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Canadian commercial law Law Notes
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Law Notes
Table of Contents
LAW NOTES.................................................................................................................................. 1
GENERAL LAW STUFF................................................................................................................. 2
LEGAL PROCESS.......................................................................................................................... 5ALTERNATIVE DISPUTE RESOLUTION (ADR)..................................................................................6
TORTS............................................................................................................................................ 7
NEGLIGENCE................................................................................................................................ 8OTHER TORTS.............................................................................................................................. 9
Deceit..................................................................................................................................... 9Trespass................................................................................................................................ 9Nuisance................................................................................................................................ 9Assault and Battery................................................................................................................9False Imprisonment..............................................................................................................10Malicious Prosecution..........................................................................................................10Intentional Infliction of Mental Suffering................................................................................10Defamation........................................................................................................................... 10Intentional Interference of Contractual Obligations..............................................................10
CONTRACTS............................................................................................................................... 11
OFFER AND ACCEPTANCE...........................................................................................................11CONSIDERATION......................................................................................................................... 13CAPACITY................................................................................................................................... 14GROUNDS TO IMPEACH...............................................................................................................17
Mistake................................................................................................................................. 17Misrepresentation.................................................................................................................18Undue Influence................................................................................................................... 19Duress.................................................................................................................................. 20
REQUIREMENT OF WRITING.........................................................................................................20INTERPRETING CONTRACTS.........................................................................................................21PRIVITY AND ASSIGNMENT..........................................................................................................22
Privity................................................................................................................................... 22Assignment.......................................................................................................................... 22
DISCHARGE................................................................................................................................ 23BREACH..................................................................................................................................... 24CONSUMER PROTECTION ACT.....................................................................................................26SALE OF GOODS ACT.................................................................................................................27NEGOTIABLE INSTRUMENTS.........................................................................................................29DEBTOR-CREDITOR RELATIONS...................................................................................................30CREDITORS RIGHTS....................................................................................................................31OTHER IMPORTANT STATUTES.....................................................................................................32LAND LAWS................................................................................................................................ 33
Estate in Time...................................................................................................................... 34Interests less than Estate.....................................................................................................35Usual Conveyance of Land..................................................................................................35
REAL ESTATE MORTGAGE...........................................................................................................36LANDLORD AND TENNANT...........................................................................................................37
SPECIFIC STATUTES.................................................................................................................39
EVIDENCE ACT........................................................................................................................... 39INSURANCE ACT......................................................................................................................... 39
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NEGLIGENCE ACT....................................................................................................................... 39OCCUPIER’S LIABILITY ACT.........................................................................................................39MERCANTILE LAW AMENDMENT ACT............................................................................................39STATUE OF FRAUDS...................................................................................................................39SECURITIES ACT......................................................................................................................... 39INSURANCE ACT......................................................................................................................... 40CONVEYING AND LAW OF PROPERTY ACT....................................................................................40FRUSTRATED CONTRACTS ACT...................................................................................................40CONSUMER PROTECTION ACT.....................................................................................................40SALE OF GOODS ACT.................................................................................................................40BILL OF EXCHANGE ACT.............................................................................................................40PERSONAL PROPERTY SECURITIES ACT......................................................................................40BANK ACT.................................................................................................................................. 40BANKRUPTCY AND INSOLVENCY ACT............................................................................................41BULK SALES ACT........................................................................................................................ 41MECHANICS LIEN ACT................................................................................................................. 41CONSTRUCTION LIEN ACT...........................................................................................................41STATUTE OF LIMITATIONS............................................................................................................41EXECUTION ACT......................................................................................................................... 41CREDITORS RELIEF ACT.............................................................................................................41WAGES ACT............................................................................................................................... 41PLANNING ACT........................................................................................................................... 41SUCCESSION LAW REFORM ACT.................................................................................................41FAMILY LAW ACT........................................................................................................................ 42REGISTRY ACT........................................................................................................................... 42LAND TITLES ACT....................................................................................................................... 42MORTGAGES ACT....................................................................................................................... 42TENNANT PROTECTION ACT........................................................................................................42COMMERCIAL TENANCY ACT.......................................................................................................42
ISSUES......................................................................................................................................... 42
NEGLIGENCE.............................................................................................................................. 42CONTRIBUTORY NEGLIGENCE......................................................................................................42REMEDY..................................................................................................................................... 42RES IPSA LOQUITOR...................................................................................................................42CAUSATION................................................................................................................................ 43DISCLAIMER............................................................................................................................... 43Vicarious Liability...................................................................................................................... 43
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General Law Stuff
Small claims < $25,000 3 components of law
o Regulateing of societs conducto Through the use of rleso That court will enforce
2 sources of lawo statutes passed by government
federal or provincial (not municipal) statutes can be changed
o Precedents (previous court decisions) Also can evolve; source sensitive to society’s changing needs
Eg you used to have to sue to get a divorce Basic presumption
o Everyone is presumed to know every law Reality is that no one knows the whole law Free legal advice available to everyone for ½ hour
o Implication – law is based on false assumptions And therefore to know answers – first need to know questinos
o Easier to find answer than to discover the questiono Law is like medicine, easy to fix if caught early
Some verbal contracts are fine but put them in writing anyways (prevents an argument later)
Problem is that there may not be any “symptoms” Preventive medicine – vaccination; preventive law – steps taken to avoid legal difficulties Law different from medicine – doctor can do medical check-up, but a lawyer cannot do a
legal check-upo Difference is that there is nobody to go to point out your legal problems too; no
pain until it has ballooned into something very expensive to solve
2 Areas of law Procedural
o Rules of practice i.e. what Court you o to, wjat papers need to be filled out etc.
Substantiveo Public Law (Involves Government as participant)
Criminal law Constitutional Law
Divides power between federal and provincial government Charter of Rights and Freedoms (i.e. ‘charter of rights’ or
‘charter’)o Right to a trial in a reasonable time etc.
Administrative Law Presided over by civil servants to administer government policy Administrative Tribunals
o Labour relations board, liquor control boardo Set up to administer government policy
No judges, but they have civil servantso Can be fired, unlike judges (judges can’t be fired until
they are 75)o Judges are appointed not hired
o Private Law – dispute between individual and corporation Most commercial Law Between 2 or more parties
3
o Status Law Corporate Law – Includes formation of Corporations
Corporation is a separate legal entity from the directors and shareholders
Family Law Marital status affects your duties, rights Different based on single, common law, married, divorced etc.
Immigration Law Can be in more than one are of law as a result of the same situation
o Have different outcomes for the same people and the same event i.e. OJ Simpson
Common Lawo System using precedent as distinct from civil lawo Law evolved through the Queen’s Court for the common people as distinct from
the Court of Equity, administered through the Churcho Common Law Court now includes both the rules of the monarch (Queen’s Court)
and equity Used in all provinces except Quebec
Uses Civil law, where everything is based on written law Civil law also refers to private law cases
o System utilized in Quebec, all laws set out in Civil Codeo Still need to look to Court decisions to interpret the code
Opposite is criminal; when using civil in this class, talking about our cases and not Quebec
o Court adjudicates Prosecutors in criminal law
o Crown prosecutes o Accused/Defendanto Plaintiff – prosecutor in civil cases
Initiates the case, defendant defends the caseo Appellant – person who appeals
Has right of appeal, respondent respond’s to the appealo Smith vs. Jones et al
Smith vs jones and others; smith is suing jones Cases
o Need to be able to identify either by case name or subject matter (memorizing case name not necessary)
When looking at cases. Need to be able to answer 5 questions1. Who is suing whom? What kind of a person is suing what kind of a person? (Doctor - patient)2. What is the cause of action? What is the basis of the lawsuit? (Negligence, breach of contract)3. What is being claimed? (what do they want, money, property, rights…)4. Who won? (Plaintiff or defendant)5. Why did they win?
What are the important facts the led the court to the decision in this case? What was the turning point?
What are the legal rules that the court applied in reaching its decision? The Ratio? What does the case stand for? What is the precedent value in the case?
Use this format for an exam questions:1. identify the issue2. state the law that applies to that issue (spell out in full the laws that apply, the entire legal principle)3. relate that law to the facts that you are given.
4
Statuteso Need to know the names if all of the statutes but no the sections numberso Must be followed by courts; must be applied by the Court as they reflect the will
of the people, but first need to be interpreted by the Courto Passed for 2 reasons
Bring laws together into one place Changing the law (usual case)
o May have ambiguous wording Could be poorly written (a poor draft) Deliberately left open
Hard to come up with strict rules for all situationso i.e. rule in hockey says the ref must blow whistle when
he loses sight of the puck Gives judges room to maneuver (accommodate flexibility)
o Eg Fines must be paid “forthwith” What is Forthwith? Depends on situation
o Need to know purpose behind the rule when trying to interpret it
Machinery of Justice Burden of Proof (Onus of Proof)
o Who has the burden?o What is the degree of burden?
Criminal: crown has burden of proof “beyond reasonable doubt” Civil: plaintiff has burden of proof “Beyond balance of probability”
Burden Applied by the Trier of Fact – Judges or Juryo Judges/juries are the triers of fact
Criminal jury is 12 people Civil jury is 6 people
Cases decided within adversary system (system of competition) Criticized – rewarding party with most expensive lawyer
o Lawyers now entitles to charge on contingency basis Still significant cost in preparation of presentation (e.g. hiring a accident Reconstructionist
in car accident case, paying for report, etc.
In a civil case, burden of proof issues arise typically with regard to two issues:o Issue of Liability – who wins the caseo Remedy/Damages – how much compensation is owed
Burden of Proof (both liability and damages) must be decided in each case; based on a balance of probabilities
Liability must be decided regardless of the decision on the other in case of nan appeal Plaintiff’s must prove his/her case on the scope of probabilities for both liabilities and
damages Adversarial system – two people competing Decisions made based on evidence submitted by each part subject to several concerning
evidence: Evidence
o Factors that can be taken into accounto Rules against hearsay
Because of lying, mistake Unable to cross-examine
o Opinion evidence must be given by a qualified expert such as a doctor, accident, reconstructionist
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o Privilege – any communication between lawyer and client
Evidence Act o Exceptions to hearsay ruleso Business records are evidence despite being hearsay
Assumed right unless proved otherwise Must be kept over normal course of business
Stare decisiso Precedento Courts required to follow decisions of equal or higher courtso Importance
Prediction of outcomes Less likely to have dispute in first place Public respect
Hallmark of legal system Public needs to respect the legal system
o Problems Bad precedent is carried forward
o Distinguishing a case Focus on differences between precedent and current case Does the difference make a difference?
o Decisions from other provinces, commonwealth contries Persuasive but not binding
o Decisions from the US Not binding
Many are based on jury decisions Judges are elected (politics is important) Different laws in different states
Anyone can sue anyoneo Courts are open and accessible but not freeo 90% of people will go to court sometime during life
Legal Process
statement of claimso not under oatho just what the claim is
Statement of Defenseo What the defense is
Statement of Claims + Defense = The Pleadings Examination for Discovery
o Very importanto Only in case of $50,000+o Each party questions the other under oatho Involves court reporter, lawyers, the partieso Avoids surprises and “trial by ambush”o If you don’t go, you lose your caseo In you don’t answer the questions, you loseo If you lie = perjuryo Leads to settlements without trial
90% of cases get settled in discoveries 3 stages of a trial
o Plaintiffs Caseo Defendants Case
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Not always neededo Reply evidence
Witnesseso Prove you case based on credibility of your witnesseso Examination in Chief (friendly lawyer)o Cross-Examination (opposition lawyer)o Redirect (friendly)
Legal Costso Lawyers fees, judges, administrationo Taxpayer or user fees?
Combination (there is some use to society as a whole)o Average length of court case – 3 dayso Average cost – almost 100,000o Recovery
No costs, each covers own expenses Rare
Substantial Recovery (recover most of you costs) Rare
Partial Indemnity (some fees recovered) Most often the case Usually 50-60% of costs Reasons
o Encourage settlementso Discourage fights over principleo Encourage preventive law
Alternative Dispute Resolution (ADR)
Resolves disputes without the court Motivated by costs Average cost 19,000 (vs. 100,000 for court) 2 forms
o Mediatono Arbitration
Binding Non-binding
Must be agreed upon by both partieso A few exceptionso Could have ADR clause in contract
Can choose who the “judge” iso Doesn’t have to have specific credentials
Can choose time and place No rights to appeal Less confrontational
o Good if you want to continue business with them 47% of Arbitration is for $100,000 cases
Torts
the righting of wrongs (torts) 2 issues
o liabilityo damageso both have to be decided in each case
Criteria for shifting loses
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o Based on fault (if you did something wrong) Opposed to strict liability (if you cause harm)
o Exceptions Car insurance
No fault system Insurance Act
Vicarious Liability Liability of employer for faults of employees Does not eliminate employees liability
o No double recoveryo Jointly and severally
Employer-Employee issues Depends on contracts Preventive law
o May hurt opportunities Need to show defendants actions cause injury
o Violation of Duty of Care Res ipsa loquitur
o “the act speaks for itself”o presumes fault
pressure on defendant to prove case plaintiff needs to show probable fault defendant has the facts
What does causing injury mean?o Causations – practical need to draw reasonable liability limits
Palsgraf Vs Railroado Sued railway for “explosive box”
Lost the case No breach of duty to her
Conductor owed duty to runner Chain of causation was broken
1 action did not cause the other No duty to rescue someone (eg Good Samaritan law)
o If you attempt to rescue someone and cause more damage you could be responsible
Contributory Negligenceo Both parities at fault at the same time
Negligence Act o Apportion fault
o Apportion damages in same ratioParty A BFault 90% 10%Damages 200,000 100Amount to Pay 90 20,000
Intervening Negligenceo Negligence happening after the fact
Car runs red light Person gets out, car rolls away Leg injured trying to stop it Is the first driver responsible?
Negligence
Most frequently alleged tort Accidental harm (not intentional)
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Standard of careo Reasonable person
Not liable if you were acting reasonably If you foresaw harm, have to be careful Your duty is to be careful, not prevent injury Hazardous Activity
Reasonable people will be VERY careful Relevance to Business
o Product Liability Used to have duty of care to consumer No contract between manufacturer and consumer MWRC Manufacturer is in preferred position of inspection
Has to be very careful!!o Negligent Statements
Hedley Byrne case (p. 7) Defendant negligently passed info to 3rd party info 3rd Party info $ Plaintiff Defendant Lawsuit defendant was liable
o Occupiers Liability Duty of occupier of land towards guests
Invited – someone there on your invitationo Dinner guest, customero Guard against hazards known of, or should have known
of Licensee – someone there with permission
o Guard against hazards known of Trespasser – someone you don’t want there
o Don’t recklessly disregard against well-being Occupier’s Liability Act
Other Torts
Only negligence has to be accidentalo Rest are either intentional or it can be either
Deceit
Deliberate lie with intent they will rely on information Usually in context of fraudulent contracts
Trespass
Intention doesn’t matter Preservation of Land laws
Nuisance
2 typeso Public
Interfere with public use of public land Lawsuits, regulation, class action
o Private E.g. smelly, noisy neighbor
Intent not important
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Could issue and injunction as well as damages Damages could take into account future nuisance
Assault and Battery
Distinction is becoming watered downo Need to show two things
Contact was intentional Contact must be harmful
o Does it have to be intentionally harmful?o Defense of person is valid excuseo Defense of property is not
False Imprisonment
Restraint of mobility with no reasonable means of escapeo Police
Reasonable case of crime Reasonable case that you did it
o Citizen’s Arrest Crime HAS occurred Reasonable case that you did it
Relevant in shoplifting cases
Malicious Prosecution
Only in criminal cases E.g. police harassment
Intentional Infliction of Mental Suffering
Only pay damages as it would affect a normal persono Only for this torto Others: Take you victim as you find them
Defamation
Libel and Slander Act Libel – written Slander – spoken Defamation occurs if unjustifiable damage to reputation Plaintiff must show
o Reputation lost (Balance of Probability)o Person who heard it must have believed it
Defendant must showo Truth
wholly trueo Privilege
Law gives complete immunity to Parliamentary debate Testemony
o Qualified Privilege E.g. letter of reference
o Fair Comment Editorials (public interest)
Intentional Interference of Contractual Obligations
Eg
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o Plaintiff has contract with singero Defender lured the singer away
Plaintiff could sue either defendant or singero Can’t double collecto Amounts don’t have to be the sameo Legal principles differ for torts and contract lawo Must be intentional
I.e. defendant must know of first contract
Contracts
Different approach than torts Contract is an agreement, the foundation of business Does not have to be in writing Few grey areas – not “part contracts”
Offer and Acceptance
2 parts of contracto offero acceptance
if contract is broken, damages can be awardedo sometimes cheaper to break contract than uphold them
Offero Tentative promise subject to/containing requesto Advertised price is not a offer
Its an invitation to make an offero Intent
Are you meaning to make an offer, or inviting an offero Must be communicated
Can’t accept offer you don’t know about Eg the “unknown reward”
Crossed offers Standard Form Contract
o Removes ability to negotiate (law doesn’t like that)o Government regulationo Strict interpretation (technical)o Disclaimer
Parker case Customer needs to know about disclaimer
Or had reasonable notice of Wilson vs. Blue Mountain
Judge says he didn’t read the disclaimer Wording had not been brought to plaintiffs attention For test:
o Early case: based on knowingo Newer case: read and/or meaning of wording
Expiring Offerso Once expired it is deado 2 ways
Lapse If either party dies or becomes insane If not accepted in stipulated time After a reasonable length of time
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o Barrick vs Clarko Conduct of partieso Industry norm
Revoke of offer Can be done anytime prior to acceptance
o Unless Under seal Option (ie contract to leave offer open)
Rejection Counter-Offer
Kills original offer Is an offer itself Conditional acceptance is a counter offer
Acceptanceo Must take positive form
Eg no negative billing Unless separate contract stating silence is acceptance
o If by words, language must be clear Eg “that sounds good”
Is that an acceptance or a comment?o If by conduct, it must refer to subject matter of offero Must be communicatedo If there is a method of communication between parties, when is the contract
formed? Acceptance should be in way suggested by contract
Doesn’t have to be Mail Rules
Acceptance is complete when it is dropped in the boxo If offer states you may reply by mailo If offer itself was by mail
Acceptance is when receivedo Delivered to the place of business or residenceo Not when open, seen, read, etco Exception:
When contract forbids acceptance by mail Revoking an offer is effective when received Disputes:
o Whichever group initiates the use of mail ends up the loser if mail gets lost
o Always sign contracts face to face Applicable jurisdiction
o If contract states law of another jurisdiction it is valido If not specified, law of jurisdiction where contract is
formed If you mail an offer to Montreal, Quebec law will
apply What happens if you drive from Hamilton to
Buffalo to mail you acceptance? Miscellaneous stuff
o 2 types of contracts unilateral
one party has to perform before the othero eg “reward contract”
bilateral
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both parties have to performo eg buy and sell agreements
o Agreement to make an agreement Not a deal until the agreement is actually made
Consideration
The price you pay for what you geto Must be 2 considerations in a contract
Contract without consideration is not enforcble Eg Gratuitous promise
Past consideration is not relevant Not consideration to agree to do something you legally have to do
anyways Folks vs Beer
o Debtor owed money to a creditoro Deal: if principle was paid, didn’t owe interest
Later sued for interest as there was no consideration in the deal, so therefore it wasn’t a contract
o New Statute: Mercantile Law Amendment Act If you take part as payment for the whole, you are stuck with the part Issues
What does it mean to accept part performance?o When you accept the offer or when you receive the part
payment What does “expressly” mean
o Opposite is impliedlyo Eg send a cheque for partial amount, with “Payment in
Full” written on ito Writing on cheque does not count as contract
Injurious Relianceo You rely on a promise and suffer lose when not doneo Ontario does not follow Injurious Reliance
Consistent with law of consideration Quantum Meroit
o Pay what it meritso You have to pay for the stuff you asked foro Only applies if no price agreed upono Eg. Ask plumber to fix sink, don’t negotiate price before work done
Use of a sealo Little red stickerso If seal on offer, must leave it open for time statedo Consideration is irrelevant if offer under seal
Intention to Create legal Relationshipo Not a consideration issueo “I’d give up everything for…”o usually presume that you mean what you say
a rebuttable presumption burden on you to prove you didn’t speak literally
Capacity
the legal capacity to enter a binding contract void never happened voidable can be terminated
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o valid until repudiated People can enter contracts except Minors/infants
o People under 18 (or other age depending on jurisdiction)o Contracts with infants are voidable by the infant without reason, except
Beneficial Service Contract Eg Apprenticeship
Contracts of necessaries Exceptions
o Price Only has to pay reasonable price Burden of proof on infant
Necessaries include food, clothing, transportation, medicalo Ryder Case
Infant purchased some luxuries Court ruled they weren’t necessaries despite his high wealth
o Johnston vs Marks Infant bough clothing Rules they weren’t necessary since he already had some
o Dickson Bros. vs. Woo Rental of car by infant (woo) Infant repudiated contract after major accident 2 courses of action
breach of contracto Was the car rental a necessary?o It was not since it was for joyriding
Therefore contract was voidable Thomas case
Car was for honeymoon, therefore a necessary
Negligenceo Woo was negligento Not liableo It was covered by the contract
Purpose of contract transportationo Can’t use torts to get at infant if they have contract
defenseo What if infant lies about age
Jule vs Broad Infant was father of illegitimate child Mother could enter contract to cover exp or launch a lawsuit Infant lied about age, entered contract, then broke it a year later
o Paternity suits must be launched within a year Infant can’t lie their way into capacity
o Lending money to infant No recoverable unless it is spent on necessaries
o Infant may repudiate contract for necessaries not yet deliveredo If contract is repudiated
Must return goods in their possession May be charged with fraud if happens often
o When age of majority reached Once they turn 18 no longer voidable Must be repudiated promptly upon turning 18 Is junior hockey an apprenticeship?
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“one-shot deals” must be ratified in writing
o Statute of Frauds o Preventive Law
Don’t deal with infants Get adult to be part of contract Put it under seal
Lunaticso Someone with a mental disorder is not capable of making rational decision
Drunkardo Someone who is under the influence of drugs or alcohol
Law is same for drunkards and lunatics as for infantso Have to prove you had the conditiono Have to prove other party knew about it
Aboriginals under the Indian Acto Capacity issues
Not allowed to get property back from person on a reserve If car used as collateral, not enforceable
Indians can’t waive the protection What if you refuse to lend money to them? Is it unlawful discrimination when it is the law that discriminates?
Illegal Contracts Contract which calls for commission of a crime void Illegal means contrary to public policy
o Anything criminal is deemed to be against public policyo Anything contrary to social policy
Eg contract to commit adultery If contract is void, courts try to put both parties back to square one If contract is void and illegal you get nothing! Mills vs Gills
o Restriction that doctor couldn’t practice in city if he left the clinico Clinic asked for injunction and damageso Contracts in restraint of trade are void
Unless Reasonable between the parties
o Ability to earn living for doctoro Where does clinic draw patients from
Not contrary to public interesto Is service still availableo Effect on price
o Clinic won the caseo Non-competition clauses
Employment contracts Sale of practices
o What if terms of were can’t practice in Canada for life instead of City for 5 years If contract contains just one bad clause
o Can sever that clause if contract is essentially the same afterwards
Grounds to Impeach
Mistake
If you enter into contract by mistake, then perhaps you should be able to get outo Depends on type of mistake
Mistake of fact is an excuse
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Mistake of law isn’to Assumed to know the law
Mistake doesn’t mean something you regret doingo Must be a factual mistake which induced you to enter contract
Categories of Mistakeo Common Mistake
Both parties share a common mistake Contract is not binding Contract void if
Mistake about existence of subject mattero Eg “overheating corn case”
Contract voidable All other cases Exception
o Mistake in writing of the contract Courts enforce agreement as it was met Hard to prove Burden of proof on plaintiff
o Mutual Mistake Both parties mistaken, but about different things Eastern Cafeteria of Canada case
Parties made mistake about which company they were talking about
Side with most reasonable interpretation usually winso Unilateral Mistake
Just one party is mistaken Most complicated 4 types
mistake about important aspecto selling a textbook, knowing that it will be different next
yearo contract is bindingo if it wasn’t important enough to put in the contract, it’s
not important enough to bring to court Mistake about identity of other party
o Fake vs non-existent name Fake means you know the name being used -
void Non-existent means the name means nothing to
you – voidable You have valid contract with them
Mistake about nature of signed documento Not about what it sayso Mistake about the kind of document it iso No est factum – not my doing
Contract is void Only in case of signed document Relevant: lack of care Only applied if you are not careless
Mistake about wording of an offero McMaster vs. Wilchar
Law of tender Is the tender an offer or invitation to
make an offer
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o Conflicting court decisions If tender was an offer
Wage escalation clause left out If McMaster knew there was a mistake
in wording, they can’t accept University said they didn’t think it was a mistake Witnesses from construction company were
more reliableo Is contact void or voidable?
Effect on 3rd party (not applicable in McMaster case)
If voidable, it has to be repudiated If voidable there would be a choice whether to
fulfill contract or not
Misrepresentation
Contract is voidable Misstatement of fact
o Reason you made the agreement 2 types
o innocent (not deliberate) contract is voidable must act quickly upon realization of misrepresentation compensation for any expenses incurred
must be out of pocket expenseso fraudulent (deliberate)
same as about plus damages
better than compensationo includes lost profits
must have intention to mislead tort of deceit
Misc. Pointso Negligent misrepresentation is innocent by default
Negligence is unintentionalo Special rule for land contracts
Two dates for land contracts Contract date (when signed) Closing date (when takes effect) In between is time for lawyers to work After closing, not voidable for innocent misrepresentation
o Opinions vs. Fact Not misleading if you are stating your opinion Has to be your true opinion If you misstate your opinion, you are misstating fact
o “Closed mouth Doctrine” can’t misstate something if you keep your mouth shut exceptions
Insurance Act o Must disclose certain facts
Securities Act o Public corporations must file prospectuso Must disclose good as well as bad
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Undue Influence
Mental dominationo Weaker person is deprived of rational choice
Voidable by the weaker party Usually in case of special relationship Burden of proof
o Party alleging undue influence must prove dominationo If special relationship, court assumes domination
Then proof on dominate one to prove not undue influence Factors
o Degree of dominationo Extent of the advantageo If either of these are high, contract is voidable
Preventive Lawo Independent legal advice
Not foolproof, but the best available
Duress
Physical coercion Use or threat of violence May also be a crime Voidable until violence dissipates
Requirement of Writing
No contract has to be in writing Reasons for using writing
o Easier to win court caseo Less chance of having a dispute
Certain contracts must being in writing according to statuteo Statute of Frauds
Nothing to do with fraud Distinction between form and substance
Substance: rights and obligations Form: the paper it is written on
Deals only with form Contracts requiring written form if you want to enforce them in court
o Promise to pay another’s debt Guarantee – you pay if the other doesn’t
Has to be in writing Indemnity – pay someone else’s debt
Doesn’t have to be in writingo Marriage contractso Land Contractso Contracts not to be performed for more that a year by either partyo Ratification by former infant
What is writingo Note or series of notes signed by the defendant
Doesn’t have to be signed by plaintiffo Must contain essential terms
Names of parties Subject matter Consideration
What is signing
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o Typed on letterheado Email
If you are in breach of statute of fraud, contract is still binding, you just can’t sue on it Statute doesn’t say when it has to be signed Statute must be in the pleadings to be enforced Exception
o Doctrine of part performance Any with land If land deal is verbal and partly performed
Preventative Lawo Put everything in writing
Interpreting Contracts
Preventive Lawo Use clear language
Focus on interpretation issues when writing 3 Approaches used by the court
o Interpret against the drafter He was the one who made it ambiguous
o Strict Meaning Approach The “dictionary” approach Doesn’t always provide an answer
o Liberal Approach Looks at intent and surrounding circumstances Problem: assumes both sides had same intent
Returns to “mistake” issues Paral Evidence
o Verbal evidence which contradicts or adds to written agreement is inadmissible Prevents people from challenging accuracy of written agreement
o Exceptions Condition Subsequent
Clause which, if it happens, ends the deal Condition Precedent
Condition which must be met before the deal happens Collateral Agreement
Makes separate agreements their own contracts Contracts must be able to stand on their own Need to show that the verbal agreement was reason you signed
the contract Miscellaneous
o Implied terms No such thing Exceptions
Trade customs Quantum meroit Statute
o Court tries to enforce what parties intended Will have failed if it finds there is no agreement
o 2 risks for poorly-worded contracts no deal interpreted different that you intended
probably the worst case
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Privity and Assignment
Privity
If you are not a party to a contract, then you are not bound by it Exceptions
o Novation Substitution of parties with others’ consent
o Vicarious Performance Hiring someone to do what you were contracted to do
Permitted unless contract calls for personal performance Law of Trusts
o Under Privity, child is not part of contract between Parent and Trust companyo Courts called the Equitable Trust because “C” is the beneficiary
Beneficiary is considered the owner of the money Undisclosed Principle (Silent Partner)
o Undisclosed principle is deemed to be a part of the contract Insurance Contracts
o First, sue the negligent partyo If they don’t pay, you can sue the insurance company
Insurance Act
Assignment
You can’t assign your obligations without consent You can assign you benefits Called Equitable Assignment
o Court cases must involve all partieso Conveyance and Law of Property Act
Statutory Assignmento 3 Criteria
Assignment Agreement is unconditional No condition subsequent/precedent
Written form Notice to Promissor is in Writing
Implicationso If B pays wrong person, B must pay the right one
Promissory should insist on written notice of assignmento What if A assigns it to two different parties?
B pays the first notifiero Can’t assign for more than you have (rights, not money)
If there is undue influence in first contract, then assignee inherits the undue influence.
Discharge
If contact is breached it may be discharged 4 Ways to Discharge
o Performance Do what is called for in contract You might not perform if other side doesn’t
need to show you were reading, willing, able to performo dangle check in front of noseo tendering performanceo must be done for land deals
o Agreement
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Make agreement to end the agreement Many different types
Novation Change consideration Conditions subsequent/precedent Option Clauses Waiver
o Waive your future rightso Most don’t have consideration
Won’t be binding unless under seal or optiono Frustration
Normal rule If you don’t do something you agreed to do, you are liable
o Fault is not relevant Frustration Exception
Unexpected event makes performance not possible Must make the task impossible, not extra difficult When is problem severe enough? Economic impossibility is not excuse Frustration can not be self-induced
Both parties are released from obligations Even if one party has finished 90% of there part Frustrated Contracts Act
o You get paid for performance before frustrationo Only get paid the amount that the work has benefited the
other partyo Discharge by Statute
Bankruptcy and Insolvancy Act Discharges contracts
Limitations Act (Statute of Limitations) Limits the time you have to sue someone Time limit varies
o When did breach happeno What type of contracto Who are the parties
Most situations are 2 years Time limit from the last of:
o Breacho Written acknowledgement
Breach
What constitutes a Breach of Contracto When one or more parties fails in performance
2 Types of Breacho Breach of Condition
Breach of a Major term Gets you out of the deal You can repudiate Lead to rescission
o Breach of Warranty Breach of a Minor term Entitles you to damages
Anticipatory Breacho Person says they are not going to perform
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Expressed Repudiation You can sue right away You can find a replacement
o Self-induced Frustration They have acted in a way that makes performance impossible
Can sue right away Can find a replacement
Must assess if breach is Major or Minoro If you are wrong, you will be responsibleo Err on the safe side, assume minoro Must assess the risks of considering it major or minor
Installment agreementso What happens if they miss an installment
Courts consider it a minor breach Unless evidence there will be future misses
Preventive law Put clause in contract about missed installments
Acceleration Clause If you miss a payment, all future payments are due
o Must be careful on interest Can’t go about 60% or it’s a crime
Exceptionso If you elect to receive benefit from contract even though a major breach
Still get damages, but no right to rescission Remedies for Breach
o Damages Not generally a crime to break a contract Should place injured party in financial position they would have been if
contract performed Burden of proof on the plaintiff on balance of probabilities Not intended to punish the wrongdoer
Rarely give punitive damages Duty to mitigate your own damages
Hadley vs Baxingdaleo Foundation case for recovering damageso Doesn’t say you can’t recover lost profitso Does say that you might not get themo Set legal principles court should use
Damages must either naturally flow from breach arise from special circumstances known to both at time of
contracto sort of means “foreseeable”o knowledge could be stated or from past experience
Preventive Lawo Performance bonds
Insurance policy to cover non-performanceo Pre-arrange damages in case of failure
Liquidated damages Must be a sincere attempt to estimate loss
Can’t create punishmento That would be contrary to public policy (void)
Equitable Remedieso Injunction
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Court forces person not to do what they agreed not to doo Specific Performance
Court forces person to do what they agreed to doo Must show that damages are not adequate compensation
Land purchase Antiques, works of art Things that are one of a kind
Other Ruleso Can’t get specific performance for money payments
Not including fines, or family support There are no debtor’s jail for practical and social reasons
o Can’t get specific performance for service contracts Performance is likely to be of poor quality
o To get equitable remedy, you must have clean hands Must be a deserving recipient
Consumer Protection Act
Executory Contracto Someone does part of the deal later
Applies to goods and services (not land) Must make you contracts in accordance with the Act
o Intrudes on freedom of contracts Don’t have to pay for unsolicited goods, even if you use them
o Can’t sell them because you don’t have title to them Section 21 (cooling off period for door-to-door sales)
o Applies only to a few agreements Only written contracts
Executory contracts must be in writing or it is not binding on the buyer
Only executory contracts Anywhere other than sellers permanent place of business Must rescind in writing within 2 days
Can be sent by registered mail 2 days starts after buyer receives copy of contract
Security Agreementso Clause to repossess item if default on paymento Void if more than 2/3 of purchase price has been paid
Unless allowed by judge Curtis vs Clark and Wilson
o One of few cases on the CPAo Arguments for Defendants
CPA doesn’t apply because it was a rental agreement Pig and Cow Doctrine
o You can call a cow a pig, but it’s still a cowo Substance over form
No Repossession In this case there was repossession by trick
Agency Owner allowed show room and stationary to be used
o Who is the public led to believe they are dealing with Damages
Should have been the value of the TV on date of repossession
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Sale of Goods Act
Different from the CPAo Applies only to goods, not services
Goods: anything not land, services, money, right of action Not designed to protect everyone
o Recognizes that there usually isn’t written contracts for sale of goodso Act writes out the contract you assume
Section 53:o If you don’t like the act, you can change the contract
CPA Section 34:o In consumer sale, you can’t limit anything in Sale of Goods Act
Implied condition of titleo Seller is legally able to sell it
When you specify a purpose, what you get should fulfill ito Must rely on sellers skill/judgmento Must be item the seller normally sellso Can’t specify a patent or trade name
This would limit sellers options Sale by sample
o Bulk must compare with the sampleo Able to inspect sample and bulk after receiving ito Goods will be of merchantable quality
Section 27o Payment and delivery are concurrent conditionso Able to contract out of it even for consumer sales because it says so in the
section Delivery
o 3 aspects Quantity
If Q < contracto Reject themo Accept them, and pay at contract rate
If Q > contracto Accept included, reject the resto Reject allo Keep all, pay contract rate
Time Early delivery is breach of condition, just like late
Place Delivery is responsibility of the buyer, unless contract/custom
says otherwise Damage in transit is responsibility of the “owner”
Section 19 (Transfer of Property)o Unconditional contract for specific goods
Property passes to buy at time of contract Payment and delivery is irrelevant
o Title passes after something extra is done Eg additional work
o Title passes after price is determined Eg weighing and measuring
o Sale on approval Title passes on approval or keeping beyond approval period
o Unascertained goods Title passes when parties agree to which specific items are to be sold
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Remedies of the Buyero Rescission
For breach of contract Only applicable if goods can be returned
o Damages Duty to mitigate Lost profit Naturally flowing Etc
o Possible tort action for fraud Larger possible claim
o Specific Performance Only when damages are not adequate compensation
Remedies of the Sellero Sellers Lien
Right to hold possession until buyer pays Gone when seller gives up possession once
No right of repossessiono Stoppage in Transito Resale
Right to seller to someone else Has to give notice Should sell as way to mitigate damages
o Money If title has passed to buyer
Sue for price If title hasn’t passed
Sue for damageso Retention of Deposit
Deposit can be retained Unless deposit is seen as a penalty
Difference between deposit and down payment Deposit = represents good faith Down payment = partial payment of price
Not clear whether you can take credit for deposit
Negotiable Instruments
Instrument = legal document Negotiable = transferable Negotiable Instrument = transferable document Bill of Exchange Act
o Identifies what a negotiable instrument iso See p. 418o Should be as similar to cash as possible
Negotiation needs signature and deliveryo Except for “bearer form instruments”
Ie payment to “the holder” Just needs delivery
Endorsemento Ways to endorse ) p. 420
Endorsement in blank Sign name on back Turns into “bearer form”
Special Endorsement
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Specified new payee Restrictive Endorsement
Eg “Payable to to D only” Destroys the negotiability Prevents transfers to 3rd parties
Qualified Endorsement If cheque bounces, D c an sue C or A
o Both are legally liable Endorses it to D “without Recourse”
o D only has A to sue Anomalous Endorsement
When someone wants to be liable for someone elseo Used as guarantor
Courts have been avoiding thiso Lenders now draw up guarantor contracts
Holder in due Course Someone who possesses the paper (Holder) Paid something for it, in good faith, no notice of defect (in due course) P. 425
Enforcemento Everyone “in the chain” are jointly and severally liable
Defenseso Personal Defenses (p 427)
Lack of consideration Right of set off
Setting off one claim against anothero Defective Title (p. 427)
Duress If C transferred to D under duress Defense will lose due to holder in due course
o If D knew about the duress, then it will work Note: D gave more legal right to E than he originally had
o Real Defenses Infancy
If C is an infant the defense will work, even against holder in due course
Abuseo If you pass on a negotiable instrument you are liable if it turns out to be no goodo Possible criminal liability if it is fraud
Eg writing cheque, then stopping payment Fraud is based on intent Stop payment may be an effective bargaining tool
Could be dangerous
Debtor-Creditor Relations
Conditional Saleso S is selling Piano to Bo S has title and possession of the pianoo Title stays with S until the condition precedent is met
Condition is paying the priceo If B doesn’t pay, S can take the piano back
Unless 2/3 has been paido If B sells to third party
TP pays B, then B bails
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Personal Property Securities Act Regulates security of personal property
Can S get piano back? If TP didn’t know that S had title If TP paid something for it
o Registration List B as the debtor TP should check for liens
S must have registered previous to contract between B and TP S has 30 days to register (ie prefect the security)
o Preventive law Register before giving up item
Chattel Mortgageso Title and possession transfer to Bo B gives title to F in exchange for money to pay 2
If B doesn’t pay F, F can go after a 3rd party if needed S and F are usually related parties
Floating Chargeo Same as chattel mortgage except its on a category of items
Usually inventories Assignment of Receivables
o Either general or specific accounts Bank Act
o Federal statuteo Allows bank to the security of something that doesn’t exist yeto Only for certain inventories, eg forestry, farmingo More complex and many contingencies to account for
Creditors Rights
Bankruptcy and Insolvency Act o Federal statuteo Who is going bankrupt?
Businesses don’t go bankrupt Either people or limited companies
o Assets in name of bankrupt debtor go to trusteeo Bankruptcy Planning
Giving away assets to family Courts could transfer it back
Trusteeo Must be licensed trustee in bankruptcy
Eg CA Not a lawyer
3 Methods of Bankruptcyo Receiving Order
Order of the court to give the trustee the assets Pursued by the creditors Need atleast $1000 of credit Show that debtor has committed act of bankruptcy within previous six
months 10 possible acts
exceptions not transferred food, clothes, some life insurance
o Proposal Offer to creditors
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“if you let me keep going, I’ll give you 50%” has to be accepted by 75% of debt owed
Secured Creditorso Those with registered security agreemento Get 100% to the value of their security
Security could be less than debt owed Preferred Creditors
o Given preferred status by the B%I Acto Preferred #1 gets 100%, before #2 gets a dime
General Creditorso Paid on pro rata basis of remainder
Dischargeo Debtor applies for discharge from bankruptcyo Never has to repay the debtso Granted by the courts, not the trustee
Sections 172, 173o Court can grant, refuse, delay, impose conditionso Circumstances where it can’t grant (173)
General creditors get less than 50% Act doesn’t tell court what to do Purpose is to give fresh start
o What is reasonable for debtor to do and still be free Certain debts survive bankruptcy
o Student loanso Money obtained by false pretenses
Other important statutes
Bulk Sales Act o Applies when you sell everything you own
Eg selling a businesso Concerned with creditors of the sellero Says that the contract must protect the creditors
If it doesn’t, the sale is void Mechanics Lien Act
o Not only for auto mechanics Anyone who works on “stuff”
o Allows mechanic to hold or sell the stuff if you don’t payo Value is irrelevant
Excess goes to original owner Construction Lien Act
o Applies to lando People who work on land can file a lien against ito Very complicated, technical and strict
45 days to file lien 45 days to sue
Statute of Limitations o Time limits for suing people
Execution Act o Enforcement of a Judgment
P. 289 Nothing you can do to the debtor that doesn’t pay
o Writ of seizure and sale = executiono Bring the execution to the sheriff
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o Sheriff is permitted to seize property of the debtor You must find the assets yourself
o Sheriff will pay all creditors who have filled an execution with the debtor in that county
Even if they did no work to find the assets Creditors Relief Act
o Lets the creditor who didn’t find the assets get somethingo Sheriff can seize land, but execution must be registered fro 6 weeks
Wages Act o 80% of wages are protected from garnishment
can be increased by judgeo Examination (in Small Claims Court)
Judge decides how much debtor can pay Creditors are the “prosecutors”
o Discoveries (non small claims court) No judge Ask about job, assets, bank accounts, etc
Land Laws
Propertyo Real property – title to the lando Includes more than just the surface
Timber Minerals and oils Buildings and anything permanently affixed to the building Column of air above
Quantity of rights is most importanto Zoning regulations (bylaws)
Regulate how land can be used Not retroactive
Land can be of “non-conforming” useo Building codes
Minimum standard of constructiono Planning Act
Need approval to split up land If you don’t get permission, the contract is void
Estate in Time
Exclusive possession Freehold estate
o Indefinite period of timeo Fee Simple
Greatest interest Succession Law Reform Act
Who inherits your property if you die without a willo Life Estate
Owe land for 1 life time Doesn’t have to be your own
o Matrimonial Interest Family Law Act
Must marry the land owner Live together on the property If so, you effectively become co-owner
Leasehold Interest
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o Definite period of time Concurrent Interest
o Joint Tenancy (not an actual tenant) Right of survivorship If A dies, B gains full ownership
Most common in husband/wife situationo Tenants in Common
No right of survivorship If A dies, A’s heirs get interest
More common in business situationso Both interests are salable and transferable without permission of the co-owner
If it was originally a joint tenancy, it becomes a tenant in common for the new co-owner
Interests less than Estate
Oil and Gas Rightso Most are actually leaseso Gives oil and gas companies rights to use the property
Restrictive Covenanto Negative in natureo Binding on future buyers
Exception to privity ruleo Registered with the lando Exceptions
Unreasonable restrictions Those that violate public policy
Easementso Right-of-wayo Ways to acquire
Grant A document
Prescription Comes from statute of limitations Can be sold, willed, etc Burden of Proof on A
o Must have been adverse to B (no benefit)o Must be open and obvious to be seeno 20 continuous years
Doesn’t apply against the Government Adverse Possession
A takes possession of B’s land Same burden of proof, except just 10 year time frame
Usual Conveyance of Land
By grant/deedo May be done electronically now in some parts of Ontario
Death creates automatic transfer of land Expropriation Tax deeds (for payment of real estate tax) Registration
o Registry System Registry Act Have to check all papers in the file
o Land Titles System
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Land Titles Act Only have to check the latest papers
Certified to be correct Began in mid 1900’s No adverse possession of prescriptions
o Each property is only registered under one systemo Designed to notify the world that you are owner
Registration is assumed noticeo Priority of Registration
First one to register gets it Make sure there is no one ahead of you before you buy
Real Estate Mortgage
Operates similar to a chattel mortgageo A pledge of title as security for the loano Court can issue order of Foreclosure which stops the equitable title
Mortgages Act o Combined the common laws and laws of Equity
Rightso Mortgagor
Keep possession as long as mortgage is up to date Reclaim legal title when debt is paid
o Mortgagee 2 paths to legal recovery
Foreclosureo Through Superior court of Justiceo Notice must be given to debtor who can:
Defend the case (rare) Put mortgage in good standing (ie get it up to
date) Must be within 20 days
Ask for more time Automatically will be granted 6 months
Ask for court supervised sale Debtor wants to ensure his money is
recovered Power of Sale
o Come from mortgage document Says that in event of default, mortgagee can sell
o Must give 45 days noticeo 2 obligations
try to maximize price can’t sell directly/indirectly to themselves
o more risky option possible suit for not maximizing price
o used 90% of the time quicker and cheaper less rights to mortgagor
Other Clauseso Pay interest and principle
Interest must be clearly calculableo Pay property taxes
Sometimes it’s included in mortgage paymentso Keep in reasonable repair
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o Keep insured to the value of the mortgageo Length of the mortgage
Called the “term” Maximum term is 5 years No right to pay it off early
o Early payment clauseo Open mortgage
Mortgagees are secured creditors for bankruptcy
Landlord and Tennant
Exclusive use of property Definite length of time
o Period and term are certaino Automatically renews at end of the period
Tennant Protection Act o Only for residential tenancyo Landlord can never get rid of tenant without cause
Commercial Tenancy Act o Non-residential tenancy
Things to be Addressedo Covenant to pay rent, including the amounto Right to assign and sublet
Can’t assign obligations without consent (ie Novation) If you sublet, you are still responsible for the rent
o Use of the premises If not specified, it must be “tenant-like usage”
o Fitness for occupancy Residential – must be habitable Non-residential – no implication for commercial leases
o Repairs Residential – landlord must fix most Non-residential – no obligations to either parties
o Quiet Enjoyment (both residential and commercial) Landlord has the title Non-interference promise
o Insurance No obligation
o Services (heat, hydro, etc) Varies
o Taxes Not important for Residential
Important for commercialo Fixtures
Anything permanently affixed to the land Belongs to the landlord
Exceptionso Pure decorationso Trade fixtureso Anything agreed
Remedieso Landlord
Pursue money Residential
o Rental housing tribunal
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o Courto Landlord must try to mitigate
Commercialo Courto Landlord doesn’t have to mitigate for rent arrears
Evict Must have order from court or tribunal
o Must follow procedure to get order Must notify tenant Commercial
o Doesn’t need court ordero Must be a major breach
Distress Right to take possession for rent arrears Not available for residential landlords
Injunction Order to force tenant to stop something
o Tennant Sue for damages
Always have to mitigate Move out
Get order to terminate tenancy Injunction
Business Structure
Agency
Agency is a type of employment contract Agent has ability to bind Principle into a contract How is it formed?
o Expressed, stated agreement Best, most common way Doesn’t have to be written
o Ratification Principle has to ratify actions of the agent Doesn’t have to be written
o Apparent Authority Principle makes it appear that A is his agent
o Estoppel Agent makes it appear that he has the authority Principle does nothing to prevent this
o Co-Habitation Some applied authority for domestic needs Courts generally move away from this
Obligationso Governed by contract
Subject to the Real Estate and Business Brokers Act Limits what real estate agents can put in contracts
o Agent Obligations Duty of obedience Use of reasonable skill and diligence Personal performance
Can’t have a “sub-agent” Fiduciary Duty
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Act in principle’s best interest, ahead of all others What happens when Agent and Principle’s interests conflict
o Agent has duty to tell principle of Conflict of Interest Now he must eliminate conflict
o Principle’s Obligations Pay the Agent
Usually commission Who pays the out-of-pocket expenses?
o Depends on contract Relationship between P and TP
o A is not a party to the contract Can’t sue or be sued
I.e. no privityo Exceptions
A describes himself as principle The actual “P” is not party to contract
A doesn’t say he is an A or a P A and P are both party to the contract P is like a “silent partner” Happens more frequently
A lies about his authority to act on P’s behalf Breach of warranty of Authority B sues A, P gets his book back
Ending Agency Relationshipo End of time/projecto Death or insanity of either party
Even if nobody lese knowso Bankruptcy of principle
Bankruptcy of Agent might not end relationshipo Notice by either party
i.e. Firing or resignation can do so at any time, even if it is breach of contract
may have to may damages can’t get specific performance
Partnerships
Joint business enterprise carried on for profit Courts use “Pig and Cow” doctrine to determine if it is a partnership Each partner is an agent of all other partners
o Every partner is both principle and agento Authority might be limited, but T.P don’t know
Public might assume full authority Partnership Agreement
o Usually writteno Partnership Act
Your contract if none made otherwise Not designed for specific business
Partnership may be registeredo Not requiredo Gives you right to sue for receivableso Doesn’t protect your partnership nameo If you register, then you can later de-register
Provides some evidence that you terminated partnership Partnerships are not legal entities
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All parties are jointly and severally liable for all debts of partnership to full extent of their own assets
Partnership creditors have first claim to partnership assets
Corporation
Company is a legal entity Limited liability for shareholders
o Can go to shareholders in some instances Sometimes for income taxes
Transfer of shareso Public company
Shares offered to the public Securities Act
Must disclose good and bad informationo Private company
Must be a restriction of transfer of shares Management
o Directors who run the company Owe fiduciary duty to the corporation
Not a duty to the shareholders Sometimes there is a breach of duty
Corporation can sue the directoro What if director makes decisions because he is majority
shareholder? Minority shareholder have derivative action
Can sue in name of company Must have permission from court
Weber Caseo P. 59o W Ltd. Was one-man companyo W made decision that helped himself personally, but hurt the companyo Receiver took over company in bankruptcy and sued W
Corporations vs Partnershipo Continuity of existence
If a partner dies, the whole partnership is done Unless partnership agreement says otherwise
o Decision making In corporation 75% majority needed In partnership, every partner has veto power
Pre-incorporation contractso Can enter into contracts on behalf of non-existent corporation
Must specify that it is with “Corporation yet to be formed” Company must approve contract at shareholder meeting
Until this happens, person who negotiated contract is personally bound
o Should make other shareholders party to the contract Limited Liability
o Capital funding Usually need a personal guarantee
Vicarious Liabilityo Employee is personally liable for negligenceo Agent needs to ensure he expresses that he is an agent
Shareholder Rightso By Statute
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Right to meeting at least once per year Right to be notified of meeting Right to be present and vote
Right to financial disclosure Derivative action rights
o By Contract No legal requirement for shareholders agreement Usually has
Employment contracto None competition clause
Valuation of shares if shareholder wants to leaveo “Shot gun clause”
If A sets price for shares, B can either pay it or A can buy B’s shares for that price
The more wealthy shareholder can take advantage of this
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Specific Statutes
Evidence Act
o Exception to the hearsay ruleso Business records allowed as evidence
Assumed right unless proven wrong
Insurance Act
o “no fault system” exception to general fault rules
o exception to “closed mouth doctrine” must disclosure certain information
Negligence Act
o Covers contributory negligence Apportion fault Apportion damages
Occupier’s Liability Act
o Invited guests Guard against hazards known of or should have known of
o Licensee Guard against hazards know of
o Trespasser Don’t recklessly disregard against well-being
Mercantile Law Amendment Act
o P. 24 of coursewareo If you accept part payment of debt, you can’t sue for the rest
Even though there is no new consideration Must “expressly” accept
Statue of Frauds
o Some contracts must be in writing to be enforceable in courto Contracts in violation are still valid, just not enforceable in courto Contracts covered:
Promise to pay another’s debt (guarantee) Marriage contracts Land Contracts Contracts not to be performed for more that a year by either party Ratification by former infant
Securities Act
o Corporations must disclose both good and bad information in their reports and prospectus
o Exception to “closed-mouth doctrine”
Insurance Act
You can sue the insurance company for damages if the negligent party doesn’t pay
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Conveying and Law of Property Act
Equitable assignmento assignment must be unconditionalo written formo notice to promissor in writing
Frustrated Contracts Act
You get paid for performance before frustration Only get paid the amount that the work has benefited the other party
Consumer Protection Act
See above
Sale of Goods Act
see above
Bill of Exchange Act
Identifies what a negotiable instrument iso See p. 418
Should be as similar to cash as possible
Personal Property Securities Act
Regulates security of personal propertyo Can S get piano back?
If TP didn’t know that S had title If TP paid something for it
Bank Act
Allows bank to take title to something that doesn’t exist yeto Used for farms, fishermen, etc
Bankruptcy and Insolvency Act
See above
Bulk Sales Act
When you sell substantially all you own, you must protect the interests of your creditorso Failure to follow the Act makes the sale void
Mechanics Lien Act
Allows people who work on “stuff” to hold it until they have been paid
Construction Lien Act
People who work on land can file liens against it.o Very technical acto Only have 45 days
Statute of Limitations
Time limits for suing people
Execution Act
Allows sheriff to seize property of debtor
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o Must get court ordero Must find the assets yourself
Creditors Relief Act
Allows seizure of lando Must have registered seizure for at least 6 weeks
Wages Act
80% of wages are protected from garnishmento can be increased by a judge
Planning Act
Need approval to split you land upo If you don’t the contract is void
Succession Law Reform Act
Covers who gets your land if you die without a will
Family Law Act
Spouse who lives in house will effectively become co-owner
Registry Act
Older land registry system Have to check all papers
Land Titles Act
Began in early 1900’so Last transfer is certified to be correcto Only have to check last one
Mortgages Act
See above
Tennant Protection Act
See above
Commercial Tenancy Act
See above
Issues
Negligence
Occupiers Liability Act o Guard against harm based on status
Contributory Negligence
Negligence Act o Duty of care to yourselfo Apportion fault and damages
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Remedy
Take your victim as you find themo Compensate for lost earnings, expenses, pain/suffering
Needed in all cases!!
Res Ipsa Loquitor
Shift burden of proof to defendanto Plaintiff needs to show probable faulto Facts to refute solely in possession of defendant
Causation
Broken chain lead to no further liability Time, geography in between Intervening negligence
o Was there negligence in between events
Disclaimer
Person must be made aware of the disclaimero Also needs to know the meaning of the wording
Vicarious Liability
Employer is responsible for actions of employees Plaintiff can sue both parties
o Can’t double collect however
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