Comm 304 Midterm 1 Flashcards
Role and Function of Law
law determines rights, freedoms and obligations of society, represents values and beliefs of society, It is made by the sovereign to regulate the conduct of participants in society within its jurisdiction
Law is typically backed up by sanctions for noncompliant participants
It has three main roles:
Establish rules of conduct in society
Dispute settlement
Protect individual/business
Common Law vs Civil Law
Common Law: Based on English Law
Found in many anglo-saxon countries (Ireland, UK, US, Canada, Australia)
Sources of law:
Past cases
Statutes/Codes/Acts and accompanying regulations
Regulate isolated matters in detail
Often interpreted literally
Concept of precedent applies
Civil Law: Based on Roman Law
Found in many European countries (France, Italy, Germany, Spain) and in Quebec
Sources of law:
Statutes/Codes/Acts and accompanying regulations only
Comprehensive regulation in broad terms
Often interpreted teleologically
Concept of precedent does not apply
Common Law concept of Precedent
Known as “stare decisis”, i.e., to stand by a previous decision
Only applies to courts in the same jurisdiction
Example: a decision by the BC Court of Appeal does not bind the SK Court of King’s Bench
Only applies to decisions of a higher court
Example: a decision by the SK Court of King’s Bench does not bind the SK Court of Appeal
Even if a decision is not binding upon it, a court may still decide to follow it
Common law Supreme Courts rarely overrule themselves; they prefer to argue on cases being “distinguishable on facts”
Lower courts rarely overrule themselves and state new rules
Any act of parliament can overrule the most established common law rule
Sources of Law
Common law, equity and statute law (acts, statutes regulations)
Substantive Law
body of law that establishes rights and obligations of individuals/businesses
Procedural Law
body of law that establishes how a substantive right is enforced
Private Law
body of law regulating the relationship between individuals/businesses
Public Law
body of law regulating the relationship between individuals/businesses and the state/government
Charter of Rights and Freedoms
Is part of the constitution
Sets out basic rights and freedoms for all Canadians (and some for permanent residents) regulating the citizen-state relationship
Applies to acts of governments only, i.e.
Laws & regulations need to be in compliance with the charter
Governments in their capacity as participants in business activities need to be compliant with the charter
It does not directly apply to actions between private people and businesses
Unlike Charters in other countries (US, Germany), the Canadian one does not include a right to own property
Charter rights are not absolute!
Federal vs Provincial Law Making Power
Examples of exclusive federal jurisdiction:
Currency and Banking
International Trade and Interprovincial Trade
Shipping
Intellectual property
Bankruptcy & Insolvency
Postal services
**Examples of exclusive provincial jurisdiction: **
Laws on property and civil rights
Local trade and commerce
Provincial incorporation of companies
Education and schools
Municipalities
Hospitals and prisons
Judicial System Provincial
Provincial courts hear most business-related disputes
Jurisdiction of trial court depends on amount in dispute and/or subject matter of lawsuit
Judicial review of decisions of provincial administrative tribunals
Federal Judicial System
Disputes between provincial governments and the federal government
Disputes on intellectual property matters (patents, copyrights, trademarks) and maritime law
Judicial review of decisions of federal administrative tribunals
Parties involved
Plaintiff vs. defendent
Burden of proof:
plaintiff
Standard of Proof
balance of probabilities (not: beyond a reasonable doubt which applies to criminal matters)
Administrative Tribunals (AT)
Are set up under federal or provincial legislation
Specialized governmental agencies with quasi-judicial decision-making powers on very wide range of topics
Are expected to be independent and non-political
Apart from decision-making power, may also have regulatory/licensing functions (example: law societies)
Often called “Board”, “Commission”, or “Tribunal”
Alternative Dispute Resolution (ADR)
outside the court system
Different forms of ADR for different types of disputes with different outcomes
Tremendous growth in ADR over past two decades in Canada
Reasons for parties opting for ADR are:
Speed (court proceedings are very slow)
Flexibility and control over proceedings
Confidentiality (award may not be published)
Costs (though some ADR can be expensive)
Choice of forum/adjudicators
More suitable to retain long-term relationship
Solution-oriented/effective results
Limited/no appeal
In international setting: no other effective dispute resolution mechanism may be available
Negotiation
Should be a first step in attempting to settle any business dispute
Typically done between the parties with no third party involved
Outcome very much depends on skills and negotiation style/tactics of involved parties
Negotiation Pros
Inexpensive, flexible and fast
Parties control the process
Confidential (based on trust)
Can lead to win-win business outcomes
Prevent further conflict escalation
Retain long-term business relationships
Negotiation Cons
No guarantee for satisfactory outcome
Power imbalance can be of disadvantage for the weaker party
Even if agreement is reached, enforcement might be a challenge
May be used as a delay tactic by one party with no real interest in resolving the dispute
Mediation
Involves a third party (mediator) to assist parties in settling their dispute
Wide range of types and styles of mediations available
Mediator assists parties to reach an agreement, they do not to impose a solution upon the parties
Focuses on non-confrontational settlement, thus preserving the business relationship
Flexible, speedy, confidential and cost-effective allowing for outcomes not available in traditional court proceedings
If successful, outcome is an agreement which is enforceable as a contract (with all limitations inherent in contract enforcement)
Mandatory mediation applies in some civil court proceedings prior to trial
Mediation also has some drawbacks:
Parties can withdraw at any time (unless mediation is mandatory)
Dependence on skill of mediator
If unsuccessful, other means of dispute resolution may get more difficult
Due to lack of formal process, unsuccessful mediation may be a waste of time and money as there is no guarantee for an outcome
Arbitration
Mirrors to some extent a court process with one or more arbitrators deciding the dispute for the parties by issuing a binding arbitration award
Arbitrators appointed by parties, who are typically subject matter experts in a given field or appointed by an institution from a list of arbitrators
Hearings are less formal with simpler and more flexible proceedings than court proceedings
Available remedies are more limited than in court proceedings (no injunctions)
Arbitral awards can be enforced by law and may be subject to judicial review (but no formal appeal)
Preferred by businesses over litigation due to its speed, cost-effectiveness, confidentiality and fairness
Increasing practical relevance in areas such as:
Consumer disputes
Disputes between businesses
Labour disputes (see below)
Family law disputes
When not to arbitrate
If need to/want to set a precedent
If relationship is damaged beyond repair and does not need to be preserved
If concerned about the lack of transparency/appeal possibility in the process
If litigation is the better alternative (in some countries it is not)
If a remedy is sought which an arbitrator cannot grant
Labour Arbitration
Is of essence in unionized workplaces to settle disputes over the interpretation, application and enforcement of a collective bargaining agreement (CBA)
Decisions by one arbitrator or an arbitration board (typically 3) are final and binding but subject to judicial review; arbitrators are chosen by the parties
Arbitrators are not bound by stare decisis, but still arbitrators strive for consistency in their reasoning
Arbitration process is set out in the CBA or failing this, in applicable legislation
Arbitration is the next step after initially trying to resolve the dispute through the grievance process
In practice, many arbitration cases focus on employee discipline, especially on whether the employer had “just cause” for dismissing an employee
Labour Arbitrators are not to be confused with Labour Relations Board and typically have wide powers in deciding a suitable remedy for a given case
Relevant legislation in SK: The SK Employment Act, part VI, sections 6-45 to 6-53
Contract Law in Context
A contract is a legally enforceable promise between two or more parties
Very old and comprehensive area of law
Contract law derives from both common law and equitable sources
Contract law of fundamental importance for business transactions
Pacta sunt servanda – promises ought to be performed
Specific rules apply to specific types of contract, e.g.
Insurance contracts
Contracts for the sale of land
Lease Agreements
Construction contracts
Elements of a valid contract
Intention of the parties to create a legally binding contact
Offer
Acceptance
Consideration
Legal Capacity
Legality
Sometimes, form requirements
letters of intent, memoranda of understanding (MOU) & agreements “subject to contract”
Preliminary agreement might be “agreement to agree” and thus unenforceable as it would lack key/certain terms
Some elements of “agreement to agree” may be binding, e.g., obligation to maintain confidentiality
In professionally drafted letters of intent and MOUs, intention to be bound is typically explicitly excluded
By contrast, commitments letters by lenders, indicating commitment to enter into a loan with a borrower on certain terms and conditions in the future are considered binding contracts
Practical relevance in letter of comfort (LOC) situations where:
Large commercial loan is negotiated between a bank and a corporation which is a subsidiary of another (large) corporation
Lender and parent company agree on a LOC
Parent provides various assurance in LOC regarding the state of affairs of the subsidiary
Thus, bringing costs of borrowing for subsidiary down
Enforceability of LOC questionable and subject to controversy
Lack of Inention to create legal regulations
Scenarios where dealings between family members do create legal obligations:
Commercial transactions between family members, e.g., sale of real property
Non-commercial transactions between family members, e.g., a family member needing care might compensate another family member for providing the service
Marriage contracts regulating e.g., ownership and division of property upon divorce, support obligations, etc.
Co-habitation agreements regulating e.g., payment of rent, utilities, car usage
Winning Lottery and splitting it
Offer
Offer is a communication of the offeror to the offeree to enter into an agreement on certain terms
Offers are to be distinguished from invitations to start negotiations/bargaining
Mere quotations of prices are not offers
Advertisement of items for sale are not offers
Offers can be made to the public at large, typically in form of a unilateral contract (reward): “if you do X, I will pay you Y”
Special rules apply for tender processes
Offer Retail
Display of items in shop does not constitute an offer
Nor does placing the items in a basket by the customer
Presentation of items by customer to cashier amounts to offer
Offer Auctions
Involve 3 parties (owner, auctioneer (agent of owner) and highest bidder)
Individual bids are offers that may/may not be accepted by auctioneer
Seller not bound prior to fall of the hammer and can withdraw item for sale
Bids exceeded by higher bids lapse
Acceptance
Acceptance has to mirror the offer – otherwise no meeting of minds and no contract
Acceptance can be explicit or inferred from the party’s conduct and must be unconditional
A counteroffer is not acceptance and it “kills the original offer”, meaning the original offer can no longer be accepted
Acceptance must comply with instructions of the offer for the manner, place, mode of communication and timing of acceptance
Late acceptance is ineffective if offer specifies date/time until which it can be accepted
If no deadline for acceptance is stated in offer, a reasonable period of time is assumed depending on circumstances of the case (e.g., reasonable period of time for the sale of land different from transaction for sale of perishable goods)
Silence is not acceptance unless a pre-existing contract is in place between the parties which stipulates otherwise