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Law

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Protect persons and property through rules/principles and dispute resolution mechanisms.

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Business Law

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Rules governing commercial relationships, including the enforcement of rights.

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Breach of Contract

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Failure to comply with a contractual promise.

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Contract Law

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Rules that make agreements binding and therefore facilitate planning and enforcement of expectations.

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Litigation

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The process involved when one person sues another.

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Mediation

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A process through which the parties to a dispute attempt to reach a resolution with the assistance of a neutral person (mediator).

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Arbitration

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A process through which a neutral party (arbitrator) makes a decision (usually binding) that resolves a dispute.

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Liability

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Legal responsibility for the event or loss that has occurred.

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Business Ethics

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Moral principles and values that seek to determine right and wrong in the business world.

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The Three Branches of Government

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1. The Legislative Branch 2. The Executive Branch 3. The Judicial Branch

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The Legislative Branch

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The branch of government that makes laws (statutes).

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The Executive Branch

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The branch of government that administers the laws.

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The Judicial Branch

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The branch of government that interpret and apply the law.

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Constitutional Law

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The supreme law of Canada, that controls how the branches of government exercise power.

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Charter of Rights

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A guarantee of specific rights and freedoms enshrined in the Constitution and enforceable by the judiciary. 1. Guarantees rights such as free expression, free association, liberty/security of persons, fair criminal process, and equality under law. 2. Allows laws that impose "reasonable limits". Therefore, if a law does limit a charter right, government must prove the law serves an important objective and limits right as little as possible.

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Statute Law

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Formal, written laws created or enacted by the legislative branch of government (i.e. Criminal Code of Canada).

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Federal - Parliament

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Composed of the House of Commons and the Senate. Must be first passed by the House of Commons then approved by the Senate.

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Provincial - "law making body"

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Different for each province.

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Municipal - City Councils

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Created by provincial legislation; their powers are delegated to them by the province in which they are located.

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Exclusive Jurisdiction

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Jurisdiction that one level of government holds entirely on its own and not on a shared basis with another level.

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Concurrent Jurisdiction

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Jurisdiction that is shared between levels of government.

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Paramountcy

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Doctrine that provides that federal laws prevail when there are conflicting or inconsistent federal and provincial laws.

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System of Courts

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1. Trial Courts 2. Appeal Courts 3. Supreme Court of Canada

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Trial Courts - Inferior Court

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A court with limited financial jurisdiction whose judges are appointed by the provincial government.

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Small Claims Court

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A court that deals with claims up to a specified amount. It handles disputes involving smaller amounts of money (amount varies from province to province). Designed to be a simpler, quicker, and less expensive process than mainstream litigation. Parties even appear in court without a lawyer.

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Trial Courts - Superior Court

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A court with unlimited financial jurisdiction whose judges are appointed by the federal government

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Federal Court of Canada

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The court that deals with some types of litigation involving the federal government.

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Common Law

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Rules that are formulated in judgements - judge made law.

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Precedent

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An earlier case used to resolve a current case because of its similarity.

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Legal Risk Management Plan

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A comprehensive action plan for dealing with the legal risks involved in operating a business.

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Legal Risk

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A business risk with legal implications.

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Legal Risk Management Plan - Four Step Process

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1. Identify the legal risks 2. Evaluate the legal risks (asses probability/severity of loss) 3. Devise a legal risk management plan 4. Implement the plan and revise periodically

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Risk Avoidance

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Ceasing a business activity because the legal risk is too great.

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Risk Reduction

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Implementing business practices to lower the probability and severity of loss.

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Risk Transference

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Shifting the risk to someone else through a contract (e.g. insurance).

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Risk Retention

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Absorbing the loss if legal risk materializes.

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Lawyer

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A person who is legally qualified to practice law.

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Law Firm

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A partnership formed by lawyers.

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Binding

answer

Final and enforceable in courts.

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Plaintiff

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The party that initiates a lawsuit against another party.

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Defendent

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The party being sued.

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Limitation Period

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A time period specified by legislation for commencing legal action.

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Stages of a Lawsuit

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1. Pleadings 2. Discovery 3. Trial 4. Decision and Enforcement

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Pleadings

answer

The formal documents concerning the basis for a lawsuit.

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Claim

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The formal document that initiates litigation by setting out the plaintiff's allegations against the defendant.

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Defense

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The defendant's formal response to the plaintiff's allegations.

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Couterclaim

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A claim by the defendant against the plaintiff.

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Discovery

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The process of disclosing evidence to support the claims in a lawsuit.

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Trial

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A formal hearing before a judge that results in a binding decision

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Decision

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The judgement of the court that specifies which party is successful and why.

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Burden of Proof

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The obligation of the plaintiff to prove its case.

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Evidence

answer

Proof submitted in court to support a claim.

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Costs

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Legal expenses that a judge orders the loser to pay the winner.

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Judgement Debtor

answer

The party ordered by the court to pay a specified amount to the winner of a lawsuit.

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Appeals

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The process of arguing to a higher court that a court decision is wrong.

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Appellant

answer

The party who begins/files the appeal.

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Respondent

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The party against whom an appeal is filed.

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Contract

answer

An agreement between two parties that is enforceable in a court of law.

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Agreement

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Composed of an offer to enter into a contract and an acceptance of that offer. It must be complete, deliberate, voluntary, between two or more competent persons, supported by mutual consideration, and not necessarily in writing.

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Objective Standard Test

answer

The test based on how a "reasonable person" would view the matter.

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Equal Bargaining Power

answer

The legal assumption that parties to a contract are able to look out for their own interest.

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Offer

answer

A promise to perform specified acts on certain terms.

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Invitation to Treat

answer

An expression of willingness to do business.

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Standard Form Contract

answer

A "take it or leave it" contract, where the customer agrees to a standard set of terms that favours the other side.

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Offeror

answer

The person who makes an offer.

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Offeree

answer

The person to whom an offer is made.

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Termination of Offer - Events

answer

1. Revoke 2. Reject 3. Lapse 4. Counteroffer 5. Death or Insanity

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Revoke

answer

The withdrawal of an offer.

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Option Agreement

answer

An agreement where, in exchange for payment, an offeror is obligated to keep an offer open for a specified amount of time.

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Reject

answer

The refusal to accept an offer.

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Lapse

answer

The expiration of an offer after a specified or reasonable period.

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Counteroffer

answer

The rejection of an offer and proposal of a new one.

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Acceptance

answer

An unqualified willingness to enter into a contract on the terms in the offer.

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Consideration

answer

The price paid for a promise. It is a key ingredient that distinguishes a legally enforceable promise from one that is not legally enforceable.

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Gratuitous Promise

answer

A promise for which no consideration is given.

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Promissory Estoppel

answer

A doctrine whereby someone who relies on a gratuitous promise may be able to enforce it.

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Contract Under Seal

answer

Eliminates any risk of there being no consideration; it changes the nature of the document and substitutes for lack of consideration.

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Express Term

answer

A provision of a contract that states or makes explicit one party's promise to another (i.e. the terms that are actually stated in a contract).

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Rules of Construction

answer

Guiding principles for interpreting the terms of a contract.

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Implied Term

answer

A provision that is not expressly included in a contract but that is necessary to give effect to the parties' intention.

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Courts will imply terms based on...

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1. Business Efficacy 2. Trade Customs 3. Prior Dealings 4. Statutary Requirements

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Entire Contract Clause

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A term in a contract in which the parties agree that their contract is complete as written.

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Contracts can take three possible forms...

answer

1. Entirely oral 2. Entirely written 3. Both oral and written

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Parole Evidence Rule

answer

A rule that limits the evidence a party can introduce concerning the contents of the contract. It forbids outside evidence as to the terms of the contract when the document is intended to be the sole source and the language of the written contract is clear.

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Condition Subsequent

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An event or circumstance that, when it occurs, brings an existing contract to an end. For example, parties to an employment contract may agree that an employee is to work for an organization unless the employee's sales drop below a certain amount.

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Condition Precedent

answer

An event or circumstance that, until it occurs, suspends the parties' obligations to perform their contractual obligations. For example, in a real estate situation, a court would imply a term that the vendor must wait until the time for fulfilling the condition has passed before it can sell to someone else.

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Minor Exceptions

answer

1. Contract for necessaries (e.g. lease for a first year student). 2. Beneficial Contracts of Service (i.e. beneficial to the youth in the advancement of a career). 3. Right to avoid ends at age of majority.

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Limitation of Liability Clause

answer

A term of a contract that limits liability for breach to something less than would otherwise be recoverable.

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Exemption Clause

answer

A term of a contract that identifies events causing loss for which there is no liability.

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Liquidated Damages Clause

answer

A term of a contract that specifies (in advance) how much one party must pay to the other in the event of breach.

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Five Classes of Exception

answer

1. Unequal relationship between parties 2. Misrepresentation 3. Fundamental Mistake 4. Illegal Contract 5. Contract contrary to "the statute of fraud"

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Unequal Relationship Between Parties

answer

1. Minor 2. Mental Capacity 3. Duress 4. Undue Influence 5. Unconscionable Contract

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Voidable Contract

answer

A contract, in certain circumstances, an aggrieved party can choose to keep in force or bring to an end.

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Void Contract

answer

A contract involving a defect so substantial that it is of no force of effect.

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Legal Capacity

answer

The ability to make binding contracts.

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Age of Majority

answer

The age at which a person becomes an adult for legal purposes.

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Mental Capacity

answer

In order for a contract to be formed freely and voluntarily by both parties, both must be able to understand the nature and consequences of their agreements. If people were mentally impaired through illness or intoxication by alcohol or drugs, such that they were unable to understand the consequences of their actions, and the other party was aware of their state, they may be able to avoid the contract at their option.

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Duress

answer

The threat of harm that motivates a contract.

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Economic Duress

answer

The threat of economic harm that coerces the will of the other party and results in a contract.

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Undue Influence

answer

Unfair manipulation that compromises someone's free will.

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Undue Influence - Actual Pressure

answer

Sometimes a transaction—commercial or otherwise—arises because one party has exerted unfair influence on the other. In such a case, the party who seeks relief from the contract must show that the influence existed, was exercised and resulted in the agreement in question.

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Undue Influence - Presumed Pressure

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Sometimes the relationship that already exists between the parties gives rise to the presumption that the ensuing agreement was brought about by one party's unfair manipulation of the other.

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Unconscionable Contract

answer

An unfair contract formed when one party takes advance of the weakness of another. Includes a two-step process: (1) proof of inequality between the parties and (2) proof of an improvident or proof of exploitation.

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Misrepresentation

answer

A false statement of fact that causes someone to enter a contract. Contract law allows the party who has relied on a misrepresentation to have the contract cancelled. This cancellation is called rescission and involved putting the parties back into their pre-contractual positions.

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Rescission

answer

The remedy that results in the parties being returned to their pre-contractual positions.

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Three Categories of Misrepresentation

answer

1. Fraudulent Misrepresentation: The speaker has a deliberate intent to mislead or makes the statement recklessly without knowing or believing that it is true. Avoid contract. 2. Negligent Misrepresentation: The speaker makes the statement carelessly or negligently. Avoid contract and damages. 3. Innocent Misrepresentation: The speaker has no been fraudulent, but has misrepresented a fact. By process of elimination, the misrepresentation is merely innocent. Avoid contract and damages.

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Mistake

answer

An error made by one or both parties that seriously undermines a contract.

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Common Mistake

answer

Both parties to the agreement share the same fundamental mistake.

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Illegality

answer

Under the classical model of illegality, even a freely chosen contract will be unenforceable if it: (1) is contrary to a specific statute and/or (2) violates public privacy.

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Illegal Contract

answer

A contract that cannot be enforced because it is contrary to legislation or public policy.

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Public Policy

answer

The community's common sense and common conscience.

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Restrictive Convenants

answer

1. Non-solicitation Clause: A clause forbidding contact with the business' customers. 2. Non-competition Clause: A clause forbidding competition for a certain period of time.

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Guarantee

answer

A promise to pay debt of someone else, should that person default on the obligation.

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Four Ways Contracts Are Terminated

answer

1. Performance 2. Agreement 3. Frustration 4. Breach

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Performance

answer

When both parties fulfill their contractual obligations to each other, they have performed the contract. This is generally the ideal way of concluding a contractual relationship.

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Vicarious Performance

answer

Performance of contractual obligations through others.

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Agreement

answer

Parties are always free to voluntarily bring their contract to an end. Both parties could agree to simply walk away from their agreement, or one party could pay a sum to the other side by way of settlement in exchange for agreeing to end the contract.

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Novation

answer

The substitution of parties in a contract or the replacement of one contract with another.

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Responses to Termination Through Agreement

answer

1. Enter into a whole new contract. 2. Vary certain terms of the contract. 3. End the contract. 4. Substitute the party.

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Assignment

answer

The transfer of a right by an assigner to an assignee.

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Frustration

answer

The doctrine of frustration applies when, after the formation of a contract, an important, unforeseen even occurs—such as the destruction of the subject matter of the contract or the death/incapacity of one of the contracting parties. The event must be one that makes performance functionally impossible or illegal. When a contract is frustrated, it is brought to an end.

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Claiming Frustation

answer

The person claiming the frustration must establish that the event or change in circumstances: (1) was dramatic and unforeseen, (2) was a matter that neither party had assumed the risk of occurring, (3) arose without being either party's fault, and (4) makes performance of the contract functionally impossible or illegal.

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Balance of Probabilities

answer

Proof that there is a better than 50 percent chance that the circumstances of the contract are as the plaintiff contends.

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Enforcement of Contracts

answer

1. Privity of Contract: The plaintiff has to establish that there is a contract between the parties. 2. Breach of Contract: The plaintiff must prove that the other party (the defendant) has failed to keep one or more promises or terms of the contract. 3. Entitlement to a Remedy: The plaintiff must demonstrate that it is entitled to the remedy claimed or is otherwise deserving of the court's assistance.

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Privity

answer

A critical ingredient to enforcing a contract. It means that, generally speaking, only those who are parties to a contract can enforce the rights and obligations it contains.

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Breach

answer

A breach of contract, when it is particularly serious, can release the innocent party from having to continue with the contract if that is his wish. Less signification breaches generally entitle such a party to damages only.

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Condition

answer

An important term that, if breached, it gives the innocent party the right to terminate the contract and claim damages.

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Warranty

answer

A minor term that, if breached, gives the innocent party the right to claim damages only.

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Innominate Term

answer

A term that cannot easily be classified as either a condition or a warranty.

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Fundamental Breach

answer

A breach of contract that affects the foundation of the contract.

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Anticipatory Breach

answer

A breach that occurs before the performance.

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Damages

answer

Monetary compensation for breach of contract or other actionable wrong.

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Expectation Damages

answer

Damages which provide the plaintiff with the monetary equivalent of contractual performance.

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Punitive Damages

answer

An award to the plaintiff to punish the defendant for malicious, oppressive and high-handed conduct.

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Test for Remoteness

answer

The kinds of damages recoverable in contract law are determined by the test for remoteness. The test states that the damages claimed are recoverable provided: (1) the damages could have been anticipated, having 'arisen naturally' from the breach, or (2) the damages—although perhaps difficult to anticipate in the ordinary case—are reasonable foreseeable because the unusual circumstances were communicated to the defendant at the time the contract was being formed.

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Duty to Mitigate

answer

The obligation to take reasonable steps to minimize the loses resulting from a breach of contract or other wrong.

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Interlocutory Injuction

answer

An order to refrain from doing something for a limited period of time.

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Unjust Enrichment

answer

Occurs when one party has undeservedly or unjustly secured a benefit at the other party's expense.

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Restitutionary Quantum Merit

answer

An amount that is reasonable given the benefit the plaintiff has conferred.

Business Law I: Chapters 1-9 – Flashcards

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