Type:
Solution Manual
Resource:
Business Law in Canada
Edition:
9th Edition
Author(s):
Richard A. Yates Teresa Bereznicki-Korol Trevor Clarke
INSTRUCTOR’S RESOURCE MANUAL Richard A. Yates Simon Fraser University J. Joseph D. Bateman B.A.,LL.B, LL.M
BUSINESS LAW IN CANADA Ninth Edition Richard A. Yates, Teresa Bereznicki-Korol, Trevor Clarke
CONTENTS Preface Part 1: Introduction 1 Managing Your Legal Affairs 2 Introduction to the Legal System 3 The Resolution of Disputes—The Courts and Alternatives to Litigation
1 5 12
Part 2: Torts 4 Intentional Torts 5 Negligence, Professional Liability, and Insurance
21 29
Part 3: Contracts 6 Formation of Contracts 7 Formation of Contracts (Continued) 8 Factors Affecting the Contractual Relationship 9 The End of the Contractual Relationship
37 45 52 59
Part 4: Methods of Carrying On Business 10 Employment 11 Agency and Partnership 12 Corporations
65 74 83
Part 5: Property and Information Technology 13 Real, Personal and Intellectual Property 14 Information Technology and the Internet
91 100
Part 6: Commercial Transactions 15 Sales and Consumer Protection 16 Priority of Creditors
105 114
Appendices Introductory Comments 1 Recommendations for Teaching Business Law in Canada 2 The Yates Cases 3 Comments with Respect to the Yates Cases
126 127 150 172
A NOTE ON THE APPENDICES The first appendix to this manual consists of a research paper by Richard A. Yates on teaching business law. It summarizes trends and focuses on a teaching approach that is modelled on the case study method of the Harvard School of Business. This research provided the impetus for the creation of the “Yates Cases,” which are included in the second appendix. The third appendix provides commentary on how they might be used in a business law course.
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Chapter 1 Managing Your Legal Affairs Summary ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞ ∞
Explain the meaning of “sophisticated client” Describe the role of the lawyer Identify when to hire a lawyer and when to represent yourself Explain how to find a good lawyer Describe legal aid Explain how lawyers bill their clients Outline the procedure to follow to complain about your lawyer Discuss the ethics of lawyers and of clients Describe a code of business conduct
Discussion EXPLAIN THE MEANING OF “SOPHISTICATED CLIENT”
A “sophisticated client” understands the role of the lawyer, and their own role as client. This involves knowing when and how to hire a lawyer, the costs involved and what can be done if the lawyer is not meeting your expectations. Good business decisions can only be made with consideration of appropriate laws, whether the client is able to access that information for themselves, or through the services of a lawyer. A sophisticated client also understands the importance of evidence, and may change their practices, and those of the business in order to make sure the evidence is there in the event of a dispute.
DESCRIBE THE ROLE OF THE LAWYER
The client is the ultimate decision maker, but makes those decisions with the advice of a number of experts, of which the lawyer is one. If the business person deems other business factors to be of greater importance, he or she may choose to accept some legal risk, but it is an informed decision. Lawyers are bound to follow the instructions of their clients.
IDENTIFY WHEN
The decision as to when to hire a lawyer starts when decisions need to be made as to how the business will be organized, whether it is to create to a new business or buy an existing one. It allows the business owner to minimize their risks and make sure they are in compliance with all laws. This would also apply to decisions about the premises, financing, existing or new contracts, intellectual property and finally selling the business. For less significant decisions, the client may choose to inform themselves, through the internet and the resources listed throughout this textbook and the Companion Website. A sophisticated client will know when to do research themselves, and if unable to obtain the information or understand the information found, when to seek legal advice. Small claims court applications are often done by clients, due to the low monetary limits, unless the legal issues are too complex for the client to handle themselves. Criminal matters should nearly always be handled by legal counsel.
TO HIRE A LAWYER AND WHEN TO REPRESENT YOURSELF
EXPLAIN HOW TO FIND A GOOD LAWYER
Finding an appropriate lawyer is difficult. Referrals from trusted friends or associates with the same type of legal problems are good. Some provincial law societies or branches of the Canadian Bar Associations also have lawyer referral services that provide names of lawyers who practice in specific areas of law. You may have an initial consultation for little or no cost, and then decide if you wish to pursue the matter and hire them. Initial consultation costs will vary, if not going
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2 through one of these agencies and should be confirmed with the lawyer in advance. The lawyer you choose should be someone that you wish to establish an on-going relationship with for your business. DESCRIBE LEGAL AID
Legal aid may be available for people with low income, but the eligibility varies from province to province, so it’s best to check with the administrators of the program in your province. What types of legal services are covered also varies, and it is generally not available for business issues. Duty counsel is available at no charge in criminal court to provide advice, but not representation.
EXPLAIN HOW LAWYERS BILL THEIR CLIENTS
Lawyers bill their clients for services either by a fixed fee, an hourly rate or by a contingency fee based on a percentage of the money recovered on behalf of the client. Clients are always responsible for paying disbursements, the out-of-pocket expenses incurred such as filing fess, long distance telephone charges, etc. Sometimes a lawyer will require a retainer to start a file, which operates as a deposit against legal work performed.
OUTLINE THE PROCEDURE TO FOLLOW TO COMPLAIN ABOUT YOUR LAWYER
Lawyers are self-governing, and have provincial law societies that deal with this function. Fee complaints are dealt with differently from province to province. Complaints about a lawyer’s conduct are dealt with through the law society, which will have a resolution process that would include mediation, investigation and formal hearings, with penalties for wrong doing. Claims for compensation are subject to limitation periods, as is any other action.
DISCUSS THE ETHICS OF LAWYERS AND OF CLIENTS
Professional and ethical obligations of lawyers are set out in rules of professional conduct established by each province’s law society. The vast majority of lawyers meet these standards, but as with any profession, there are some that do not. If this occurs, the client needs to take appropriate action on a timely basis.
DESCRIBE A CODE OF BUSINESS CONDUCT
There is no code of conduct for business people, and there have been a number of well publicized examples of breaches of ethical conduct by high profile business people recently. This affects the public’s perception of the integrity of our country and the advisability of doing business here. Each business needs to make a commitment to ethical behaviour by preparing a code of conduct for their employees. It needs to include issues such as conflicts of interest, use of corporate assets and opportunities, confidentiality, fair dealing, compliance with laws and reporting of unethical or illegal behaviour within the business. It needs to reflect the business’ core ethical values and principles, in order to encourage ethical behaviour on the part of all those associated with the business. This, in turn, can enhance the long term success of the business.
Answers to Questions 1. Explain the meaning of “sophisticated client”. A sophisticated client is confident, knowledgeable, up-to-date and understands the role of a lawyer. This includes when to represent him or herself and when to hire a lawyer, as well as the costs involved. 2. Why should the owner of a small business have a lawyer on “the team”? A lawyer is an expert, providing advice relevant to the client, allowing the client to make an informed decision. 3. Distinguish the role of the client from the role of the lawyer.
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