Business Law Notes PDF

**Business Law** October 29, 2024 -- Business Associations ========================================= **~~Business Associations~~** - **~~Sole Proprietorship~~** - ~~Business indistinguishable from individual~~ - ~~[Unlimited personal exposure] (all personal assets are up f...

**Business Law** October 29, 2024 -- Business Associations ========================================= **~~Business Associations~~** - **~~Sole Proprietorship~~** - ~~Business indistinguishable from individual~~ - ~~[Unlimited personal exposure] (all personal assets are up for grabs)~~ - ~~[Risk is high] because if business fails it's all on you~~ - ~~Individual owns the business~~ - ~~Easy way to get into business~~ - ~~Sales over \$30,000 you have to get an HST number~~ - **~~Partnership~~** - ~~Involving two or more people~~ - ~~Created when there is [an intention to carry on business with a view to a profit]~~ - ~~Being co-owners doesn't create a business/partnership~~ - ~~Don't have to have a written agreement~~ - ~~Creation of partnership is based off the relationship in law~~ - ~~Corporation (a person in law)~~ Partnership Act -- Provincial (document on Moodle) - S27 - Unless you agree otherwise these are the rules that apply - 27A -- unless agreed otherwise all profits are shared equally - 27E -- all partners have right to manage (if there's a lot of people you need one managing person to make the decisions) - 27F -- you don't get paid to be a partner (no salary no bonus no wage) but don't get a percentage of the profit (if there's not deal each person gets 50%) - 27G -- can't have someone become a partner without consent of all partners - 27I -- partnership book must be kept at place of business and every partner has the right to see the books - S28 - Deals with expulsion of a partner (can't get rid of a partner just because) - S29 - Give 30 days' notice to end the partnership - ~~A partnership is automatically resolved upon death of bankruptcy of the partner~~ - ~~S14 -- joint and several liability~~ - ~~Most important part \*always on exam~~ - ~~If liability occurs during partnership both partners are responsible and if one partner leaves the other partner is responsible for all of it~~ Business Corporation Act -- Provincial - Govern provincial corporations Canada Business Corporations Act -- Federal - For companies with federal objectives November 5, 2024 ================ ~~Corporations~~ - ~~"Legal fiction" - can't touch it, smell it, hear it, etc. but can own property, own assets, can sue, enter contracts, can be sued, can incur debt~~ - ~~if you put money into business your exposure is only the amount of money you put in~~ - ~~entity is separate from the people who invest in it~~ - ~~owns the assets --- but shareholders own their shares~~ ~~shareholders (in relation to the corporation)~~ ~~own the corporation~~ directors - ~~manage the affairs of the corporation~~ - ~~shareholders give them the right to do that by voting them in in an annual meeting~~ - ~~"Owners delegate power to management"~~ - ~~required by law to have a yearly meeting to elect a board of director~~ - ~~director doesn't necessarily need to have a share in the corporation~~ - ~~Most meet maybe 2-4 times a year to discuss overall management strategy of the corporation (could be monthly but usually not)~~ - ~~determines how the profit is spent and how much money goes to the shareholders (pays shareholders in dividends)~~ - ~~shareholders cannot compel directors to pay the dividend (it is ONLY the directors decision)~~ - ~~if they don't make shareholders happy they can be voted out in the next election of board members~~ ~~officers~~ - ~~Manage day to day affairs and operations of the corporation~~ - ~~appointed by board of directors~~ - ~~President of company/CEO, Vice president (could be several --- finance, hr, etc.) secretary, treasurer (usually VP of finance)~~ - ~~usually CEO is the only one reporting to the board of directors~~ - ~~CEO is usually hired by the CEO and then they develop their own team from there~~ ~~shareholder ratification~~ - ~~these are actions done by directors that must be approved by shareholders (ratification also means approval) --- don't need complete approval (mostly just need ⅔ to approve of it)~~ - ~~Dissolve or wind up corporation (get rid of it)~~ - ~~Cannot alter the capital structure (ex. selling authorized shares BUT can only sell the shares that are left --- so alteration would be increasing the authorized shares so that they can sell more shares) --- this can dilute the interest each shareholders gets from their share(s)~~ - ~~amalgamation with another company (joining with another company and becomes one company --- shareholders keep their shares)~~ - ~~a change of corporate objects (changing the purpose of the corporation --- ex. Wanting to switch from a mining company to a spa??)~~ ~~Limited liability~~ - ~~corporations are limited liability~~ - ~~shareholders are limited to the value of their investment (they can only lose what they've invested)~~ - ~~When corporation gets sued, you can only sue what the corporation owns (NOT the shareholders)~~ Why become a partner? Why incorporate? - fun fact; corporations are taxed at less than 20% of profit - Without being incorporated you pay high personal taxes on all the profit you make but incorporating means you don't have to pay personal tax rates on profits since you are a separate entity from the business - Some incorporate due to liability (the more you personally own, the more they can sue you personally for if you aren't incorporated) - you can really only benefit from incorporating if you have assets (bank won't really give you money unless you have assets) minority shareholders - Any shareholder who owns less than 50% of the company - if you are a majority shareholder, you control the board of directors because you own 50+ % of the company - can have a corporation who are all minority shareholders - should have a shareholders agreement (tie-breaker kind of stuff) - don't have many rights (right to attend annual meeting, right to vote at meeting, right to access the financials of the company) articles of incorporation - anybody can apply --- best to go through a lawyer - name must end in something that shows it's a corporation (Inc, ltd, Corp, or French version of these) this is because everyone needs to know that they're entering business with a corporation --- this is due to the limited liability aspect of a corporation - Run a name search, do application for a corporation (objections, head office, share structure, etc.) - short process - establishes the creation of a new legal entity - "Government document that gives the special ability to be a corporation" various types of corporations For profit corporations (the objective is to make money so shareholders can increase their value and get dividends) --- talking about it all class Not for profit corporations - no shareholders but instead have members - ex. rotary clubs, church parish, charity - mostly incorporate for the liability aspect (because no tax benefits due to there being no profit) - Members have the right to vote on picking the board of directors - relatively same structure as for profit Municipalities - cities, towns, etc. - No shareholders but instead have members - members elect their mayor who delegate to officers - Incorporates for government structure and to get the limited liability - crown corporations - ex. Canada post, CBC, finance PEI, PEI energy corp, CN - board is picked by government - Incorporates for government structure and to get the limited liability Legislative corporation - ex. UPEI, law foundation of PEI, college of physicians and surgeons, - board is picked by government - Incorporates for government structure and to get the limited liability Fiduciary duty - Trusted to do what is right - basically expected to do due diligence - ex. If board didn't do a soil test before committing to building on land and then soil is bad, they haven't done their fiduciary duty (1st duty as a director) Duties owed by directors to corporation - NOT to shareholders because shareholders can change so interest of corporation should come first --- not the shareholders' opinions - every directly must exercise such care, diligence, and skill that a reasonable prudent person would exercise in a comparable circumstance - be well versed in what you need to know - taking proper, reasonable steps to protect the corporation - two ways to protect yourself from liability - seek professional opinion (lawyers, auditors, engineers, doctors, etc) Indemnity (corporate indemnity & directors liability insurance) --- basically as long as you acted in good faith the corporation can't sue you ~~Duty to not self deal~~ - ~~Avoiding conflicts of interest~~ - ~~Don't be selfish~~ - ~~ex. Corporation is looking for property for office space, you (a member / director) suggest one space, 6 months in its found out that you own the property --- this is a conflict!!~~ - ~~BUT if you were to disclose the property is yours then it\'s not going against this duty as long as you excuse yourself from the vote and don't vote~~ - ~~protect yourself by~~ - ~~disclose it is a conflict of interest (BUT may not have to say why it is a conflict of interest because it may be a breach of privacy) --- this is 'mandatory' & good practice~~ - ~~don't vote on decision --- this is 'mandatory' & good practice~~ - ~~Not require but Bill thinks --- you should recuse yourself (AKA leave the room)~~ - ~~Refrain from abuse of a corporate opportunity~~ - ~~if an opportunity arose, chances are the opportunity belongs to the corporation~~ - ~~best to offer it to the corporation first & if they say no then you can do it on your own (as long as it\'s not a conflict of interest)~~ ~~partnerships versus corporations~~ ~~Control~~ - ~~partnership --- partners~~ - ~~Corporation --- shareholders (owners) delegate control to board of directors~~ ~~liability~~ - ~~partnership --- unlimited personal exposure~~ - ~~corporation --- limited liability~~ ~~transferability of interest~~ - ~~partnership --- do not have an unfettered right to transfer interest~~ - ~~corporation --- buy and sell shares all the time so you can transfer interest (generally unrestricted)~~ ~~term~~ - ~~Partnership --- limited to the life of its partners~~ - ~~corporation --- lives in perpetuity (lives forever & never dies) BUT can be dissolved / winded up (gives back articles of corporation to the government)~~ ~~Separate existences~~ - ~~partnership --- partners are indistinguishable from the partnership~~ - ~~corporation --- shareholders are separate from the corporation (a separate existence of law)~~ November 12, 2024 ================= Last Class - Corporation is a legal fiction - Legal fiction: creation of statue (there in law but can't touch it or anything) - Separate and distinct from its shareholders - Directors have the power to declare a dividend (tell shareholders when they get paid) - 4 things that require shareholders ratification - Types of corporations - 3 duties that directors have to corporations \*always on the exam **~~Real Property~~** - ~~Real vs personal property~~ - ~~Real property = land and everything attached to the land~~ - ~~personal property = everything that you can touch that isn't real property (tangible property that is [moveable])~~ - ~~ex:~~ - ~~building~~ - ~~land~~ - ~~fixture (something that is connected to the real property ex: lights, whiteboard~~ - ~~Property rights vs constitution~~ - ~~No property because of PEI~~ **~~Restrictions on Land Use~~** 1. ~~Zoning restriction~~ 2. ~~Subdivision vs consolidation~~ 3. ~~Municipal by-laws~~ 4. ~~Expropriation laws~~ - ~~a) government can't take land for a public purpose and b) must pay you fair market value for it~~ **~~Lands Protection Act~~** - ~~PEI Legislation~~ - ~~Limits Land Holdings~~ - ~~1000 acres for individuals (one person can't own more then 1000 acres)~~ - ~~3000 acres for corporations (corporation can't own more then 3000 acres)~~ - ~~Non-residents and corporations can't acquire an aggregate of more than 5 acres or 165 feet of share frontage without execution council approval (apply to IRAC, IRAC makes recommendations to EC)~~ **~~Real Property Assessment Act~~** - ~~Double taxation of non-residents~~ - ~~Constitutionally valid~~ **~~2 types of land ownership (measured in time)~~** 1. **~~Fee Simple Estate~~** a. ~~Greatest interest a person can hold in land as they own it for all times present and future (even when you die the land stays in your estate)~~ b. ~~Where the land goes depends on what your will says (if you don't have a will the government gets the land)~~ c. ~~Die intestate (when you have no will) (if you die the law says your land goes to your spouse and children (split between them a specific way) (if you have no spouse or kids it goes to parents, then grandparents, then siblings) (if there is no blood relative then it goes back to the government)~~ d. ~~Most land in PEI is held in fee simple~~ 2. **~~Life Estate~~** - ~~Life tenant -- owns the land during their lifetime, once they pass their interest passes with them (doesn't go into estate)~~ - ~~Remainderman: the person who owns the land after you die in this scenario~~ - ~~Following passing of life tenant remainderman will own land in fee simple~~ - ~~To the exclusion of all others~~ - ~~Ex: wife = life tenant (limited to the life of the wife, if she dies it can be sold)~~ - ~~Children = remainderman~~ - ~~The only duty you have as a life tenant is to not do anything that will injure the remainderman~~ - ~~No duty to repair~~ **~~Easements~~** a. ~~Dominant tenant: benefits (the right to use someone else's property in perpetuity (forever) (land that benefits from the easement)~~ b. ~~Servant tenant: subject (land that is subject to the easement)~~ a. ~~Ex: the DT uses the power access from the ST property (drainage)~~ - ~~Right to use law of another in perpetuity~~ - ~~Easements run with the land (not a personal right) \*important to know~~ - ~~Easement by prescription - Continuous and uninterrupted use of land of another for 20 years or more~~ **Types** 1. Express 2. Prescription 3. Implied November 19, 2024 ================= **~~Recep from Last Day~~** - ~~What is Real Property? Land~~ - ~~What is personal property? Tangible property that isn't real property (moveable)~~ - ~~Property Rights~~ - ~~Restrictions on what you can do with property~~ - ~~Environmental, expropriation (gov can take it if they give fair market value and its for a public purpose)~~ - ~~Double the tax if you don't live on PEI (double taxation law)~~ - ~~Measured: time~~ - ~~2 ways of ownership (fee simple estate and life estate)~~ - ~~Remainderman (own property in fee simple)~~ - ~~Easement (dominant and servant)~~ - ~~Runs with the land (follows the transfer of the land)~~ - ~~Perpetuity: forever and a day~~ **~~Restrictive Covenants~~** - ~~Run with the land~~ - ~~Benefit and Burden~~ - ~~(Each lot would have the benefit and burden of the restrictive covenants~~ - ~~In a subdivision any owner in the subdivision can enforce restrictive covenants because it "runs with the land"~~ - ~~Restrictive or control the use of property (usually found in developments)~~ - ~~Restrictions (no sheds, garage must be fixed to dwelling, material used on the outside of house, no clothes lines, no satellite dishes, fence restrictions, no commercial purposes)~~ - ~~Why would developers put restrictive covenants on property?~~ i. ~~Ex: stops people from putting a small mobile home by a big mansion~~ - ~~Courts will enforce reasonable covenants (court will stay out of it if its unreasonable)~~ **~~Adverse Possession~~** - ~~Adverse Possession: [open], [uninterrupted], [well-known] use of another property for 20 years or more~~ - ~~Settled through a court application~~ **~~Types of Tenancies~~** - ~~**Sole Tenancy** -- one person owns property (can be corporation)~~ - ~~**Joint Tenancy** -- 2 or more persons (right of survivorship: the survivor of whoever dies first gets the house (wife and husband)) (best way for spouses to own a house) (after second person dies it goes to their estate)~~ - ~~**Tenant in Common** -- 2 or more persons (when the people aren't as close ex: friends who would want their half to go to their family)~~ - ~~If deed doesn't specify type of tenancy it is presumed to be joint tenancy~~ **Issues in Family Law Act** - Matrimonial Home - Can't convey (without spouses consent for family home, if it was an apartment building they could sell it) - = right to yassession ~~Review Deed~~ **~~Registration -- Change of Title~~** - ~~Registry Act -- 40 years good chain of title then there's no one that has a better interest in it than them~~ - ~~Bona Fide purchases for value without notice of a defect in the title take free of the defect (important to register deed to protect your title)~~ - ~~Registration = constructive notice = actual notice~~ **~~Typical Chain of Title~~** - ~~Conveyances~~ - ~~1921: Gov of PEI to John Smith~~ - ~~1957: John Smither to Jane Smith~~ - ~~1988: Joe Smith to John Doe~~ - ~~1992: John Doe to Black Acre LTD~~ ii. ~~Not a good chain of title here because there's an interruption in it (still belong to Jane?) (maybe her will said she was leaving it to Joe)~~ - ~~Mortgages~~ - ~~1992: Black Acre LTD to CIBC (\$70,000)~~ - ~~1996: Black Acre LTD to BNS (\$10,000)~~ **~~Law of Mortgages~~** - ~~What is a mortgage?~~ - ~~Severance of title~~ - ~~A deed pledge as opposed to a live pledge (mortgage is a deed pledge) (live pledge is a pawn shop)~~ - ~~Uses collateral to secure the loan~~ - ~~A loan isn't a mortgage~~ - ~~Benefits to a mortgage~~ - ~~Mortgager - borrower~~ - ~~Mortgagee - lender~~ - ~~Legal Title vs~~ - ~~Equitable Title~~ - ~~Equity of redemption: ability to redeem the legal title once you pay it all off~~ - ~~Equity of possession: right to live there~~ - ~~Should you register?~~ - ~~Yes so if you sell it the people know what the debt is~~ **~~4 Remedies for Default of a Mortgage~~** 1. ~~Sell the property -- most powerful remedy. (Auction 1. No Bidders 2. No sales~~ a. ~~Duty to account~~ 2. ~~Foreclosure -- the bank is looking to foreclose on the equity of redemption (the bank wants ownership so you can't get it back) (doesn't happen in Canada because they want their money they don't want to own property) once foreclosure is issued there is no longer the duty to account nor do you have the right to sue for debt10~~ 3. ~~Right to Possession -- take the money (from apartment leases) to pay off a mortgage on the building. Quickest option. (won't kick you out of a house, its for income properties)~~ 4. ~~Sue for Damages (debt)~~ **Tort Law** - Tort: civil wrong - If a condition is criminal chances are it is also a tort but not all torts are crimes - Civil vs criminal wrongs - Civil Wrong: committed a wrong against a citizen - Criminal Wrong: committed a wrong against the king/queen/public/government iii. Remedy for assault -- punishment by the state (fine, probation, jail) - Compensation systems vs penal systems - Compensation: is part of the criminal justice system, which aims to reduce crime and its effects - Penal: is for victims of crime to seek compensation for damages - Liability (responsibility) - Based on fault -- you don't get paid if no one is proven to be at fault - Vicarious Liability -- liable for someone else's actions iv. Two times you can be responsible/liable for someone else's actions 1. Automobile (under the highway traffic act if someone drives your car with your consent then the owner is responsible for the tortious act committed by the driver) (consent can be expressed or implied) 2. Employment (employer is liable for the harm caused by the tortious acts of its employees when these acts arise in the course of employment) - Litigation is costly and time consuming November 26, 2024 ================= **Recap** - Restrictive covenants -- like an easement, runs with he land - Whoever owns land has benefit and burden of the covenant - Adverse possession - Ways to own land: sole tenants, tenants in common, joint tenancy - Registration of title (bona fide purchase) good chain of title - Law of mortgages - What is a mortgage -- collateral (not a loan or debt) severance of title - Why to register mortgage - 4 remedies of a mortgagee (1. Exercise power to sell (duty to account) 2. Sue for deficiency 3. Foreclosure (no duty to account) 24. Exercise right to possession of property - Tort = civil wrong - Role of tort system is to compensate (not punish) - System is based on fault - Liability/ holding people responsible for loss - Workers compensation -- get paid even if its your own fault - Vicarious liability -- holding someone else responaible for someone else actions (1. Employment and 2. Automobile (provided consent to use to the car the owner is liability) **Negligence** - Has to be a concept of carelessness -- anyone who causes injury to another should compensate the other person - Plaintiff sues the defendant **4 Elements** (if all these aren't present Negligence isn't an option) 1. Duty of Care -- defendant in carrying out a particular activity owned by the plaintiff a duty of care a. Owe duty of care to your neighbor 2. Breach of Duty or Standard of Care -- defendant broke the duty by acting the way they did b. Gotta act like reasonable people 3. Damages -- plaintiff sustained injuries or damages c. Special and general damages 4. Causation -- defendant's conduct caused the injury d. Did the breach cause the loss? **Duty of Care** - Duty will arise where the defendant could reasonably have foreseen a risk of harm to the plaintiff or to someone in the plaintiff's protection Donaghue vs Stevenson - Duty owned to "neighbor" -- person who are so closely and directly affected by my actions that I ought reasonably to have them in contemplation as being so affected when I am directing my minds to acts or omissions which are called into question 1. Product 2. Auto 3. Occupier **Breach of Duty or Standard of Care** Donaghue vs Stevenson Rule: exercise reasonable care (reasonable not perfection) - Duty to warn -- when something is dangerous (like hauling gas as opposed to potatoes) **Causation** - Did the defendant's actions cause the damages (injury) - The damages must be reasonably foreseeable consequences of the acts **Damages** 3. **Special** -- those which are capable of exact calculations up to the date of trail (have to prove past present and future damages at one time) - Loss of income - Medical expenses - Property damages - Travel expenses - House maintenance expense 4. **General** -- those which are **not** capable of exact calculations: - Non-Pecuniary: intangible (for pain and suffering, loss of amenities of life, loss of enjoyment of life) maximum amount created in 1978 is \$100,000 (\$484,000 in today's \$) (there is a cap) - Pecuniary: future losses (nap cap, personal to the person) v. Loss of future income vi. Cost of future care vii. Cost of future housekeeping Thin Skull -- because someone is more susceptibility to injury doesn't mitigate their loss - Take the victim as you find them, so you are on the hook for 100% of their loss Vs Crumbling Skull -- only reasonable for the aggravation of the condition **Defenses in Tort Law** - Volenti Non Fit Injuria -- people who voluntary assume a risk can't be injured (happens a lot in sports, you voluntarily assume the risk of injury when you participate) (there is limits to it) - Total bar to recovery 0 - Contributory Negligence Act - court can say the defendant is contributory responsible for their own misfortunes (didn't take actions to save yourself ex: no wearing a seatbelt automatic 25% off) December 3^rd^, 2024 ==================== **Recap of Last Class** - Negligence -- most common tort -- to establish the tort of negligence there must be 4 steps (if one is missing negligence isn't established) - Duty of care -- owed to your neighbor (those who are effected by your actions) - When driving down the road -- neighbors are passengers, pedestrian, other drivers - When manufacturing product -- neighbors are consumers, employee, anyone who uses the product - Breach of duty/standard of care - reasonable standard of care - The more dangerous of an activity you own more care - Causation - The breach must cause the damages - Damages -- monetary award -- two types of damages 1. Special damages (exact calculation ex: cost of care, loss of income 2. General damage (not capable of exact calculation) (pain and suffering, loss of life) pecuniary (house keeping, medical expense) - Trial is a once in a life time opportunity -- can't go again for that case - Defenses: if I participate voluntarily in something I can be injured (during sports) - Think skull rule: you take victim as you find them (defenedant is on the hook for all the damages, just because someone is more sepeitbale to injury you - Thick skull: you've made the condition worse (reasonable for aggravated portion) **Occupiers Liability** - Investees - - Licensee - Trespassers **Occupiers Liability Act** (talks about the common law) Section 1: Definition of Occupies (doesn't talk about an owner, its occupier) Section 3: Confides the 1. Duty of care -- owed to all lawful entrants 2. Standard of care -- keep premises reasonably safe (duty to inspect -- same duty to inspect at home vs at a commercial building) **Limitation period in Tort Law** -- 2 years - 2 years from the time the tort is committed **Workers Compensation Legislation** - Is the element that doesn't oppose fault on people -- no fault based (if you are hurt at work, you can't sue the workplace but you get automatic compensation) **Professional Liability** - Professional? People who are qualified/experts people like doctors, lawyers, accountants - Contract or Tort (duty of care, standard of care, damages, causation) **Negligent Misrepresentation** Hedley Byrne vs Helles and Portiners Hedley Byrne Easipower Helles and Portiners **Tort of Negligence** 1. Duty of care 2. Breach of duty or standard of care 3. Damages 4. Causation Review ====== Business association - 3 types (sole -- you are the business-unlimited person exposure, partnership -- intention of carrying on business with a person (section 27, 28 and 29 -- MC questions) (know joint and several, corporation -- creation of legal distinction -- separate from person) - Shareholders -- appoint directors to manage - Ratification - Directors choose officers to handle day-to-day activities - Limited liability -- limited to investment - Corporations -- know the duties\* (3 duties: what they are and how you protect yourself) - Exercise care and skill - Professional opinion - Liability insurance - Duty not to self-deal -- finding yourself in a conflict of interest - Protect yourself: One more thing, don't vote, leave the room viii. Duty to restain from ix. Something about using omehting for your advantage - Real property vs property - Lance of protection act -- how its specific to PEI -- limits your land hold so no one can have too much land on PEI - Double taxation - Fee simples vs life estate -- measured in time - Easement -- right to use someone property that runs with the land - Restrictive covenants - Adverse possession -- occupying someone property for 20 years or more - Tenancy - Registering title register mortgage - Equitable title - Mortgager goes into default (sell -- duty to account, foreclose -- no right to sue, take over possession of property) - Tort law -- civil wrong -- role is to compensate not punish) - Vicarious liability -- automobile or employment - Negliance (a lot on this)\*\*\* (basically just all the notes on this) - Heavy burn principle - 40 MC (worth 20 marks) - 40 T/F (worth 20 marks) - 3 Essay Questions (10 marks) - Life estate vs fee simple estate? - Joint vs several liability x. Unlimited xi. Can pick partner - 1 Hypothetical Case (10 marks) - Negligence - Establish the four elements - Explore the damages to be claim - Defense? - Occupiers liability situation: duty and breach -