Business Law

Question 1

What are the elements of an agency relationship?

Answer 1

(the agent) is authorized by another (the principal) to bind the latter to contractual obligations.

Question 2

What are the two distinct contracts in an agency relationship?

Answer 2

1. The principal has a contract with the agent (the agency agreement); and
2. The principal has a contract made on its behalf by the agent (the third-party contract) with a third party.

Question 3

What are the duties owed by the agency to the principal?

Answer 3

• a duty to obey the terms of the agency contract
• duty of care
• a duty of personal performance
• good faith

Question 4

What is a common type of agency agreement?

Answer 4

Power of attorney

Question 5

What duties are owed by the principal to the agent?

Answer 5

• A duty to compensate the agent for his or her effort (by commission or otherwise); and
• A duty to pay the agent’s expenses and compensate for losses

Question 6

What are the rights and liabilities of the principal and agent to the third party?

Answer 6

1. The principal alone is liable on the contract. When all parties act properly the agent will cease to have any responsibility and the ongoing contract is between the principal and the agent.
2. The agent alone is liable on the contract. When an agent holds herself out as the principal and does not disclose that she is acting as an agent for an undisclosed principal, she alone will be liable under the contract; and
3. Either the principal or the agent may be held liable on the contract. Where an agent does not disclose her principal but does not hold herself out as the contracting party, the third party may elect to hold either the principal or the agent liable under the contract

Question 7

What two protections does the Arthur Wishart Act ?

Answer 7

• Franchisors are required to give every prospective franchisee a disclosure statement at least fourteen days before the franchise agreement is signed which contains all material facts including financial and franchise information. Failure to provide the disclosure gives the franchisee the right to rescind the franchise agreement
• The franchisor has a duty of good faith and fair dealing with its franchisees

Question 8

Define an employment relationship?

Answer 8

by contract, one party known as the employer is authorized to direct and control the work of another party, the employee.

Question 9

What are the four factors set out by the supreme court of Canada to distinguish between an employee and independent contractor?

Answer 9

1. How much control does the employer have? Does the business decide what you do, your rate of pay, when your work needs to be completed and how and where you complete your work?
2. Ownership of the tools, does the business supply the equipment or materials needed to perform the work?
3. Chance of profit. Is a person paid the same hourly rate regardless of how quickly they complete an assignment?
4. Right to subcontract. Does the individual have the ability to retain someone outside the company to complete their assigned work?

Question 10

What does the Canada Business Corporations Act say that directors owe?

Answer 10

• A fiduciary duty to act honestly and in good faith with a view to the best interests of the corporation. Often these fiduciary duties involve conflicts of interest by a board member vis-à-vis the corporation; and
• A separate duty to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

Question 11

Who do directors owe duties to?

Answer 11

Directors owe a fiduciary duty only to the corporation and not to any one group of stakeholders such as creditors or shareholders. However, when acting in the best interests of the corporation, it may be appropriate for the directors to consider, among other factors, the interests of the shareholders, employees, suppliers, creditors, consumers, governments and even the environment.
However, directors do owe a duty of care to shareholders, creditors and employees to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. The standard of care is whether the board had “exercised the care, diligence and skill” of a prudent person

Question 12

What are the rights of a share holder?

Answer 12

Vote at any meeting of shareholders;
Receive any dividend that is declared for their class of shares;
Receive the remaining property of the corporation, after payment of all debts, should the corporation dissolve;
Receive financial disclosure which must be provided through an audited financial statement prior to the annual general meeting;
Review the documents of record of the corporation, which include the minutes of shareholders’ meetings, a copy of the corporate charter, all bylaws and resolutions and a register of the directors.

Question 13

What is a derivative action?

Answer 13

The derivative action allows a shareholder or other complainant to bring an action on behalf of the corporation when the directors, on behalf of the corporation refuse to bring the action itself

Question 14

What is the difference between a claim of oppression and a derivative action?

Answer 14

Claim of oppression hurts the person directly, derivative action is used when the corporation has been damaged.

Question 15

What four documents are typically used for an export sales contract?

Answer 15

1. Contract of Sale
2. Bill of Ladding
3. Insurance Policy
4. Invoice

Question 16

What does the Proper Law of the Contract mean?

Answer 16

Canadian courts and courts in other countries hold that the proper law of the contract, which is to be applied in any dispute, is the law the parties intended to govern the agreement

Question 17

What does Forum non conveniens mean?

Answer 17

The defendant may argue that the court selected by the plaintiff is a forum non conveniens which means another court is more directly connected to the action and should hear the dispute.

Question 18

What are the points incoterms primarily addresses?

Answer 18

Cost
Control - who owns the shipment at any given time during transit.
Liability

Question 19

What are the alternative arrangements recommended through incoterms?

Answer 19

EXW - buyer picks up from sellers premises
FOB - seller delivers to buyers source of transport
CIF - when the buyer picks it up seller responsible till picked up by buyer.
DDP - seller delivers right to buyers door

Question 20

Under the Export and Import Permits act what industries are regulated?

Answer 20

1. Agriculture.
2. textiles
3. Lumber
4. Goods destined for countries on the area controlled list.
5. Nuclear and Energy Materials and Technology
6. Missile, Chemical, and biological goods
7. Military

Question 21

What is the benefit of WTO over GATT?

Answer 21

• The WTO provides for greater control over trade in goods, services and intellectual property, whereas GATT only controlled trade in goods.
• WTO also holds countries accountable if they break rules to either fix them or dispute it otherwise other countries are allowed to close their markets to you.

Question 22

What is the difference between arbitration and the court system?

Answer 22

1. Arbitration less informal
2. Can take place right away, not subject to delays
3. Both parties decide on judge to ensure expertise.
4. Often parties agree no appeal process afterwards.
5. Arbitration usually less costly than court system.

Question 23

What three elements must succeed in order for complainant to be established when dealing with a trade mark?

Answer 23

• The domain name is identical or confusingly similar to the complainant’s trade mark;
• The respondent has no rights or legitimate interest in the domain name; and
• The domain name was registered and is being used in bad faith

Question 24

What is the traditional test for copy right patents?

Answer 24

• The invention must add to human knowledge something technological;
• A business method is not patentable; and
• A patentable object must change in character or condition a physical object