After Midterm Flashcards
What does a breach of any term in a contract entitle the non breaching party to?
Claim damages
What may serious breaches of a contract do
May also discharge a contract and release the non breaching party from further performance or his or her contractual obligations
What may be considered a serious breach
It must undermine the whole contract or a substantial part of it; only then can they discharge
What are the 2 situations in which you can lose the right to treat the obligations as discharged?
When innocent party decides to proceed with the contract and accept benefits, despite the breach
Or when the innocent party may have received the benefit and not learned of breach until performance was complete (can still claim for damages)
Would delivering 9995 out of 10000 bags of flour be considered a minor or major breach?
Minor
When you encounter a breach, what should you consider first?
The importance of the term breached
What are the 3 ways a breach may occur
By expressly rejecting its obligations
By acting in a way that makes it impossible to perform its promises
Or by either failing to perform at all or it’s actual performance falls short of its promise
What is express repudiation
Happens when one of the contracting parties communicates to the other that it does not intend to perform as it promised
What is the promisee entitled to in express repudiation
To treat the contract as immediately ended, to find another to perform, and to sue for whatever damages it sustains
They must inform them tho that they are treating the contract as an end
What is anticipatory breach
When express repudiation occurs before any performance has been done
But a contract exists from the time is has been formed, not performed
What does the good faith performance mean
The parties will conduct themselves in good faith both at the time the obligation is created and at the time it is performed
Includes fairness, honesty, and consideration for the interests of the other party
In a contract where one party is to perform by instalments, the other may consider itself freed from liability if it can offer answers to these 2 questions:
Is there a good enough reason to think future performance will be equally bad
Is the expected or actual defectiveness important relative to the whole performance promised (it was bad in this order but will it be in the next ones?)
What is the doctrine of substantial performance
That a promisor is entitled to enforce a contract when it has substantially performed, even though it’s performance does not comply in some minor way with the requirements of the contract
Basically that a promisee cannot use trivial failure of performance to avoid its own obligations
What happens in over performance
If person was over payed, court will order him to restore it
Quasi- contract: one party had received an unfair benefit at the expense of another
What can you use in over performance/ quasi- contract
Restitution- an order to restore property wrongfully taken
What is the purpose of an exemption clause
To protect themselves from liability for breach of contract
What is the 3 step analytical approach that courts take to decide if the party should escape the effect of an exemption clause
Decide whether the clause covers the circumstances in question
Whether the clause was unconscionable (unequal bargaining power) at the time of contracting (is yes, not enforced)
Whether there is a strong public policy reason against enforcement
What are the types of remedies
Damages
Equitable remedies- specific performance, injunction, and rescission
Quantum meruit
What is the purpose of awarding damages
To place the injured party back in the position he would have been in if the contract had been properly completed
What are the 2 prerequisites for an award of damages
Loss must flow from the breach
(Foreseeable)
Damages must be mitigated
(They tried to minimize losses)
What is the expectation damages
Expectation damages= expected position of the plaintiff if the contract had been performed- the actual position the plaintiff is in after the breach
What are general damages
Describes an estimated amount for intangible injuries that a court may award
What are reliance damages
To compensate the injured party for wasted time or effort or expenses incurred to prepare for performance
What are punitive damages
Awarded for malicious or bad faith behaviour of the breaching party
What are the 4 challenges in measuring damages
Mental anguish
Wrongful dismissal under mental anguish
Lost holidays under mental anguish
Cost of performance VS economic loss
What are the 5 prerequisites for an equitable remedy
A plaintiff must come to court w clean hands
Plaintiff must not delay in taking action
Must not negatively affect an innocent purchaser
Plaintiff must have paid meaningful consideration
Remedy would be awarded if he were the defendant instead
What is specific performance
An order requiring a defendant to do a specific performance
What is an injunction
A court order restraining a party from acting a certain way; in terms of a contract it would be to prohibit them from committing a breach
What is a negative convenant
A promise not to do something
What is rescission
Involves returning the party as nearly as possible to the position that existed before the contract was made
What is quantum meruit
The fair amount a person deserves to be paid for benefit given
What happens when a plaintiff obtains a judgement for a sum of money
He becomes a judgement creditor and the defendant becomes judgement debtor
What is agency
A contractual relationship in which one person, known as an agent, is authorized by another person for whom she acts, known as principal, to form contracts with 3rd parties on principals behalf
What is a Commission Agent
one who sells on behalf of a principal to third parties and receives compensation through commissions on those sales
What are the 4 duties owed by an agent to the principal
Duty to comply with the agency agreement
Duty of Care
Duty of Good Faith
What is the duty to comply with the agency agreement
determined by the terms—express and implied—of the agreement with the principal
breach of any term, whether express or implied, gives the innocent party the usual remedies against the other for breach of contract
What is the duty of good faith
agent owes a fiduciary duty to the principal
requires that an agent be loyal, act in the best interests of the principal, and keep the principal fully informed
What happens if an agent demands money from a third party for the conduct of the principal’s business affairs?
Under theCriminal Code, it is a criminal offence for an agent to corruptly demand or accept any remuneration from a third party in the conduct of her principal’s business affairs
What are the duties owed by the principal to the agent
Remuneration (to compensate the agent for their efforts, commission)
Expenses (to pay the agents expenses and compensate for losses)
When is an agent entitled to commission
when they introduce to the seller a prospective purchaser who is “ready, willing, and able to purchase.” A completed sale is not required
What is actual authority
authority given expressly or impliedly to the agent by the principal (oral or written)
What is apparent authority
authority that the 3rd party is entitled to assume the agent possesses
contract is enforceable if the agent had the apparent authority
What is usual authority
has the apparent authority to act in the manner that is usual for that type of agent in that type of business, unless the third party knows, or ought to know, of any restriction upon that authority
What are the 3 possible outcomes of the rights and liability of the principle and agent
The principal alone is liable on the contract.
The agent alone is liable.
Either the principal or the agent may be held liable.
when would an agent be liable on a contract
When an agent contracts on terms that she is the real contracting party, though she is in reality acting or intending to act for an undisclosed principal, the agent alone has rights and liabilities relative to the third party
When is no contract formed in agency assumption
No contract is formed when a person holds herself out to be an agent but has no authority, actual or apparent, and the named principal does not ratify
No contract between a third party and the principal can be formed after the principal has lost contractual capacity or has ceased to exist
True or false: would an early withdrawal by either principal or agent without the consent of the other constitute a breach of contract?
True
What is franchising
one party, the franchisor, grants a licence to the other party, the franchisee, to sell its product and use its name, trademark, and business model in return for payment of a franchise
what is the consideration granted by the franchisor
the grant to the franchisee of a right, or licence, to sell goods or services supplied by or made to specifications provided by the franchisor
What is the legal relationship created by franchising
contractual one between independent entrepreneurs
Not fiduciary relationship
Imposes good faith on both parties: requiring prompt, honest, fair, and reasonable dealings with each otherand actions to protect and enhance the value of the brand
If an agent represents themselves as the principal who is liable?
agent
When can you enforce a contract against a 3rd party in agency contract
can show that K was made with authority
authority was real and not apparent
What is employment law
a contractual relationship where one party, the employer, is authorized to direct and control the work of another party, the employee
What are some torts in employment law
vicarious liability
negligent hiring
wrongful referral
What are an employees duties
duty to obey
duty to exercise skill and care
duty of good faith and fidelity
What are an employers duties
duty to pay
What are some factors for determining a reasonable notice for the termination of an employment contract
trade practice duration of employment intention at time of K formation frequency of pay level of position
When can an employment contract be discharged
frustration
major breach of K
What is dismissal for cause
dismissal without notice or further obligation by the employer when the employee’s conduct amounts to a breach of the contract
what are the 3 major breaches of employment k
misconduct (bad behaviour)
disobedience (not obeying a reasonable and lawful request)
incompetence (there was an implied or expressed term of competence in K that they did not have)
what is a frustrating event that makes a dismissal for cause in employment K
illness
what is an employers role before dismissal for cause
to warn the employee (so they can try to improve)
to train and assist
to document activities
what is wrongful dismissal
where an employee claims they have been wrongfully dismissed
employer can defence that there was a cause and adequate notice
what does wrongful dismissal try to do
to place the injured party in the position they would have been had the contract been performed
what is the first thing to determine in a wrongful dismissal case
the reasonable notice time period
then they find the rate of pay + the benefits multiplied by notice time to make damages amount
what does mitigation mean in wrongful dismissal
contract law requirement to act reasonably to reduce losses
must try to obtain comparable employment
What is the employee welfare leglislation
Both federal and provincial governments used legislation to force employers to improve working conditions for employees
fair working conditions for all employees
What are secured transactions
typically give collateral security- an interest in property of a debtor that gives a creditor the right to seize and sell it in the event of non- payment of debt
what are the 2 parties in secured transaction
creditor
debtor
What is bailment
possession of personal property without a transfer of ownership
right to retain possession of property, but NOT the right to repossess or take back property
ex. company car= higher standard of care
What is a benefit to secured interest
a secured creditor does not need a judgment or an execution order but canproceed on its own to enforce its rights over the secured asset. In this sense, a security interest provides a creditor with a quick self-help remedy
When does a creditor take a security interest
when it is practical to do so:
- as incentive to a debtor to pay
- when goods will maintain their value
- long term debt
What are the rights of a judgement creditor
can obtain execution order to seize property
what are the rights of a secured creditor
does not need a judgement to realize on its security
has priority over other unsecured creditors
What are conditional sales contracts
where the debtor in possession but ownership with the creditor
-creditor has the right to repossession upon default
What are chattel mortgages
a mortgage but on personal property(moveable things)- gives the mortgagee an interest to secure repayment
parties: mortgager and mortgagee (creditor)
What are floating charges
a form of mortgage on all of the assets of a corporation other than those already specifically charged
What does the personal property security act (PPSA) govern
governs not only conditional sale contracts, chattel mortgages, and assignments of book debts, but also floating charges, pledges, leases and consignments intended as security, and other less common forms
what are the 3 components of the PPSA
creation of the security interest (agreement)
attachment of a security interest
perfection of the security interest (when creditors interest is protected)
how can perfection occur
where secured party takes possession of the assets
or once registration under the PPSA is done
what are the exceptions for good faith buyers
anything under 1000
retail purchases
what is the assignment of book debt
a security interest in debtors accounts receivable
only triggered by default
what are the 3 forms of businesses
sole proprietorships
partnership
corporation
what is a partnership
• Partnership is the relation which subsists between persons carrying on a business in common with a view of profit There are 3 types of partnerships; • General partnerships • Limited partnerships • Limited liability partnerships
what do limited liability contracts require
registration
what are general partners liable for
personally liable for the debts of the partnership
What are the implied terms of partnership
equal share of profits
firm must indemnify partner that incurs expenses and liabilities (if he is sued, others help)
when will a partnership dissolute by law
by any event that makes it unlawful for the business to be carried on
mentally incompetent
incapable of performing
guilty of conduct likely to negatively affect the business
breaches the agreement
just and equitable
what are the effects of dissolution
the property of the partnership is first used to pay the debts and liabilities of the firm; any surplus is distributed to the partners according to their interests
what are limited liability partnerships (LLP)
LLP partners are not responsible for debts, liabilities, or obligations of the partnership or any partner arising from the negligent acts or omissions that another party of the partnership commits in the course of business
what is a joint venture
a contractual agreement between two or more parties to collaborate on the management of a specific project, to each contribute part of their respective resources, and to share the profits
what kind of duties does a shareholder owe to a corporation
no duty of good faith to the corporation: he may carry on any independent business himself and may deal freely with the corporation as if he were a stranger
What are bylaws
operating rules of a corporation
directors adopt or amend old bylaws and the shareholders must confirm them to make the bylaws valid
What is corporate governance
refers to the organization and management of the business and affairs of a corporation in order to meet its internal objectives and external responsibilities
What are the 4 people in the internal affairs of a corporation
directors- supervise officers
officers- run the business
shareholders- owners of corporation
stakeholders-other interested parties (employees)
what kind of powers do directors have
power to issue shares
to declare dividends
to adopt by laws
to call meetings of the shareholders
what are a directors duties
-act honestly and in good faith with interests of corporation
-standard of care- ○ behaviour must be comparable to the average director in the same circumstances
fiduciary obligation-comply
when can directors be personally liable
misconduct/ negligence
votes for a decision that is financially detrimental
-liable for employee wages
if taxes not paid
what is a defence for directors
due diligence
acted diligently
relied on audited financial statements
(business judgement rule:give them benefit of doubt)
what is insider trading
the use of confidential information relating to a corporation in dealing in its securities
fines up to 5 million and prison up to 5 years
what are shareholders rights
to vote at any meeting of the shareholders
to receive any dividend declared
to receive remaining property on dissolution
what requires an ordinary resolution of shareholders (majority rules)
approval of any amendments made by directors
election of auditor
election or removal of director
what requires a special resolution of shareholders (2/3 majority)
approval of alterations to articles of incorporation
fundamental changes- ex. sale of the assets
what is corporate indemnity
defence to breach:An agreement with the corporation to reimburse a director or officer for any costs associated with liability for breach of duty is enforceable provided that the director acted honestly, reasonably, and in good faith
what is the fiduciary obligation to a corporation when involving conflicts of interest
the duty to disclose any interest that the director may have in contracts made with the corporation
-failure to do this gives corporation the right to rescind the contract
if a director has intercepted an opportunity belonging to the corporation what happens
they committed a breach of duty
It is a director’s duty to give the corporation the chance of first refusal before acting for herself
what rights do common shares have
right to vote
what rights do preferred shares have
priority in payment of dividends
only right to vote in some circumstances
what right do shareholders have
information financial statements meeting times registers etc
what is appraisal remedy
allows a minority SH who does not agree to the changes to have the corporation buy back their shares
- court will set a price
what is derivative action
When a corporation has suffered an injury or, for example, where directors have made a secret profit for themselves by exploiting a “corporate opportunity,” the corporation may sue the wrongdoer to recover its losses
what is winding up
the dissolution (liquidation) of a corporation used when the corporation is a small family business or an “incorporated partnership,” where there is deadlock, where relations between the participants have broken down, or where a “partner” has been frozen out
what is the oppression remedy
allowing individual shareholders to seek a personal remedy if they have been unfairly treated
show that their interests or reasonable expectations have been treated unfairly or oppressively disregarded by the behaviour of the corporation or its directors
what are shareholder agreements
an agreement between 2 or more shareholders that is distinct from the corporations charter and by laws
what are some terms in shareholder agreements
right to employment
to participate in management of business
to a fair price for a share interest
what is the maintenance test
corporation cannot declare dividend when:
- the C after the payment would be unable to pay liabilities as they are due
- C’s assets would be less than liabilities AND capital
what are the 2 goals for protecting investors
prevent and punish fraudulent
require full disclosure of financial info
what is the requirement of mens rea
he prosecution must prove beyond a reasonable doubt not only that the accused actually did commit the act described in the offence but also that he had the intention to do it—that is, the “intent.”
Mens rea - a guilty mind
what is the directing mind in criminal liability
any person who has policy making authority can be construed as the directing mind and can therefore fulfill the mens rea requirement for the corporation to be convicted
how are employees protected
personal liability of directors for up to 6 months wages
protected through occupation health and safety legislation, which requires ongoing monitoring and creates regulatory offences for unsafe workplaces
what do corporations must demonstrate in environmental offences
effective system to prevent offences is in place
regular monitoring
implement improvements
keep up to date
what is the standard of care for directors and officers in environmental offences
need for expertise when engaged in hazardous activities
- held to higher standard of care
- no skill and knowledge- then failed to employ necessary people
who is held responsible for environmental offences
the person committing the act
directors or officers
what are the reasons for punishment of environmental offences
protect public
deter offenders
promote compliance w law
express public disapproval
what are factors to be considered in determining the appropriate sentence for public offences
nature of environment affected extent of damage deliberateness attitude of defendant attempt to comply w regulations
What is the difference between international and multinational business
international-located in one place but dealing with foreign countries
multinational-offices set up in other countries as well as original
what are export contracts
for the international sale of goods or for the supply of services abroad
If the contract does not state the proper law of the contract (the jurisdiction) they will look at
surrounding circumstances and intentions of the parties
the system of law that is mostly connected to the contract
what 4 documents does an export sale require
the contract of sale
the bill of lading (proof that goods have been delivered, title of goods)
insurance policy/ certificate (insuring lost goods)
the invoice (must conform to requirements of importing country)
the 4 standard terms to describe the shipping and insurance arrangements EXW FOB CIF DDP
Ex Works
Free on Board
Cost, Insurance, Freight
Delivery, Duty Paid (you are dealing with the duty expenses)
If the seller is nervous about payment for goods but the buyer is nervous about paying before they get the goods what can they do
a collection arrangement
what is countertrade
instead of money, consideration for contract would be other goods
when exporting services, what do you need to follow
to abide by the importing countries rules
requires a proper law of the contract
need to determine method and currency for payment
what are the 2 types of foreign investment and what do they mean
passive investment-buying shares in foreign companies
active investment-purchasing foreign property, joint ventures
what is forum shopping
when jurisdiction law is based on better favours, must have actual reason for making certain law in contract
what is the forum non conveniens
allows a court to decline jurisdiction where there is no real or substantial connection to that jurisdiction- defer the lawsuit to a more appropriate foreign court
what is commercial arbitration
Arbitration
neutral third parties set up to arbitrate disputes
what is role morality
checking your humanity at the door
employees view that their actions are permissible because they are doing it for their employer
What is Ecommerce
the use of computer networks to facilitate transactions involving the production, distribution, sale and delivery of goods and services
Web- wrap agreements
a web site document setting out the contract terms, if you accept you click on the appropriate icon
terms need to be brought to the attention of customer
what is a click wrap agreement
requires the buyer to open the terms page before clicking acceptance
what is a browse wrap agreement
provide a link to additional terms and conditions, but does not require to be open before accepting
what type of tort law would a computer malfunction be
negligence
reliance on servers
negligence on part of service provider
what are intellectual property rights
abstract property rights owned by persons who have the sole right to licence the use of the property
what is a trademark
a word(s) a design, or a combination of these, used to identify the goods or services of one person or organization registration for this is good for 15 years
patentable inventions must be
an art, process, machine, manufacture, or composition of matter or an improvement to such
where will courts set jurisdiction in Ecommerce
where the defendant resides, or where there is a real and substantial connection to jurisdiction
what is defamation in Ecommerce
posting defamatory material on a website or message board for publication for the purposes of libel and slander
increase damages because of broad audience
what does PIPEDA do?
An act to promote that business can only collect and store personal information with their consent
