Agency and Partnership: Business Law PDF

CHAPTER 10: AGENCY AND PARTNERSHIP 10.1: THE AGENCY RELATIONSHIP  Agency: the service an agent performs on behalf of the principal  Agent: a person authorized to act on behalf of a principal when dealing with a third party  Principal: the person who authorizes an agent...

CHAPTER 10: AGENCY AND PARTNERSHIP 10.1: THE AGENCY RELATIONSHIP  Agency: the service an agent performs on behalf of the principal  Agent: a person authorized to act on behalf of a principal when dealing with a third party  Principal: the person who authorizes an agent to act on their behalf  Key Distinctions:  A real estate agent is NOT an agent in legal definition  If they were, a real estate agent could put in an offer for a house for a person  Most employees are not agents, but some are agents  Eg: customer service reps in Rogers are agents  They offer different phone plans and these offers are binding on Rogers  In Partnerships, every partner is an agent for the other  Eg: Professor can bind anything with her two law partners  CREATION OF THE AGENCY RELATIONSHIP  Agency Agreement (formation by contract): a legal agreement creating an agency relationship between the principal and agent  All the elements of a contract must be present: consensus, consideration, legality, intention to be bound, and capacity  Actual Authority: the authority given to an agent either expressly or by implication  Express Authority: the authority of an agent, as actually stated by the principal  Implied Authority: the authority of an agent, as implied from surrounding circumstances  A written agency agreement should expressly state the agent's authority as specifically as possible to limit implied authority.  Enduring Power of Attorney: an agreement created while the principal still has full mental capacity, allowing a trustee to manage the affairs of the principal in the event they lose sanity  Formation by Estoppel: when a principal’s conduct or words lead a third-party to believe an agent has authority, the principal is bound by the agreement regardless of if the agent had actual authority or not.  Estoppel: an equitable remedy that stops a party from taking back their actions or words in the argument of fairness. (the principal is es-STOPPED)  Apparent Authority: authority, as suggested to a third party, by the conduct of the principal   Reasonable person test applied-> Depends on the conduct of the principle not the *agent*. The conduct of the principal has to cause the misleading, the agent’s conduct doesn't matter.  Formation by Ratification: occurs when a principal confirms an agreement entered into by an agent, even if the agent was acting without any apparent or actual authority when the agreement was made.  The Following Elements Must be Present:  Time Limit: The third party has the right to set a reasonable time limit within which the ratification must take place  Specific Principal: The agent must be acting on behalf of a specific principal at the time of entering the agreement.  An agent cannot enter an agreement and then find a principal to uphold it  Capacity: The principal must have been fully capable of entering a contract at the time the agent was claiming to act on their behalf  If the principal was drunk at the time, the agreement is null  Performability: The parties must still be able to perform the object of the contract at the time of ratification  Ratification by Conduct: ratification can also occur if the principal receives benefit from the agreement or acts as if the agent had the authority to enter the agreement  Formation by Necessity: the authority to act as an agent when there is an urgent need.  With instantaneous communication now available, it is rare that agency by necessity be used.  Ex. if you worked on a farm and your boss was away for a trip and your crop was going to go bad very very soon - you have the authority to make a quick decision 10.2: THE DUTIES OF THE PARTIES IN AN AGENCY RELATIONSHIP  Agent’s Duties:  A Duty to Act Within Their Actual Authority  When an agency agreement exists, an agent has the responsibility to act within the bounds of their actual authority.  If an agent violates their actual authority, even in the case of apparent authority, the principal can sue for breach of contract and any losses suffered as a result  A Duty of Care   An agent must not only have the skills and expertise claimed, but must also exercise that skill in a reasonable manner  Duty to Follow Instructions of the Principal  An agent must follow the explicit instructions of the principal, even if doing so harms the principal  Duty to not Delegate (unless expressed/implied):  Generally, an agent cannot delegate their responsibilities to another person.  Fiduciary Duty: a duty to act in the best interest of the principal.  Elements of Fiduciary Duty:  Keep in strict confidence any communications that come through the agency function and disclose that communication to the principal  Act in the best interests of the principal, even if the agent may lose some personal benefit  Not take advantage of any personal opportunity that may come to the agent through the agency relationship  An agent has a duty to perform in the utmost good faith towards their principal since the principal is vulnerable to the agent.  An agent must adopt full disclosure in all communications with their principal and reveal any personal benefits they may receive as the result of an agreement.  Lawyers, Accountants, Doctors, and Trustees have a fiduciary duty towards their clients  Principal’s Duties:  Honor the Contract: the principal’s primary obligation is to honor the terms of the contract with their agent with the primary factor being payment to the agent. 10.3- THE LIABILITIES OF THE PARTIES IN AN AGENCY RELATIONSHIP  Agent’s Liabilities:  Warranty of Authority: when an agent knowingly misleads a third party into believing they have authority when they do not, the agent is liable and may be sued by the third party for the tort of deceit. The agent may be sued for negligence if they were inadvertently acting outside their authority.  Principal’s Liabilities:  Vicarious Liability: holds an employer liable for the acts of an employee during the course of employment  Agent is an Employee: when an agent is the direct employee of the principal, the principal is always vicariously liable for their acts   Agent is NOT an Employee: the definition of an ‘employee’ is constantly expanding within the supreme court. Currently, it is believed that a principal can be held vicariously liable for the acts of an agent, if the acts in question were performed in the process of serving the agency function.  Estoppel: if the principal however has directly done something that leads a third party to believe an agent is an employee, vicarious liability will always hold.  Direct Liability for Tortious Conduct:  A principal can also be held liable if they communicated false information to their agent which was then relied upon to make a deal with a third party. The tort of deceit or negligence may apply.  Undisclosed Principals: a principal whose identity is concealed from the third party with whom the agent is dealing.  Aware Third-Party: when an agent makes it aware that they are acting for a principal but does not reveal their identity, the agent holds no liability to the third-party and only the principal can enforce the agreement.  Unaware Third-Party: when an agent enters an agreement as if they are the principal, the agent is liable to be sued by the third party and only the agent can enforce the agreement, not the principal. However, once the third party discovers that an undisclosed third-party exists, they may choose to stop pursuing the agent and instead sue the principal. Note that their decision here cannot be changed  Situations in Which the Principal Must be Disclosed:  Where the identity of the person is important.  Ex., an agent cannot pass a job interview for a principal and then have the principal show up to work  Where the agent has no actual authority  An agent cannot be acting on apparent authority when making a deal for an undisclosed principal. They must be acting on actual authority  Termination of the Agency Relationship:  Death of Principal: actual and apparent authority ceases  Bankruptcy of Principal: actual and apparent authority ceases  Dissolution of Corporation: actual and apparent authority ceases  Insanity of Principal: actual authority ceases, apparent authority may continue until third-party is notified  Mutual Agreement: actual authority ceases, apparent authority continues until third-party is notified 10.4- TYPES OF BUSINESS ORGANIZATIONS  Sole Proprietorship: involves a person carrying on business as a sole owner  No separate legal entity  Unlimited personal liability  Single owner  Income subject to personal tax rate  Proprietor may obtain insurance to offset liability  Partnership: when the ownership and responsibilities of a business are shared by two or more partners, with a view towards profit  No separate legal entity  Unlimited personal liability  Two or more partners  Creation of a Partnership:  Creation by Inadvertance: occurs when the following 3 factors are present  Joint contribution of capital to establish money  Any implication that you intended to share profits/losses  Joint participation in management of the business  Creation by Contract: the contract must include all relevant information pertaining to the business such as;  Duties of each partner  Type of work/talent each partner is expected to contribute  Time period of commitment  How the profit is to be shared and how capital is to be allocated  Any limitations on the power of a partner  Methods of resolving disputes  Creation by Estoppel: if one of the parties, represents to a third-party, either by conduct or through words that they are a partner, and that information is relied upon, a partnership exists.  Other Business Structures:  Non-Profit Society: a separate legal entity with a different incorporation process and liability of its members  Holding Corporation: a corporation that holds shares of other corporations   Joint Venture: a collaboration of several businesses, usually to complete a major project  Limited Partnerships: a type of partnership agreement involving 1+ general partners (unlimited liability) and 1+ limited partners (limited liability)  The liability of a limited partner is capped to whatever their initial investment in the business was.  A limited partner must be careful to not partake in management activities or day to day operation of the business as this would change their status to a general partner and open them up to unlimited liability 10.5- RIGHTS AND DUTIES OF PARTNERS  Provisions of the Partnership Act: the following provisions apply to all partnerships unless otherwise stated in the partnership agreement  Partners Will Share All Profits/Losses Equally Between Them  Partners Are Entitled To Reimbursement For Any Expenses They Incur In The Process Of The Partnership Business  All Partners Have The Right To Take Part In Management  A Partner Is Not An Employee And Is Not Entitled To Wages, Only To The Profits Of A Business  No Major Changes Can Be Made Without The Unanimous Agreement Of All Partners  Partners Cannot Assign Their Partnership Status To Another Person Without The Approval Of All Partners  Business Records Must Be Kept At Partnership Office And All Partners Have The Right To Review Them  Fiduciary Duty:  Each partner has the fiduciary duty to act in the best interest of their partner(s)  Information learnt through one's position as a partner, must be shared with the partnership and cannot be used for personal benefit.  A partner cannot operate a similar business without consent  Use of Partnership Property: if the property of the partnership is used for personal use, any profits derived must be split with the partnership and reimbursements must be made for deterioration of property  Bringing Personal Property into a Partnership: if personal property is brought into a partnership for business use, it becomes the property of the partnership.  Liability of Partners:  Liability through Agency: each partner is an agent for the others and is able to legally bind them to a contract, as long as  the contract has to do with the normal operations of the business.  Vicarious Liability: partners are vicariously liable for the careless or intentional conduct of other partners.  Partners can also be held liable for misuse or damage to the money/property of a third party that was entrusted to the partnership  Partners are also liable for the conduct of their employees  Unlimited Liability: as with sole proprietorships, partners have unlimited personal liability to satisfy the claims of an injured party.  When the assets of the partnership are not sufficient to satisfy the claims of a third-party, partners must make up the difference from their personal assets. This is typically done in the same proportion that profits are split under the partnership agreement.  If one partner is substantially well off compared to the others, a third party may come after that partner in particular. The partner would then later be able to look to the remaining partners to compensate him/her based on the proportions set out in the partnership agreement.  Jointly Liable: under joint liability, all partners must be sued together  Severally Liable: under several liability, each partner can be sued separately  Dissolution of a Partnership:  Dissolution by Notice: a partnership can be dissolved by notifying the partners of one’s desire to exit  Dissolution by Death or Bankruptcy: a partnership is automatically dissolved upon the death or bankruptcy of a partner, unless otherwise stated in the partnership agreement  Dissolution by Expiration of Term: when a partnership was originally created for a specific time period only, the partnership is dissolved at the end of the term   Dissolution upon Completion of Venture: when a partnership was created for the completion of a specific venture only, the partnership is dissolved upon its completion  Dissolution by Illegality of the Business: if the nature of the business a partnership is involved in becomes illegal, the partnership is dissolved  Dissolution by Court Mandate: one partner can apply to the court to dissolve a partnership if any of the following are present;  A partner has become mentally incompetent or otherwise incapable of performing their responsibilities  A partner’s conduct is in breach of the partnership agreement  It is clear that the partnership’s business can only be carried at a loss  It is just and equitable that the partnership be dissolved  Distribution of Assets and Liabilities:  Steps: 1. Debts to creditors paid out from profits a. If profits are insufficient to cover debts, the partners’ original capital investment may be used b. If profits and original investment is insufficient, the partners are personally liable to make up the difference 2. Once debts have been paid, any assets remaining are used to pay back the partners for their advances and original capital investments 3. If any funds remain, they are split among the partners CHAPTER 11: CORPORATIONS 11.1- SEPARATE LEGAL ENTITY  Separate Legal Entity: the principle that a corporation exists separately from the person who created it.  This distinction also makes it true that the assets of a corporation do not belong to its shareholders and therefore the liabilities of a corporation (in most cases) do not belong to the shareholders either.  The Role of Agents: since a corporation is a separate legal entity (a fiction), it does not have the ability to represent itself. Instead, it relies on directors/shareholders to enter into contracts on its behalf.  Pros of Incorporation:   Limited Liability: since corporations are a separate legal entity from its shareholders, the shareholders have a limited liability towards the obligations of the corporation and can only lose what they have invested  The concept of limited liability is often eliminated when taking loans from a bank because the bank will request a personal guarantee from the shareholders on that loan  Regardless, the principle of limited liability protects shareholders from vicarious liability, insolvency when dealing with suppliers, and more.  Taxes: a corporation can also provide multiple tax advantages if funds are handled correctly and with the advice of a professional  Succession and Transferability:  Succession: because a corporation is a separate legal entity, and its ownership comes in the form of shares, which are an asset, a corporation is not dissolved automatically if a major shareholder dies. Instead, their shares, being an asset, are simply transferred as a part of their estate to their heir  Transferability: shares in a corporation can be easily and quickly transferred from person to person without the approval of other shareholders or reporting to the corporation authority  Obligations of Participants: unlike members of a partnership, shareholders are free of any obligations to the corporation or other shareholders.  Limitations do exist in the case of majority shareholders*  Management: unlike sole-proprietorships or partnerships, where the management and ownership of the business are hand in hand, the owners of a corporation (the shareholders) do not need to be involved in its management.  Instead, shareholders appoint a board of directors (whose purpose is to create the greatest value for shareholders) and in turn the board of directors will hire managers.  If shareholders are unhappy with the board of directors, they can vote to replace one or all of the members.  Cons of Incorporation:  Loss of Control  Expensive to Incorporate and Ongoing Fees  Formal Record Keeping Requirements 11.2- THE PROCESS OF INCORPORATION:  Incorporation Methods:  Registration: incorporation through registration involves registering a “memorandum of association” and “articles of association” along with paying a fee. Nova Scotia is the only province still using this method of incorporation  Memorandum of Association: the “constitution” of a corporation, setting out important information such as name, authorized shares, objectives, etc.  Articles of Association: internal regulations setting out the procedure for governing a corporation, including how shares are to be issued, voting procedures, etc.  Letters Patent: incorporation through a letters patent is based on the practice of the monarch granting a royal charter. An applicant would petition the appropriate government body for the granting of the letters patent, and the government, acting by statute, would grant a charter of incorporation. Prince Edward Island is the only territory using this method  Articles of Incorporation: a corporation is granted a certificate of incorporation by filing the articles of incorporation and paying the fee. All other provinces and the federal government use this method of incorporation.  Share Classes  Common Shares: shares to which no preferential rights or privileges are attached  Gives shareholders the right to vote at shareholders meetings, to receive dividends declared by the corporation, and to receive the property of the corporation on its dissolution  Preferred Shares: shares giving the shareholder preference over other classes of shareholders  Gives shareholders preference to receive dividends before common shareholders when dividends are declared. Typically do not include voting rights.  Borrowing: corporations can borrow funds, thus accumulating debt. This can be done either by borrowing from a single creditor, such as a bank, or by issuing bonds to multiple creditors.  Bond: a share interest in the indebtedness of a corporation, typically secured against some asset  A bond does not give its holder any ownership or control of the corporation  In the event of insolvency, bond holders have a preference to the companies assets to repay debt before shareholders do  Debenture: an unsecured method of borrowing funds  Closely Held and Broadly Held Corporations:   Closely Held Corporation: a corporation in which there are relatively few shareholders and usually face a restriction on the sale of shares.  Broadly Held Corporation: corporations that are publicly traded on the stock market or have more than 15 shareholders  These types of corporations face much more stringent regulations such as filing requirements with local securities commissions, financial audits and reviews, etc. 11.3- CORPORATE DIRECTORS, OFFICERS, SHAREHOLDERS  Director: a manager within the corporation  Election: Directors are elected by the shareholders at the annual meeting.  Once elected, shareholders have little say in management decisions since this is now the responsibility of the director. However, if a director wishes to be re-elected, it would be wise for them to please the shareholders  Ability to Serve: for a person to serve as a director, they must meet the following requirements  Adult of sound mind  Cannot be bankrupt  Cannot have been convicted of fraud  Duties of a Director:  Duty to Exercise Care, Diligence, and Skill: federal legislation requires directors to exercise the care, diligence and skill of a “reasonably prudent person”  Fiduciary Duty: fiduciary duty requires directors to act in the best interest of the corporation, to be loyal, to avoid conflicts of interest, and to otherwise act honestly and in good faith.  Issue: it is important to note that directors owe this fiduciary duty to the corporation, not to the shareholders. Thus, directors of a corporation would have to vote to take legal action against other directors which is unlikely in most cases.  Derivative(Representative) Action: in most circumstances, even a minority shareholder can take civil action against a director on behalf of the injured corporation.  Duty of Care: directors also owe a duty of care to their creditors, exposing them to liability for negligence  Insider Information: refers to information that would make a material difference on the corporation or its share price, that is NOT known to the public   Directors are prohibited from using this insider knowledge to their own advantage or to benefit their friends and family.  External Obligation:  Personal Liability in Unpaid Wages: if a corporation fails while owing wages to workers, the directors can be held personally liable. However, in most cases, directors will resign before this point to protect themselves  Personal Liability for Unpaid Taxes: under federal income tax legislation, if a corporation leaves taxes unpaid, the director can be held personally liable  Personal Liability for Environmental Regulation: statues can pose personal liability on directors for contamination of property, pollution of air, spills, and costs of cleanup.  Due Diligence: doing everything reasonable to avoid a problem leading to legal liability  Officers and Senior Executives: courts often impose the same responsibilities and liabilities on senior executives as those placed on directors  Shareholders: shareholders typically have no/few obligations to the corporation or other shareholders unless they hold enough shares to classify as an “insider”.  Rights: shareholders have significant rights and remedies  Right to View Documents: including incorporation documents, list of all shareholders, list of transactions of shares, list of officers and directors, minutes of shareholder meetings  Right to view annual financial statements and auditors report  Annual General Meeting: shareholders have the right to attend the annual general meeting to vote on important decisions  Right to appoint a Proxy: shareholders may appoint a proxy to vote at the annual meeting on their behalf  Right to not have their shares diluted  Protections:  Derivative(Representative) Action: in most circumstances, even a minority shareholder can take civil action against a director on behalf of the injured corporation.  Oppression Action: current/past shareholders, directors, officers, or creditors, may seek relief from the court against a corporation on the basis of oppression or unfair prejudice.   Dissent and Appraisal: the right of a minority shareholder who is adversely affected by a major change to state their opposition and force the corporation to buy back their shares at a fair price  Dividends: a payment to shareholders out of corporate profits  Shareholders, preferred or common, are not entitled to these dividends unless declared and cannot sue for them.  Shareholder’s Agreement: an agreement among shareholders that sets out the terms of their relationship with the corporation  Termination of a Corporation:  Voluntarily or Involuntarily  Voluntary - divide up the remaining assets & can dissolve  Involuntary - bankruptcy process  Internally or Externally  Decision can be made internally  Externally - creditors can force it to happen CHAPTER 12- EMPLOYMENT 12.1- WHAT IS EMPLOYMENT?  Employee vs Independent Contractor:  Employee: an employee is a person who has agreed to perform services for another, the employer, in exchange for payment.  An employee is in a master-servant relationship, acting under the direction of the master  Independent Contractor: a person working for themself who contracts to provide services to another.  Control Test: the control test is used to determine whether one is an employee or an independent contractor. It assesses the degree of control exercised by the person paying for the service to make this decision  A person who is told what to do, and how to do it, is likely an employee  A person who is told what to do, but has discretion for how to do it and when, is likely an independent contractor  Organization Test: another test used by the courts to determine employment status. The organization test examines whether the worker is providing services that are integral to the organization  Risk Test: This test looks to determine who bears the risks associated with the work performed. It asks whether the worker stands to profit financially or bear financial losses from the completion of a task  Tools Test: Courts will also consider who provided the tools necessary for the completion of a job, especially when those tools entail a substantial cost. 12.2-THE LAW OF EMPLOYMENT:  Employment Contracts: employment contracts set out the responsibilities/obligations of the employer and the employee.  Responsibilities of the Employer:  Payment of Wages: an employer, by law, is obligated to pay an employee their earned wages  Ensure a Safe Workplace and Working Conditions: an employer must take every precaution necessary to ensure a safe workplace and good working conditions  Hire Competent People: an employer must carefully hire competent employees, or risk being held liable for the misdoings of an unqualified employee  Responsibilities of the Employee:  Follow any Reasonable Order Pertaining to their Employment  Treat the Property of the Employer Carefully  Be Honest, Loyal, and Courteous  Be Punctual and Work for the Time Specified in their Contract  Act in the Best Interest of the Employer  Fiduciary Duty (*sometimes*): usually only the case for senior level employees  Restrictive Covenants: a commitment to not work in a certain geographical region or industry for a specific period of time upon termination of employment  Should specify a reasonable time frame  Restrictive Covenants that are too broad will not be enforced  Covenants imposed should be the most appropriate way of protecting the employers interests  Courts are reluctant to enforce these covenants since it may deny someone the ability to earn a livelihood.  The onus to prove a clause as unreasonable lies on the party trying to void the clause.  Termination: employment contracts can be terminated in a few ways  Discharge by Time-Period: occurs if an employment contract states a specific end date  Discharge by Mutual Agreement: occurs if both parties agree to discharge the employment contract  Discharge with Reasonable Notice: occurs when reasonable notice is provided with regards to statute  Reasonable Notice: courts consider many factors such as length of service, the type of job, the employee’s age, experience, training, and qualification to determine what a reasonable notice is.  Discharge with Pay in Lieu of Notice: occurs when the employee is discharged immediately but given pay for what would have been the notice period   Discharge Immediately with Just Cause: occurs if an employee is fired for a just cause  Proportionality: there should be a degree of proportionality between the offense and the punishment for just cause to apply  Just Causes:  Misconduct and Dishonesty: just cause, but should be well supported with evidence  Disobedience and Insubordination: just cause, if behavior is repeated  Incompetence: just cause, however employers should give employees notice of unacceptable performance and provide an opportunity for improvement  Illness and Disability: just cause as it is considered a frustration of the employment contract. However, employers must take all reasonable steps to accommodate the employees needs first, unless those reasonable steps cause undue hardship.  Layoffs: an employer running out of work for an employee or experiencing financial difficulties is not just cause for termination. The employee is still entitled to a reasonable notice, pay in lieu or a just cause termination  Constructive Dismissal: unilaterally demoting or changing the duties of an employee, contrary to what was agreed to in the employment contract  By making a material change to the terms of an employees employment contract, such as the duties of their job without the consent and approval of the employee, the employer is engaging in constructive dismissal and may be sued  Constructive dismissal also applies when an employer fails to address harassment or sexual harassment within a workplace that forces an employee to quit  Remedies for Wrongful Dismissal: When an employee was dismissed without notice, without pay in lieu of notice, or without just cause, the employee has grounds for a wrongful dismissal claim.  Damages are awarded based on what the employee would have received had proper notice been given.  Ex. if an employee is fired and given only 1 months notice when they should have gotten 5 months, the damages awarded would be for what they would have earned in those 4 additional months  Punitive damages may also be awarded based on the circumstances   Wrongful Leaving: employees are also required to give reasonable notice of their intent to leave unless the employer constitutes a breach of contract such as involving the employee in illegal activities, expecting the employee to perform dangerous tasks, etc.  In most cases however, employers would only pursue a wrongful leaving case for senior employees whose leaving has a significant impact on the business 12.3-LEGISLATION IMPACTING EMPLOYMENT  Provincial: Employment Standards Act  Federal: Canada Labour Code  If you are in a federally regulated industry: banking, shipping, airline, first nations reserve, federal government workers  Set minimum wage, overtime, work hours, rest periods, vacation, maternity, and parental leave, termination and severance pay  Filing a Complaint: employment standards legislation allows employees to file a complaint with the government board which will then be investigated by civil servants.  Issue Estoppel: employees should always seek legal advice before filing a complaint under the employment standards legislation. This is due to the fact that any subsequent claims the employee makes while seeking damages in common law will be dismissed if an employment standards officer has already looked into the situation before the courts. This is because the courts will view the issue as having been resolved already  Human Rights: employers must take precaution to ensure that they do not conduct any discriminatory hiring or employment practices. Further, they must ensure the protection of basic rights as included in provincial human rights statutes.  Human Rights Tribunal: these tribunals hear complaints about violations of human rights and have the power to investigate, levy fines, and even order the reinstatement of an employee.  Canada Human Rights Act: prohibits discrimination on the basis of race, ethnic origin, color, religion, age, sex, etc.  Job advertisements and application forms should refrain from requesting information on these protected grounds unless they are a bona fide occupational requirement.  Employers have an obligation to accommodate employees with disabilities or special needs, unless when these accommodations pose undue hardship on the employer  Affirmative Action: programs intended to correct racial, gender, or other imbalances in a workplace to boost employment equity, typically through reverse discrimination.   Employment Equity: the correction of employment situations where there has been a tradition of racial, gender, or other inequality  Reverse Discrimination: bias exercised against a person or class to correct a historic discrimination against another person or class.  Health and Safety: all parties, including project owners, contractors, and employees, share the obligation to maintain workplace safety.  Worker’s Rights: workers generally have three rights under the Health and Safety legislation.  The right to refuse work they believe is dangerous to themselves or another worker  The right to know about any potential hazards to which they may be exposed  The right to participate in the health and safety process  Remedies for Health and Safety Violations: officers are empowered to enter the workplace without warrant and check for violations. If found, they have the power to  Order a correction of the problem  Shut down the jobsite  Issue tickets and fines  Workers’ Compensation: common law was often unable to provide a remedy for employees injured on the job, especially when the injury was a result of the employees own carelessness. This led to the creation of workers’ compensation programs which act as a no fault, mandatory insurance to provide payments to injured employees  An injured employee who takes workers compensation is barred from pursuing civil action against the employer or job site owner.  Employment Insurance: Both employers and employees pay into a government supplemented fund which provides temporary assistance to eligible employees who lost their job through no fault of their own or due to a shortage of work. CHAPTER 13- INTELLECTUAL PROPERTY: (EXCEPT Regulating Information Tech) 13.1- INTELLECTUAL PROPERTY  Types of Property:  Real Property: land and the things attached to it  Tangible Personal Property: consists of movable things in the form of goods or chattels   Intangible Personal Property: the rights or claims that one person has that have value and can be enforced in court. (Ex. the right to collect a debt)  Intellectual Property: personal property in the form of ideas and creative work  When an idea (IP) is taken and used by someone else, it is still available to the original owner, however its value may be considerably diminished  Intellectual Property Law: IP Law attempts to balance the protection of a persons’ ideas, information, and creative works, with the free flow of new and innovative ideas which stimulate the advancement of the commercial environment. The power to introduce legislation relating to the protection of Intellectual Property belongs exclusively to the Federal Government.  Copyright Law: exists to protect the actual expression of an idea, not the idea itself. Copyright protection is extended to the author to the end of the calendar year in which they die, and for a further 70 years after that date. The owner of the copyright controls the reproduction of their work during that period, after which, it becomes part of the public domain.  Copyright vs Public Domain:  Copyright: control over the use and reproduction of the creative work  Public Domain: the category of works that are no longer protected and may be used by anyone  Matters Covered: copyright law covers a wide array of creative expressions  Literary Works: articles, news feeds, books, software code, hardware design, etc.  *Software code is covered under copyright law as a literary work* (this is on the exam)  Dramatic Works: movies, videos, theater productions and performances  Musical Works: musical compositions with or without words  Artistic Works: paintings, drawings, charts, maps, photos, sculptures  Performances: performances by actors, dancers, singers  Sound Recording: CDs, tapes, and other methods for reproducing sound  Communication Signals: radio, TV, cable, and internet broadcasts  File Sharing: copyright law protects the holder of a copyright from their material being copied or downloaded  by a third-party for the purpose of sale or distribution, however peer-to-peer downloads are considered lawful.  Ex., it is legal for me to download a song online through improper channels, but it is illegal for me to download and distribute or sell a song for which i do not have the copyright  Creation: in canada, the creation of a work engages copyright protection automatically, without the need to register the copyright.  It is however wise to register your copyright as without doing so, remedies available in the case of a copyright infringement may be very limited  Ownership: a copyright belongs to the person who created the work or to the employer where the work was created as part of employment.  The owner of a copyright can assign or license it to anyone they wish and continue to have moral rights in the work  Moral Rights: Attribution, Integrity, Association  Attribution: name of the author should continue to be associated with the work  Integrity: the work should not be distorted, mutilated, or changed in a way that degrades it or brings harm to the reputation of its author  Association: the work should not be associated with anything that is prejudicial to the author’s reputation  Fair Dealing Exception  Copyright Act Original Exceptions: o Research or Private Study, o Criticism or Review o News reporting (but author must give source)  Copyright Modernization Act., 2012 Added: o Education o Parody (imitation) o Satire (using exaggeration for humor)  Copyright Infringement Remedies:  Injunction: a court order to stop some activity  Interlocutory Injunction: an injunction that is given before the actual trial to prevent irreparable damages  There must be an infringement of copyright   It must be the case that if the injunction is not granted, irreparable harm will be suffered that cannot be compensated for by damages at trial  The balance of convenience should be in the plaintiffs favor. (the plaintiff should stand to suffer greater damages than the defendant)  Anton Piller Order: a court order to seize offending material before a trial  Delivery Up Order: a court order to deliver all copies of infringing material to the copyright holder  General and Punitive Damages: general and punitive damages may also be awarded if the victim has suffered financial loss as a result of the infringement  Statutory Damages: allows courts to award damages it considers “just” without proof of damages or loss  Wide/Enhanced Injunction: an injunction that prohibits a wrongdoer from future infringements of copyright in works owned by the plaintiff  Summary Procedures: an arrangement allowing a court to make a decision based on affidavit evidence. 13.2- PATENTS  Patent: a government-granted monopoly that gives only the inventor the right to produce, sell, import, or profit from an invention. A patent covers the idea itself, rather than just the expression of it as with copyrights.  Qualifying for a Patent:  It must pertain to a new and original invention  It must be inventive, displaying ingenuity and not some obvious improvement  It must be useful, functional, and operational  What Does NOT Qualify for a Patent:  Some scientific principle or abstract theory  **Computer Software**, in canada this is covered under copyright law as a literary work  Genetically modified animals  Inventions for illegal purposes  An item that does not work  Creation: unlike a copyright, a patent must be registered before conferring rights on the inventor  Once registered, it provides protection to its owner for a period of 20 years. However, disclosure for exactly how that item is made will be a part of public record once a patent is granted   Patent Pending: has no actual meaning, simply used to signal to the world that a patent has been applied for (thus the applicant is first in line for a patent on that item)  Trademark: any term, symbol, design, sound, or color applied to a product that identifies a business product and distinguishes it from a competitor. A trademark identifies the manufacturer of the goods rather than the product itself.  Registration: for a trademark to be fully protected, it must be registered. Once registered, the trademark gives its owner exclusive rights to its use for 15 years.  Using a trademark for a certain length of time without registering can also establish your ownership of it through common law. However, this can lead to a lengthy and costly litigation to prove your ownership.  Bill C-31 Changes:  Brings the canadian trademark law in line with international treaties, resulting in more stringent regulations and a renewal every 10 years instead of 15  The registrant will no longer need to state that the mark has been used in canada or show an intention to use it in canada  Remove the hyphen to make the Trade-marks Act the Trademarks Act  Passing-Off: the tort of misleading the public about the identity of a business or product by using the trademark of another brand.  It is necessary to establish that the public was or would actually be misled and that actual or potential damage was caused to the plaintiff.  Industrial Design Act: allows an inventor to protect a unique design, shape, or pattern that distinguishes a manufactured article, such as the Coca-Cola Bottle.  Registration is required and will not be implied. Once registered, the item should be marked by a capital ‘D’, enclosed in a circle.  Registration provides protection for 10 years. However, a maintenance fee must be paid after 5 years 13.3- CONFIDENTIAL INFORMATION  Confidential Information: private information, the disclosure of which would be injurious to the business; a type of intellectual property.  Trade Secret: confidential information that gives a business a competitive advantage CHAPTER 14: REAL AND PERSONAL PROPERTY 14.1- REAL VS PERSONAL PROPERTY:  Property: refers to the relationship existing between an item and the individual who owns it.  Real Property: refers to land and the building or fixtures permanently attached to it; the essential characteristic of real property is that it is fixed, and immovable.  Personal Property: refers to tangible, movable goods (chattels) and intangible claims (chose in action)  Chattels: tangible personal property, consisting of movables that can be measured and weighed.  Chose in Action: a claim that one person has against another, such as a claim for debt. (ex. Bonds, Share Certificates, etc.)  Laws of Real Property: whether shelter is obtained through ownership, renting, or squatting, the relationships created are governed by real property law.  Interests in Land: legally speaking, all the land in Canada is owned by the crown and can be taken from you if it is in the best interest of the country.  Estates in Land: the right to uninterrupted possession of land for a period of time, while the ownership belongs to someone else, typically the government.  Fee Simple: the highest interest in land, equivalent to ownership; an estate granting possession for an indefinite period of time.  Life Estate: an interest in land granting possession to the holder until their death, at which point it returns to the owner or their heirs.  Reversionary Interest: the right of the original owner to take back possession of property upon the death of a life tenant  Homestead Rights: rights giving a spouse a claim to a substantial portion of family property in the case of a divorce.  Leasehold Estates: an interest in land that grants the tenant exclusive possession until a specified date.  Lesser Interests in Land: unlike freehold and leasehold, there are several lesser interests in land that do not convey the right to exclusive possession of the property.  Easement: gives a person the right to use a portion of another’s land, usually for a particular purpose  Right of Way: gives a right to cross another's land, usually to get to their own property. However, this does not include the right to stop, park a car, or build some permanent structure on that property.  Dominant Tenement: the property that has the advantage of a right of way easement   Servient Tenement: the property subject to a right of way easement  Permanent Incursion: an easement can also allow a permanent incursion onto the property, such as the right to have a part of a building hang over onto a neighbors property  Statutory Easement: gives utilities or other similar bodies the right to run fiber optic cable, phone lines, power lines, or sewer lines across private property.  Easement Acquired by Prescription: a right to the use of land that is acquired through the free use of that land for a number of years without interference by the owner  This can be prevented by periodically exercising some control over the portion of land in question, such as blocking off public access from time to time  License: a non-exclusive right to use land that is revocable at any time. (Ex. public malls)  Adverse Possession: a right to actual possession of land that occurs when someone has had possession of the land for a significant number of years with the knowledge and toleration of the owner.  Several jurisdictions have abolished the right to adverse possession as well as easement acquired by prescription.  Condominiums and Cooperatives:  Condominiums  You have ownership over your condo  You also have shared ownership over the outside of the building etc.  You would pay condo fees that are used to pay for the shared spaces  Co-operatives  All members owns all the units  Everyone has a say  Board of director will determine who lives in the unit  Tenancy in Common and Joint Tenancy:  Tenancy in Common: ownership of land by two or more parties with an equal, undivided interest in the land.  Although it is possible to create contracts giving entitlement to different percentages of the proceeds of a sale, the term undivided means that no one person can point to a section of the property and say ‘this portion is mine’.   When one of the parties dies, their interest in the land is passed onto their heirs or beneficiaries  The property is subject to estate taxes, probate fees and other expenses when transferred to the heir.  Joint Tenancy: joint tenants own the entire property, however if one party dies, the living party assumes ownership of their interest in the property.  Since the property does not go through the estate, there is no estate taxes, probate fees, or other expenses  Transfer and Registration of an Interest in Land:  Agreement of Purchase and Sale: the first step in the purchase of a property; also called an interim agreement.  This agreement is a binding contract for the sale of a property and careful attention should be given to its crafting to avoid being bound in a contract that you cannot or do not want to uphold  Condition Precedent: a condition under which, the obligations of a contract will begin; also called a subject-to clause.  Ex., financing clause, inspection clause, insurance clause, etc.  Registration System: one of the two systems used in Canada to transfer ownership of property; in this system, the rights of the parties involved are determined by the registered documents.  Lands Titles System: one of the two systems used in Canada to transfer ownership of property; this system provides guaranteed title to real property.  Landlord-Tenant  Leasehold Estates: o Lease gives the tenant the right to use the property to the exclusion of all others for the period of time o Periodic tenancy vs term lease  Term is having a full period o Assignment vs. Subletting  Residential Tenancies Act o Overrides the common law and sets minimal standards o If you rent an apartment then you are regulated by this act  Residential Tenancies (in Ontario)  Residential tenancy agreements are far more regulated than commercial leases.  Due process for evictions must be followed, proper notice, right to hearing etc. o The only entity that can pass eviction is the sheriff  Standards: good state of repair and fit for habitation. Doesn’t matter if you accepted the unit “as is”. o Landlord is obligated to fix things to make it habitable o Even if you knew  Residential Tenancies  Landlords cannot ask for a security deposit, last month's rent(LMR) only o Tenants get interest on LMR at rate = CPI  24 hour written notice for entry by landlord unless emergency or tenant is moving out or tenant gives consent.  You do not have to renew your lease. At the end of a fixed term lease, you are automatically switched to a monthly lease. o After term lease, your lease automatically turns into periodic  Landlord cannot demand post dated cheques.  Tenancy “runs with the land”  Selling property – landlord’s own use, and renovictions o If landlord sells the property, tenancy becomes attached to the property o Only if the landlord sells, and the purchaser wants to move in then they can ask u leave o If landlord wants you out, you can ask for ‘cash for keys’  Tenant’s Rights  Security of Tenure  Unit in a good state of repair and fit for habitation  Quiet enjoyment  Free from harassment  Landlord cannot prohibit pets in a building (although if the pets interfere with quiet enjoyment, that is basis of eviction) o Residential tenancy act prohibits prohibiting pets o In a condo, they can prohibit pets  Minimum of 21 degrees Celsius (City By-Law)  Provision of vital services, such as water or electricity.  Tenant’s Obligations  Pay rent on or before the 1st of the month  Maintain ordinary cleanliness  Not interfere with other tenants or the landlord  Not commit illegal acts or run illegal businesses on the premises.  If you are on a month to month lease: must give 60 days notice.  If you are on a fixed term lease: you can sublet or assign. (Landlord cannot unreasonably deny permission to person you find to sublet or assign)  o You can sublet but landlords has the right to do a credit check and reference check  Using the Landlord Tenant Board  If you have any issues with your tenancy, you can make an application to the LTB.  If the LL wants to evict you, they MUST have an order from the LTB. Police have NO jurisdiction.  Only a sheriff can physically change the locks after eviction, NOT the LL.  At the LTB, you will have access to duty counsel.  Almost all applications to LTB start with a notice.  Eviction  Even after a hearing and the LTB issues an Order to evict a tenant, the tenant will have an ultimate move out date before Order can be enforced by Sheriff. o You have 72 hours to go back in to get your possessions  Commercial Leases  Landlord Obligations: o To ensure vacant possession o Give tenant quiet enjoyment o Repair (to the extent needed for quiet enjoyment) o Notice of termination  Tenant Obligations: o To pay rent o Normal wear and tear only  Remedies o Distrain/Distress: tenancy continues but the landlord seizes all property of the tenancy and hold it until the rent is paid  if you pay rent, landlord will give it back to you o Forfeiture: landlord can change the locks to the property  Tenant can apply for relief of forfeiture by paying the rent  Tenancy is over - Tenant can come get their stuff  Very hard to get relief from forfeiture 14.2 - PERSONAL PROPERTY:  Chattels: chattels can become a part of real property when it is attached to the land. A test is performed to determine whether the chattel is a fixture or not.  If the chattel was attached to the land with the purpose of enhancing the land, it becomes a fixture  If the chattel was attached for the better use of the chattel as a chattel, it is not a fixture  Finders Keepers: when a person finds an item in a public place, they have the right to that item against everyone except its owner or a secured creditor.   If the item is found on private property, the owner of the property has the right to it  If the item is found by an employee of the owner of the land, the employer has the right to it  Bailment: temporary possession of chattels owned by another person. (ex. Leasing and rental of vehicles and equipment, goods left for repair, storage, or transport, simple borrowing of goods)  Bailor: the owner that is giving up possession  Bailee: the person acquiring possession  Bailment for Value: involves a mutual benefit or consideration flowing between the bailor and bailee. (ex. A friend stores a piano in exchange for the right to use it)  Unless an exemption clause exists in the agreement, the bailee is expected to show a level of care that would be expected from a prudent person looking after such goods. CHAPTER 16: SALES AND CONSUMER PROTECTION 16.1- THE SALE OF GOODS  Sale of Goods Act: the act imposes a minimum level of implied terms that vendors often leave out.  Some vendors fail to specify a date for payment or time of delivery. The act will then imply these missing terms into the contract.  Only applies to missing terms, so the parties are free to override the act by stating their own terms in the contract  Applies to: the act applies to only those contracts involving goods.  Goods: tangible, movable personal property that can be measured and weighed. Also referred to as chattels.  Does Not Apply to: o Real Property o Sale of Services o Where no Money is Exchanged  Bartering: two people are exchanging goods  Gifts o Intangibles: stocks, bonds, or other choses in action  Title and Risk: the transfer of title and possession do not always take place at the same time  Agreement to Sell: an agreement that the title will be transferred at some point in the future  Risk: under the Sale of Goods Act, whoever has the title, bears the risk of damage or destruction to the goods-unless otherwise agreed upon.  CIF (cost, insurance, and freight) Contracts: a sales contract in which the parties specify who will bear the risk  by assigning one party the responsibility to bear the costs of and arrange for insurance and freight of the goods  FOB (free on board) Contracts: sales contracts in which the parties specify at which point the title and responsibility for goods will change based on loading dock location.  Ex.: in a contract for goods being shipped from Company A in Seattle to Company B in Toronto, the term FOB Seattle would mean that the title and responsibility for the goods transfers to Company B once the goods are shipped from Seattle. If the contract instead said FOB Toronto, the title and responsibility would transfer once the goods arrive in Toronto.  COD (cash on delivery) Contracts: a sales contract in which the seller assumes all responsibility until the goods are delivered to the customer and payment is received.  Rights and Obligations of the Parties:  Convey Clear Title: the seller must be able to provide a title to the goods  Match Description: goods sold online or through catalogs with the use of a picture and text description, must match that picture and description  Merchantable Quality: goods should be free of defects that if known, would impact the value  Fit for Purpose: when the buyer makes it known for which purpose they are acquiring a good, the seller has an obligation to ensure their recommendation is fit for that purpose.  Match Sample: for goods that are purchased after a sample has been examined, the bulk of the goods delivered must match the sample  Remedies on Default of Payment  Seller’s Remedies (if the buyer doesn't pay for the good): o Seller’s Lien: gives the seller the right to retain goods that have not yet been delivered until appropriate payment is received. This remedy is available even if the title has already been transferred. o Stoppage in Transit: the seller's right to stop the shipment of goods in transit and retake possession. o Deposit: If you default on your payment, seller can keep the item & the deposit  Buyers Remedies o Same as general contract law o Breach of contract, misrepresentation  International Transactions   International Sale of Goods Act: o Corresponding provisions about delivery, fitness etc. o Only applies to international transactions, not online purchases 16.2- CONSUMER PROTECTION  Consumer Transactions: involve goods or services purchased by individuals for personal use and not for resale or business purposes  Federal Legislation on Consumer Protection  Competition Bureau: serves to protect and promote competitive markets and enable informed consumer choice in Canada  Competition Act: the competition bureau enforces the competition act which attempts to maintain and encourage competition in Canada so that Canadians can benefit from product choice, competitive prices and quality services.  Civil:  Bait and Switch Selling: businesses cannot lure people in with the promise of a sale and tell them the product is sold out when they arrive to encourage them to look at other deals  Need to have reasonable quantities on hand if you are advertising them  Selling Above the Advertised Price: business cannot have a selling price above the advertised price.  Advertising a False “Sale” Price: businesses cannot advertise a “sale” price that is actually the normal price of the item.  Misleading Advertising: businesses cannot use illustrations that are different from the products sold  Criminal:  Pyramid Schemes  Covered by the competition act not the criminal code  Discriminatory and Predatory Pricing: businesses cannot set unreasonably low prices strictly to drive out the competition  Price Fixing: a practice to intentionally fix prices amongst competitors  Chocolate companies were involved in a price fixing scheme to set chocolate prices. However, Cadbury snitched on other manufacturers in exchange for immunity   Misleading Advertisements Made Recklessly or Knowingly  Mergers: mergers in Canada must be reviewed by the competition bureau to ensure that they do not have the effect of creating a monopoly or otherwise significantly reducing competition.  Other Federal Legislation: disclosure legislation, Controlled Drugs and Substance Act, Food and Drugs Act, Hazardous Products Act  Provincial Legislation on Consumer Protection  Unacceptable Business Practices: o False or Exaggerated Claims: most legislation makes these statements a part of the sales contract and so the consumer can sue if the product does not meet these claims o Unconscionable Transactions: the Unconscionable Transactions Relief Act exists to protect consumers from being taken advantage of because of some vulnerability such as desperation, poverty, lack of sophistication or intellectual weakness  The Act pays special attention to loan transactions, preventing consumers from being forced to pay insanely high interest rates where it is not justified. o Gift Cards and other Prepaid Cards:  In Ontario gift cards cannot have an expiry date  You can’t tax on gift cards - otherwise double taxing  Controlled Business Practices: o Direct Sales (Door-to-Door): a sales practice in which consumers are sold products at their dwellings or place of business  Cooling-off Period: a statutorily defined period in which purchasers of door-to-door sales may return their product or rescind the contract.  The cooling off period in Ontario is 10 days o Referral Selling: a sales practice in which a purchaser provides a list of friends to the seller and if any sales are made to those friends, the purchaser is given a benefit.