Study 1: Introduction to Liability Insurance - Summary

Question 1

Explain how liability is imposed by law

Answer 1

Liability: refers to responsibility assessed against a person (possibly an insured) or entity (for example, a company) for injury or damage to a third party as a result of applying the law.

• Negligence: Failure to use the degree of care expected from a reasonable and prudent person. Most common way the law imposes liability.
• Nuisance: When someone infringes on a person’s right to enjoy and use his or her property, it might qualify as nuisance if there is a substantial and unreasonable interference with these rights.
• Breach of Contract: When a party to a contract fails to honour its terms, that party is said to be in breach of contract. Breach of contract provides the injured party to the contract with a legal cause of action against the party who failed to perform. Must be a fundamental and important part of the contract (ex. a tenant paying rent)

Question 2

Jurisdiction

Answer 2

A breach of law in one municipality may not be one in another and, similarly, there may be differences between provinces and territories as well. Therefore, knowledge of the statute law from one area to another is often very important to determine whether a wrongful act has occurred.

Question 3

Criminal Law Versus Civil Law

Answer 3

• Laws have been enacted to preserve society’s sense of security as a whole. The Criminal Code of Canada includes a list of acts that qualify as crimes that will be punished by society.
• A civil action (lawsuit) arises from a dispute, formally brought before a court, between individuals or corporations where the injured party is usually interested in monetary compensation. It could involve individual rights, family relationships, estates, contracts, and any dispute not involving a criminal or quasi-criminal act. But someone who commits a criminal or quasi-criminal act can also be sued in civil law for any damages caused as a result of the breach of duty to an individual.
• The criminal court seeks to punish an offender by imprisonment or fine or some other appropriate method. The civil court is concerned with setting appropriate compensation for the damages suffered and then obliging the liable party to pay this sum to the injured party.

Question 4

Two Systems of Civil Law

Answer 4

Canada’s two systems of civil law are 1) the Civil Code of Québec and 2) the common law system. Civil law is concerned with settling disputes: Courts decide whether to rule in favour of the plaintiff and assess compensation.

Question 5

Civil Code of Quebec

Answer 5

This covers every area of law from birth certificates to insurance contracts, from corporations to mandators, from mortgages to wills. The court’s role is to settle disputes according to the specifications set out in the Code; its role is not to make the law but interpret it. If the Code does not cover the material facts specific to a given situation, the courts will apply the general principles of justice set out in the Code.

Question 6

Common Law System

Answer 6

Over the years, Canada’s common law system has evolved into a mix of both case law precedent and statute law. Parliament and provincial and territorial legislatures have passed laws into written form known as statute law. The court’s role is bound to follow prior or past precedents. Statute laws supersede case law precedent when one comes into conflict with the other

Question 7

Case Law Precedent

Answer 7

• Under common law, the courts look upon cases that have already been decided for guidance on how to resolve cases currently in dispute.
• Lawyers and judges conduct a great deal of research on which cases can be used to reach a decision - past court decisions are considered to have set a precedent when they guide future decisions
• If a precedent has not been set for the case under consideration, the court may include a set of rules in a logical argument to support its decision
• If more than one judgment is found with a similar fact situation, the court will follow the precedent set by the higher court

Question 8

Court Structure

Answer 8

The structure of the court system varies with each province and territory in Canada. At the lowest level are the small claims courts or divisions for small cases, then the county or district courts for intermediate lawsuits, and the highest level is the superior court for the largest legal cases.

Question 9

Three levels of jurisdiction in Canadian Law

Answer 9

• Federal Government: Military, foreign relations, currency, and postal services
• Provincial & Territorial Government: property rights, education, regulation of insurance industry
• Municipal Government: protect persons living and carrying on a business in their area