BUSINESS LAW

Course ID: LAW 122

Instructor: Peter Wilson
Office: TRS 3-039
Office Hours:
Tuesday and Wednesday 11 am – 2 pm
Email: peter1.wilson@torontomu.ca
 COURSE DESCRIPTION

• Introduction to business law

• Prerequisite for other legal courses
• Refer to course outline

2
 TEXT

• McInnes, Kerr, VanDuzer, Lavoie, Managing the Law:

The Legal Aspects of Doing Business, 6th ed.,
(Toronto: Pearson)

3
 GRADING

• Mid-term Exam
❑ 45%
• Final Exam
❑ 55%

4
 COURSE SCHEDULE

Class Topics Readings

Jan. 17 Course Introduction Chapters 1 and 2
• Nature and Sources of Law Class 1 Fact Scenarios

Jan. 24 Torts, Part I Chapter 3

• Introduction to Torts Class 2 Fact Scenarios
 COURSE SCHEDULE

Class Topics Readings

Jan. 31 Torts, Part II Chapters 4 and 5
• Intentional Torts Class 3 Fact Scenarios
• Miscellaneous Torts
Affecting Business

Feb. 7 Negligence Chapter 6

Occupiers’ Liability Chapter 5, pp. 120-124
Class 4 Fact Scenarios
 COURSE SCHEDULE

Class Topics Readings

Feb. 14 Basic Forms of Business Organizations Chapter 21
Class 5 Fact
Scenarios

Feb. 21 Reading Week No class

 COURSE SCHEDULE

Class Topics Readings

Feb. 28 Practice Test
• 1 hour
• Open book (includes
student notes and class
presentations)

Mar. 6 Mid-term Exam All material to date,

• 2 hours except for Chapter 21
• Open book (includes (Basic Forms of Business
student notes and class Organizations)
presentations)
 COURSE SCHEDULE

Class Topics Readings

Mar. 13 Contracts, Part I Chapters 7 and 8
• Nature and Creation of Class 6 Fact
Contracts Scenarios
• Consideration and Privity

Mar. 20 Contracts, Part II Chapter 9

• Representations and Terms Class 7 Fact
Scenarios
 COURSE SCHEDULE

Class Topics Readings

Mar. 27 Contracts, Part III Chapter 10
• Contractual Defects Class 8 Fact Scenarios

Apr. 3 Contracts, Part IV Chapters 11 and 12

• Discharge and Breach Class 9 Fact Scenarios
• Contractual Remedies
 COURSE SCHEDULE

Class Topics Readings

Apr. 10 Course Review

TBD Final Exam Covers all material

• 3 hours since the mid-term
• Open book (includes
student notes and class
presentations)
 SOLVING A LEGAL QUESTION

• What are the facts?

❑Read carefully and understand the facts, as they determine
the relevance of any legal points you make later.
• What legal issues arise from the facts?
❑E.g., Is the contract enforceable? Has a tort been
committed?
 SOLVING A LEGAL QUESTION

• Apply the law to the facts.

❑Is there an authoritative legal test, rule or criterion that
applies to the facts?
• What is your legal judgement?
• Decisions are not simply the personal opinion of the
judge.

13
NATURE AND SOURCES OF LAW

Chapter 1
 TOPICS

• Why Study Law?

• The Nature of Law
• Maps of the Law
• Canadian Constitution
❑The Constitution Act, 1867
❑The Constitution Act, 1982
❑Charter Overview
❑Charter Scope (Limitations)

15
 TOPICS

• Indigenous Rights
• Legislation
• Common Law
• Court System
• Solving a Legal Question

16
 WHY STUDY LAW?

• The law describes, defines, and intrudes on every

aspect of life, and business is no exception.
• Business decisions have legal consequences.
❑Negative: dumping pollutants into the water;
❑Positive: facilitating enforceable agreements.

17
 NATURE OF LAW

• Rules and Laws

❑All laws are rules but not all rules are laws.
• Morality and Law
❑Moral wrongs are informally punished.
▪ E.g., broken or damaged relationships
❑Legal wrongs are formally punished.
▪ E.g., fines or imprisonment
• Laws are rules enforced by courts or other legally
empowered tribunals.

18
 NATURE OF LAW

• Law reflects a unique way of reasoning.

❑It is not simply the judge’s personal opinion of “right” or
“wrong.”
❑The decision must be based on statute and/or binding legal
precedent.
• Ethical Perspective 1.1

19
 NATURE OF LAW

Law Morality

20
 MAPS OF THE LAW

• Canadian law can be organized and categorized in

various ways:
❑There are substantive differences between certain types of
law (e.g., criminal law vs. civil law);
❑There are different sources of the law (e.g., statute law vs.
common law, federal law vs. provincial law).

21
 MAPS OF THE LAW

• Legislation is the law enacted by Parliament and the

provincial and territorial legislatures.
• Common law is the body of legal rights and
obligations arising out of judges' rulings.

22
 MAPS OF THE LAW

Canadian Law

Common Law Civil Law

23
 MAPS OF THE LAW

• Canada has two distinct legal traditions.

❑The civil law tradition in Quebec is founded on the
province’s historical connection to France.
❑The common law tradition in the rest of Canada is derived
from its historical connection to England.
▪ It is concerned with judge-made legal precedent.
• This course will focus on Canada’s common law
tradition.

24
 MAPS OF THE LAW

Canadian Law

Constitution Legislation Common Law

25
 MAPS OF THE LAW

• The Canadian Constitution is the supreme law. All

other laws must conform to the requirements of the
Constitution.
❑The Constitution Act, 1867
❑The Constitution Act, 1982

26
 MAPS OF THE LAW

• The Constitution Act, 1867

❑Describes Canada’s governmental framework;
❑Describes the distribution of powers among the federal
government, provinces and territories;
❑Describes how laws are enacted.
• The Constitution Act, 1982
❑Confirms and enshrines basic rights and freedoms of
Canadians in the Charter of Rights and Freedoms.

27
MAPS OF THE LAW
Court
Decisions
(Common
Law)

Legislation

Constitution

28
 MAPS OF THE LAW

Canadian Law

Public Law Private Law

29
 MAPS OF THE LAW

• Public Law
❑Public law is the rights and obligations of Canadians to their
governments (federal, provincial, municipal).
• Private Law
❑Private law is the rights and obligations of Canadians in
dealing with each other;
❑Its rules govern private dealings or matters.

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 MAPS OF THE LAW

Private Law

Contract Law Tort Law Property Law

31
 MAPS OF THE LAW

• Contract Law
❑The creation and enforcement of contracts;
❑The means for the purchase and sale of products, services,
employment, etc.;
❑Contracts lie at the heart of the business world;
❑They are the way business is conducted.

32
 MAPS OF THE LAW

• Property Law
❑Property law is the acquisition, use and disposition of
property. This includes:
▪ Real property (land and buildings);
▪ Personal property (moveable items);
▪ Intellectual property (inventions, creations, books,
music, software, etc.).

33
 MAPS OF THE LAW

• Tort Law
❑A tort is a private wrong (in contrast to criminal law, which
is a wrong against the state);
❑It may be deliberate (intentional tort) or a consequence of
carelessness (negligence);
❑It includes business torts (e.g., conspiracy, deceit).

34
 MAPS OF THE LAW

Type of Private Law Concerned Concerned Usual

Law or Public Parties Parties if Remedy
Law? Obligation
Breached
Tort Law Private Law Identified Aggrieved Damages
persons person takes for
(including private legal determined
corporate action loss
persons) against the
other.

35
 MAPS OF THE LAW

Type of Private Law Concerned Concerned Usual

Law or Public Parties Parties if Remedy
Law? Obligation
Breached
Criminal Public Law The person Prosecution Punishment
Law (including of the (fine,
corporate person by prison)
persons) and the state
the state

36
 MAPS OF THE LAW

• These categories are not mutually exclusive.

• An event or fact situation can give rise to both tort
and criminal liability.

37
 CANADIAN CONSTITUTION

• The Constitution is the supreme law of Canada.

❑It is “supreme” because all other laws (statutes, common
law) must conform to the Constitution.
• It establishes Canada’s system of government,
including the division of powers between the federal
government and the provinces and territories.
• It establishes and confirms the essential rights and
freedoms of all Canadians through the Charter of
Rights and Freedoms.

38
 CANADIAN CONSTITUTION

• The Constitution is founded on two discrete statutes .

❑The Constitution Act, 1867
❑The Constitution Act, 1982

39
 THE CONSTITUTION ACT, 1867

• It began life as the British North America Act, 1867,

(U.K.) (“BNA Act”).
• The BNA Act granted Canada independence from the
United Kingdom.
• It created Canada, as it then existed, out of Ontario,
Quebec, New Brunswick and Nova Scotia.

40
 THE CONSTITUTION ACT, 1867

• It provided for the future admission of Prince Edward

Island, Newfoundland, British Columbia, Rupert’s
Land and the North-Western Territory.
• The BNA Act determined Canada to be a federal state
and established the division of powers between the
federal and provincial governments. [ss. 91 - 95]

41
 THE CONSTITUTION ACT, 1867

• Division of Powers
❑Twenty-nine “classes of subject” within the exclusive
authority of the Parliament of Canada are enumerated;
[s. 91]
❑Fifteen “classes of subject” within the exclusive authority of
the provincial legislatures are enumerated. [s. 92]
❑Non-renewable natural resources, forestry resources and
electrical energy are shared. [s. 92A]
❑Education is shared. [s. 93]
❑Agriculture and Immigration are shared. [s. 95]

42
 THE CONSTITUTION ACT, 1867

Examples: Constitutionally Examples: Constitutionally

Granted Federal Powers Granted Provincial Powers
[s. 91] [s. 92]
Criminal Law; Taxation Property and Civil Rights (e.g.,
Contracts)
Employment Insurance; Banks Direct Taxation for Provincial
Purposes
Bankruptcy and Insolvency; Corporations with Provincial
Money Objects
Negotiable Instruments Municipalities

43
 THE CONSTITUTION ACT, 1867

Examples: Constitutionally Examples: Constitutionally

Granted Federal Powers Granted Provincial Powers
[s. 91] [s. 92]
International and Matters of a local or private
Interprovincial Trade and nature
Commerce
Navigation and Shipping;
Copyright
Residual Power - Any matter not
exclusively given to the
provinces

44
 THE CONSTITUTION ACT, 1867

• “Ultra vires” (beyond the power)

❑This is legislation in an area outside constitutional authority.
• Residual Power
❑The introductory wording to s. 91 states that authority over
all subjects not specifically reserved for the provinces
resides with the federal Parliament.
▪ E.g., telecommunications, air travel

45
 THE CONSTITUTION ACT, 1982

• The Constitution Act, 1982, transfers control over the

Constitution from the U.K. to Canada.
❑It “patriates” the BNA Act from the UK Parliament to
Canada;
❑It adds the Charter of Rights and Freedoms to the Canadian
Constitution as Part 1.
❑It is extremely difficult to change (see Part V).

46
 THE CONSTITUTION ACT, 1982

• “The Constitution of Canada is the supreme law of

Canada, and any law that is inconsistent with the
provisions of the Constitution is, to the extent of the
inconsistency, of no force and effect.” [s. 52]

47
 CHARTER OVERVIEW

Charter

Fundamental
Freedoms [s. 2]

Democratic Rights Mobility Rights Legal Rights

[ss. 3-5] [s. 6] [ss. 7-14]

48
 CHARTER OVERVIEW

Charter

Equality Rights
[ss. 15 & 28]

scope of The
Aboriginals &
Language Rights Enforcement Charter
Multiculturalism
[ss. 16-23] [s. 24]
[ss.1,25
[s. 32&&27]
33]
49
 CHARTER OVERVIEW

Charter

Scope (Limitations) of the

Charter [ss. 1, 32 & 33]

50
 CHARTER SCOPE (LIMITATIONS)

• [s. 32]
(1) “This Charter applies:
(a) to the Parliament and government of Canada in
respect of all matters within the authority of
Parliament including all matters relating to the Yukon
Territory and Northwest Territories; and
(b) to the legislature and government of each
province in respect of all matters within the authority
of the legislature of each province.”

51
 CHARTER SCOPE (LIMITATIONS)

• s. 32 was interpreted by the Supreme Court of

Canada to mean that the Charter applies only to
government, or government-relied-upon, action and
not to strictly private matters.
❑Ref. RWDSU Local 580 v. Dolphin Delivery Ltd., [1986] SCC

52
 CHARTER SCOPE (LIMITATIONS)

• s. 33 means that Parliament or a provincial or

territorial legislature can declare any Act, or part
thereof, passed by Parliament or the legislature, not
bound by the Charter in regard to the protection of
fundamental freedoms [s. 2], or legal rights [ss. 7-14],
or equality rights [s. 15].

53
 CHARTER SCOPE (LIMITATIONS)

• “Notwithstanding” clause [s. 33]

• “Parliament or the legislature of a province may
expressly declare in an Act of Parliament or of the
legislature, as the case may be, that the Act or a
provision thereof shall operate notwithstanding a
provision included in section 2 or sections 7 to 15 of
this Charter.” (my italics)

54
 CHARTER SCOPE (LIMITATIONS)

• [s. 1]
• “The Canadian Charter of Rights and Freedoms
guarantees the rights and freedoms set out in it
subject only to such reasonable limits prescribed by
law as can be demonstrably justified in a free and
democratic society.” (my italics)

55
 CHARTER SCOPE (LIMITATIONS)

• R. v. Oakes, [1986] SCC

• The SCC established a three-part test for determining
whether a violation of the Charter was justifiable
under s. 1 as follows:
❑Does it enforce or reflect an important societal concern?
“Trivial” objectives will not warrant overriding a Charter
right;
❑Was the limitation on Charter rights minimal?
❑Is the limitation precise as to the prohibited conduct?

56
 WHAT DO YOU THINK?

• Class 1 Fact Scenarios 1 and 2

• Were the Charter rights of the claimants in each
instance violated?

57
 WHAT DO YOU THINK?

• M. v. H., [1999] SCC

• The Supreme Court of Canada held that this statutory
definition was unconstitutional, as it breached the
couple’s equality rights under s. 15 of the Charter
(sex).

58
 WHAT DO YOU THINK?

• Vriend v. Alberta, [1998] SCC

• The SCC concluded that the failure to include “sexual
orientation” as a prohibited ground of discrimination
in Alberta’s Individual’s Rights Protection Act was a
violation of s. 15 of the Charter.

59
 INDIGENOUS RIGHTS

• Rights of the Aboriginal Peoples of Canada [s. 35]

❑Recognizes and affirms existing aboriginal and treaty rights.
❑“Aboriginal Peoples” means “Indian, Metis and Inuit.”
❑“Treaty Rights” includes those existing by way of land
claims agreements or they may be acquired.
• Note: The contemporary term for “aboriginal”
peoples is “Indigenous” peoples, and for “Indian” it is
“First Nations.”

60
 INDIGENOUS RIGHTS

• “Treaty rights” refer to the numerous treaties

between Indigenous peoples and the Crown both
before and after Confederation.
❑The treaties established rules governing the sharing of land
occupied by Indigenous peoples.
• “Indigenous rights” refer to the historical use and
occupation of the land by Indigenous peoples.
❑The treaties vary, but they generally deal with title, self-
government, resource exploitation, culture and customs.

61
 INDIGENOUS RIGHTS

• Duty to Consult
• Arising out of the constitutional protection of
Indigenous rights, the Supreme Court has declared
that the Crown (government) has a duty to consult
affected Indigenous peoples whenever it intends to
act in a way that may be injurious to them.
❑This is particularly notable in projects that affect Indigenous
land.
• Ref. Case Brief 1.5

62
 LEGISLATION

• Legislation is the second source of law, after the

Constitution.
• It is law created by Parliament and the provincial and
territorial legislatures and reflected in acts or statutes
that they have passed.

63
 LEGISLATION

• An act or statute passed by Parliament applies across

Canada (e.g., the Criminal Code).
• An act or statute passed by a provincial or territorial
legislature applies only in that province or territory.
❑E.g., the Ontario Highway Traffic Act applies only in Ontario.

64
 COMMON LAW

• “Common Law” has a dual meaning.

❑It refers to a legal system inherited from England (as distinct
from the civil law system, which originated in France);
❑It also refers to a particular source or type of law, i.e.,
settled or accepted legal rights and obligations arising out
of judges’ rulings (as distinct from the laws created by
Parliament or the provincial or territorial legislatures).

65
 COMMON LAW

• Common law results from judges’ rulings.

• It is derived from the English legal tradition
(beginnings traced to the 13th century).
• The central feature is legal precedence, as reflected in
the concept stare decisis (let the decision stand), and
operating within a hierarchical court system.

66
 COMMON LAW

• The decisions of a higher court are the determining

statements of the law on that issue and are binding
on the lower courts within the same hierarchy.
❑This provides for predictability and consistency in the
interpretation and enforcement of the law. If not, it would
be a judicial free-for-all.
• A common law principle or standard cannot negate or
override a legislative statute or the Constitution.

67
COURT SYSTEM
 COURT SYSTEM

• Supreme Court of Canada

❑The Supreme Court is Canada’s highest court since 1949;
❑It was established in 1875 by the Supreme Court Act;
❑The Chief Justice of the SCC is the Chief Justice of Canada;
❑Judges are appointed by the federal government;
❑At least three judges must be appointed from Quebec. By
tradition, three judges are from Ontario, two from the
West, and one from Atlantic Canada;

69
 COURT SYSTEM

❑It is an appellate court only;

❑Most appeals are heard only with leave of the SCC;
❑Appeals are heard in panels of five, seven or nine judges.
The decision is by majority.

70
 COURT SYSTEM

• Courts of Appeal
❑Each province, territory and the federal court has a court of
appeal;
❑The number of appellate court judges varies with the
jurisdiction;
❑Judges are appointed by the federal government;
❑Appeals are heard in panels of three.

71
 COURT SYSTEM

• Superior Court
❑Trial court;
❑Judges are appointed by the federal government;
❑The Ontario Superior Court sits in 51 locations, organized
into eight regions, and hears civil, criminal and family law
matters.

72
 COURT SYSTEM

• Provincial Courts
❑Trial court;
❑Judges are appointed by the provincial government;
▪ Small claims (Small Claims Court)
▪ Family matters
▪ Most criminal cases
❑The Ontario provincial court is the Ontario Court of Justice.

73
 COURT SYSTEM

• Appellate courts do not hear witnesses or evidence.

• The trial court decision is considered on the basis of
the law; i.e., did the trial judge apply the correct legal
standard?

74
 COURT SYSTEM

• The court system and the law generally are founded

on precedence and the judicial doctrine of stare
decisis (let the decision stand).
• A lower court in the hierarchy must abide by the legal
principles, doctrines and interpretations of a higher
court in the hierarchy.

75
 SOLVING A LEGAL QUESTION

• What are the facts?

❑Read carefully and understand the facts, as they determine
the relevance of any legal points you make later.
• What legal issues arise from the facts?
❑E.g., is the contract enforceable? Has a tort been
committed?
 SOLVING A LEGAL QUESTION

• Apply the law to the facts.

❑Is there an authoritative legal test, rule or criterion that
applies to the facts?
• What is your legal judgement?
• Decisions are not simply the personal opinion of the
judge.

77
 WHAT DO YOU THINK?

• Class 1 Fact Scenario 3

78
 WHAT DO YOU THINK?

• The issue (legal wrong):

❑ Was Ki Yim liable to Bettel for the tort of battery?
• The applicable legal test or rule:
❑ Whether Ki Yim intended to cause offensive, physical
contact with Bettel.

79
 WHAT DO YOU THINK?

• Apply the facts:

❑ Intention to cause harm – Yim purposely shook Bettel;
❑ Offensive action – yes;
❑ Physical contact – yes.

80
 WHAT DO YOU THINK?

• Cases and Problems 6

81
 WHAT DO YOU THINK?

• Duty to consult
• As the construction of the turbines may be injurious
to the rights of the First Nations, the government,
before granting permission, must ensure that there
has been genuine consultation with the First Nations.

82
 WHAT DO YOU THINK?

• You Be the Judge 2.1

83
 WHAT DO YOU THINK?

• No, there are no courts, in your hierarchy, superior to

your court (Alberta Court of Queen’s Bench) that have
issued a binding decision.
• However, you should consider (although you are not
bound by) the decisions of the other courts.

84
 NEXT CLASS

• Chapter 3 and Case Brief 4.1 in Chapter 4

• Torts, Part I
❑Introduction to Torts
• Readings
❑Concept Summary 3.3
❑Case Brief 3.1
❑Bazley v. Curry
❑You Be the Judge 3.1

85
 NEXT CLASS

❑Cases and Problems 1

❑Case Brief 4.1
❑Class 2 Fact Scenarios

86