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Questions and Answers
What is the primary difference in purpose between criminal law and tort law?
What is the primary difference in purpose between criminal law and tort law?
Who typically carries the burden of proof in a criminal action?
Who typically carries the burden of proof in a criminal action?
What is a primary characteristic of a Limited Liability Partnership (LLP)?
What is a primary characteristic of a Limited Liability Partnership (LLP)?
Which of the following best describes primary liability?
Which of the following best describes primary liability?
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In tort law, who initiates the legal action?
In tort law, who initiates the legal action?
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How is a corporation primarily managed?
How is a corporation primarily managed?
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Which of the following accurately describes the liability of shareholders in a corporation?
Which of the following accurately describes the liability of shareholders in a corporation?
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What is vicarious liability?
What is vicarious liability?
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What is a dividend in the context of a corporation?
What is a dividend in the context of a corporation?
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What standard must the plaintiff meet to win a civil action in tort law?
What standard must the plaintiff meet to win a civil action in tort law?
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What is a major benefit of the perpetual existence of a corporation?
What is a major benefit of the perpetual existence of a corporation?
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What term is used for the government representative bringing a criminal prosecution?
What term is used for the government representative bringing a criminal prosecution?
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Which statement about the transferability of ownership in a corporation is true?
Which statement about the transferability of ownership in a corporation is true?
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Which of the following is a situation where vicarious liability may apply?
Which of the following is a situation where vicarious liability may apply?
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What role do officers play in a corporation?
What role do officers play in a corporation?
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Which of the following does a corporation NOT have to worry about?
Which of the following does a corporation NOT have to worry about?
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What defines pure economic loss in the context of negligence?
What defines pure economic loss in the context of negligence?
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Which professionals are most likely to commit negligent misstatement?
Which professionals are most likely to commit negligent misstatement?
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What is a key characteristic of strict liability?
What is a key characteristic of strict liability?
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What is the duty of care owed by commercial establishments serving alcohol?
What is the duty of care owed by commercial establishments serving alcohol?
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How does negligence differ from strict liability?
How does negligence differ from strict liability?
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What determines liability for tort actions related to property use?
What determines liability for tort actions related to property use?
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What is the role of an 'occupier' in the context of property law?
What is the role of an 'occupier' in the context of property law?
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What distinguishes an 'invitee' from a 'licensee' under property law?
What distinguishes an 'invitee' from a 'licensee' under property law?
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What is a significant advantage of forming a business as a corporation?
What is a significant advantage of forming a business as a corporation?
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Which of the following is a disadvantage often associated with corporate structures?
Which of the following is a disadvantage often associated with corporate structures?
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In a franchise agreement, who typically provides the operational guidelines?
In a franchise agreement, who typically provides the operational guidelines?
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What characteristic does a strategic alliance usually lack?
What characteristic does a strategic alliance usually lack?
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What describes a joint venture?
What describes a joint venture?
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In a sales agency arrangement, which obligation is typically present?
In a sales agency arrangement, which obligation is typically present?
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What is a clear distinction of a distributorship compared to a franchise?
What is a clear distinction of a distributorship compared to a franchise?
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Which of the following is NOT typically a benefit associated with forming a corporation?
Which of the following is NOT typically a benefit associated with forming a corporation?
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What must be submitted as part of the incorporation process to define the basic characteristics of the corporation?
What must be submitted as part of the incorporation process to define the basic characteristics of the corporation?
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Which of the following is NOT a factor considered when determining name confusion?
Which of the following is NOT a factor considered when determining name confusion?
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What is the initial financing method through which a corporation can raise money without giving ownership interest?
What is the initial financing method through which a corporation can raise money without giving ownership interest?
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Which document provides information about the directors' names and addresses as part of incorporation?
Which document provides information about the directors' names and addresses as part of incorporation?
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What must occur within 18 months of incorporation for a corporation?
What must occur within 18 months of incorporation for a corporation?
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In the context of equity financing, what do companies sell to raise money?
In the context of equity financing, what do companies sell to raise money?
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Which type of security represents a document confirming a secured debt owed by a corporation?
Which type of security represents a document confirming a secured debt owed by a corporation?
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Which of the following statements about bylaws is TRUE?
Which of the following statements about bylaws is TRUE?
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Study Notes
Tort Law vs. Criminal Law
- The purpose of criminal law is to censure behavior, with the government prosecuting the crime and the victim not receiving compensation.
- The purpose of tort law is to require the wrongdoer to compensate the victim for their loss.
Commencing Legal Actions
- Criminal law actions are typically brought by Crown prosecutors on behalf of the government.
- The "accused" is the wrongdoer and the "complainant" is the victim.
- The injured party in a tort law action sues in a civil action.
- The injured person is the "plaintiff" and the wrongdoer is the "defendant".
Burden of Proof
- In criminal actions, the Crown has the burden of proving the crime "beyond a reasonable doubt".
- A conviction in a criminal action may result in imprisonment.
- The plaintiff in a civil action has the burden of proof and must prove, on a balance of probabilities, that the defendant committed the tort.
- Success in a tort law action results in the defendant paying damages to the plaintiff.
Liability in Tort: Primary and Vicarious
- Primary liability arises from one's own personal wrongdoing.
- Vicarious liability holds an employer responsible for the tortious acts of their employees committed within the scope of their employment.
- Employers are typically vicariously liable for:
- Acts authorized by the employer.
- Unauthorized acts that are so closely connected to authorized acts that they can be considered improper modes of doing an authorized act.
Negligent Misstatement
- Pure economic loss is financial loss resulting from a negligent act without accompanying property or personal injury damage to the claimant.
- Negligent misstatement (or negligent misrepresentation) is an incorrect statement carelessly made.
- Professionals, like accountants and lawyers, are more likely to commit the tort of negligence by providing bad advice, potentially breaching a contractual obligation with their client.
Negligence and Product Liability
- Product liability relates to the design, manufacture, or sale of a product.
- The same elements of proving negligence apply to negligence claims against a manufacturer.
Negligence and the Service of Alcohol
- Commercial establishments that serve alcohol have a duty of care to both impaired patrons and the public to ensure their safety.
- This duty includes assisting impaired patrons and preventing them from being injured, as well as protecting the public from injuries caused by intoxicated patrons.
The Negligence Standard vs. Strict Liability
- Strict liability imposes liability without proof of negligence.
- Strict liability is primarily limited to vicarious liability, liability for fires, liability for dangerous animals, and liability for the escape of dangerous substances.
- Liability in contract is also generally considered strict liability.
Torts and Property Use
- An occupier is someone with control over land or buildings on that land.
- Tort actions may arise when an occupier harms others, with the specific standard of care varying by jurisdiction.
Limited Liability Partnership (LLP)
- Partners in an LLP have unlimited liability for their own malpractice but limited liability for other partners' malpractice.
- LLPs offer a hybrid structure combining elements of partnerships and corporations, providing partners with limited liability for the LLP's debts and obligations.
- Often used by professionals like lawyers and accountants who cannot incorporate.
Corporation
- A corporation is a separate legal entity with the capacity to assume its own obligations.
- Offers the most significant protection for businesses because owners have limited liability, meaning their responsibility for obligations is restricted to the amount of their investment.
- Managed by a board of directors elected by shareholders.
- Shareholders have an ownership interest in the corporation and can receive dividends and profit from an increase in share value.
- Directors are elected by shareholders to manage the corporation.
Profit Sharing, Decision Making, and Sources of Capital in a Corporation
- Profits are distributed to shareholders through dividends.
- Corporations are managed by boards of directors, who may hire officers to assist in daily operations.
- Obtain capital through borrowing or selling shares.
- Shares represent ownership units and offer opportunities for dividends and increased share value.
- Creditors are paid ahead of shareholders in the event of business failure.
Taxational and Transferability of Ownership in a Corporation
- Corporations are separate legal entities that pay their own taxes, separate from shareholders.
- Offer tax advantages through strategic distribution of dividends and salaries.
- Shareholders are not personally liable for corporate debts.
- Shares are easily bought, sold, or inherited, although some corporations may have restrictions on share transfers.
Perpetual Existence and Regulations
- Corporations continue to exist even if shareholders die or go bankrupt.
- Subject to general laws, including tax laws, employment laws, and environmental regulations.
Pros and Cons of Corporations
Pros
- Limited liability
- Flexibility
- Greater access to capital
- Continuous existence
- Tax benefits
- Transferability
- Potentially broad management base
Cons
- Higher cost
- Public disclosure
- Greater regulation
- Dissolution
- Tax disadvantages
- Potential loss of control
- Potential bureaucracy
Comparison of Major Forms of Business Organization
- This section is related to a table, so the text doesn't provide specific details on the comparison of different business organizations.
Business Arrangements
Franchise
- A contractual agreement where the franchisor grants rights to a franchisee to use the brand and business model.
- The franchisor owns the brand, allowing the franchisee to use it.
- The franchisor provides operational guidelines for the franchisee to follow.
- The franchisee pays fees and royalties to the franchisor.
- The relationship is primarily contractual, not fiduciary.
Joint Venture
- A business association involving two or more entities collaborating on a specific project or venture.
- Profit and loss are shared.
- Flexible structure, including partnerships, equity joint ventures, and contractual arrangements.
Strategic Alliance
- A partnership between businesses that may involve joint research, technology sharing, or joint use of productions.
- The relationship is typically contractual.
Distributorship or Dealership
- Similar to a franchise, one party agrees to sell products or provide services prescribed by a manufacturer.
- Often seen in the automotive and computer industries.
- Relationship is governed by contract.
- Typically does not involve agency or fiduciary relationships.
Sales Agency
- An agreement where a manufacturer or distributor allows another entity to sell goods or services on their behalf.
- The agent acts on behalf of the owner but is not the actual vendor.
- Fiduciary obligations are owed.
- Common in the travel, real estate, and insurance industries.
The Process of Incorporation
- The process varies across Canada but is similar.
- Incorporator is the person who initiates the incorporation process.
- Articles of incorporation define the basic characteristics of the corporation.
Organizing the Corporation
- Once incorporated, directors will meet to:
- Make bylaws, which are rules governing the corporation's day-to-day operations.
- Adopt forms of share certificates.
- Authorize the issue of shares and securities.
- Appoint officers.
- Make banking arrangements.
- The first meeting of shareholders must occur within 18 months of incorporation to elect directors.
Financing the Corporation
- Two methods exist for financing corporations:
- Debt financing.
- Equity financing
- Securities are shares and bonds issued by a corporation.
Debt Financing
- Corporations can raise money by borrowing from banks, family, shareholders, and the government.
- Bonds and debentures give the lender a charge on the corporation's assets if the debt is not repaid. -A bond is a document evidencing a debt owed by a corporation, often used to refer to a secured debt. -A debenture is a document evidencing a debt owed by a corporation, often used to refer to an unsecured debt.
- These do not result in an ownership interest in the corporation.
- In the event of insolvency, holders are entitled to repayment before shareholders.
Equity Financing
- Corporations can raise money by selling shares.
- Equity financing leads to an ownership position.
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Description
Test your understanding of the key differences between tort law and criminal law. This quiz covers legal actions, burden of proof, and outcomes associated with each type of law. Improve your knowledge about how these two legal systems operate and their implications for victims and wrongdoers.
