2)

Diageo Canada Inc v Heaven Hill Distilleries et al, 2017 FC 571: The court determined that Diageo had strong goodwill with their brand name, and Heaven Hill had mislead consumers by creating a similar product.
Heaven Hill had improperly used the trademarked name from an established product.

Registration Process and Protection

The first user of a trademark in Canada can register it.
Trademark agents search for similar trademarks to avoid duplication.
Registration provides the owner with exclusive rights relating to use for 10 years and renewal.

Business Application of the Law 18.1

The Tragically Hip v Mill Street Brewery: The Tragically Hip band sued a local brewery for unfairly using their band’s famous “100th Meridian” song name, claiming it confused consumers.
The court rejected the band’s claims because the brewery correctly registered their trade name.

Copyright

Copyright is automatic upon creation and gives owners rights to prevent copying and modifications.
Ownership and associated rights last for a set period after the work is created or published.

Requirements for Protection

Copyright protection is automatic when a work is created.
Registration can provide evidentiary advantages when dealing with copyright infringement.

Rights Under Copyright (1)

Copyright gives authors rights including of reproduction, public performance, publication, translation rights, adaptation, and mechanical/cinematographic reproduction.

Rights Under Copyright (2)

Copyright covers communication, exhibition, and rental of specific products like recordings/computer programs.
Authorisation involves rights for other copyright-protected areas.

Copyright Infringement

Case 18.4 (1)

Cinar Corporation v Robinson, 2013 SCC 73: A previous TV show script and drawings were copied into a new TV show.
Robinson brought a case for copyright infringement, and the court ruled that the copying was an infringement.

Case 18.4 (2)

Cinar Corporation v Robinson, 2013 SCC 73: Both TV shows (Robinson and Sucroë) drew inspiration from the same source, but had different characters and settings.

Case 18.4 (3)

Cinar Corporation v Robinson, 2013 SCC 73: The court ruled the copying was a substantial part of the original work, and therefore infringement. Damages were awarded.

Case 18.4 (4)

Cinar Corporation v Robinson, 2013 SCC 73: The court noted that the visual appearance of characters, settings, and scenographic features constituted substantial parts of the original work.

Moral Rights

Moral rights relate to having an author's work properly credited and protect their integrity.
It grants the author the right against prejudicial or misleading usages or modifications.

Case 18.5

Snow v The Eaton Centre Ltd (1982), 70 CPR (2d) 105: A sculpture of geese was modified with ribbons, deemed damaging to the artistic integrity of the work under moral rights legislation.
The court ruled in favor of the artist and ordered removal of the ribbons.

Exemptions

Exceptions exist from copyright protection and include those for educational use, libraries, museums, and archiving.
Fair dealing is a specific exception that permits certain types of use (private study, education, criticism, review, parody).

Case 18.6 (1)

Wiseau Studio, LLC et al v Harper et al, 2020 ONSC 2504: A fan made a documentary about the film "The Room".
Wiseau sued for copyright infringement.

Case 18.6 (2)

Wiseau Studio, LLC et al v Harper et al, 2020 ONSC 2504: The court determined the use of clips from the film was warranted under fair dealing limitations for use in reviews.

Case 18.6 (3)

Wiseau Studio, LLC et al v Harper et al, 2020 ONSC 2504: The court determined the quantity of the use was not excessive and that there were no similarly viable non-copyrighted options for this use.

Confidential Business Information

Confidential business information provides a business advantage due to its confidentiality.
Misappropriation is illegal—it can be addressed through criminal law or common law principles.
Protecting this information requires economic value, secret safeguarding, and being unrecognised in the industry.

Process and Scope of Protection

Confidential business information is protected indefinitely—it is not disclosed to the general public.
Criminal provisions deal with intentionally obtaining and sharing confidential information..
Common law provisions cover breaches of contract and specific conduct such as a fiduciary relationship.

Landmark Case 18.1 (1)

LAC Minerals Ltd v International Corona Resources Ltd [1989] 2 SCR 574: Corona divulged its interest while negotiating with LAC, and LAC later purchased the property in question, causing Corona to sue for breach of confidence/fiduciary duty.

Landmark Case 18.1 (2

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