Canadian Business Law, 3rd Edition

472 Pages·2018·7.969 MB·English

by  Pat Papadeas, Tamra Alexander

Canadian
Business Law
Third Edition
Tamra Alexander & Pat Papadeas

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Copyright © 2018 Emond Montgomery Publications, Toronto, On.

Canadian Business Law
THIRD EDITION
Tamra Alexander
Pat Papadeas
Kathryn Filsinger
Laurence Olivo
Nora Rock
Camilla Wheeler
Copyright © 2018 Emond Montgomery Publications Limited.
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Library and Archives Canada Cataloguing in Publication
Alexander, Tamra, 1967-, author
Canadian business law / Tamra Alexander [and five others]. Third edition.
Includes index.
Revision of Canadian business law. 2nd ed. Toronto : Emond Montgomery
Publications, 2012.
ISBN 978-1-77255-281-2 (softcover)
1. Commercial law--Canada--Textbooks. 2. Textbooks. I. Title.
KE919.A75 2018 346.7107 C2017-908073-3
KF889.A75 2018
Brief Contents
Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v
Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi
About the Authors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv
Chapter 1 Foundations of Business Law in Canada . . . . . . . . . . . . . 1
Chapter 2 Resolving Disputes and Navigating Canada’s
Court System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Chapter 3 Tort Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Chapter 4 Understanding Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Chapter 5 Working with Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
Chapter 6 F acilitating Business, Protecting Consumers,
and Safeguarding the Marketplace . . . . . . . . . . . . . . . . . . . 167
Chapter 7 Forms of Carrying On Business . . . . . . . . . . . . . . . . . . . . . . . . . 209
Chapter 8 Banking, Financing, and Debtor-Creditor Law . . . . . 263
Chapter 9 Workplace Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297
Chapter 10 Property Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 363
Chapter 11 Intellectual Property and Business Law
in the Digital Age . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 391
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 423
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 433
Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 443
iii

Contents
Brief Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii How Are Business Disputes Resolved? . . . . . . . . . . . . . . . 35
Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi
Canada’s Court System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
About the Authors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv
The Hierarchy of Courts in Ontario . . . . . . . . . . . . . . . 36
Reducing Cost and Delay . . . . . . . . . . . . . . . . . . . . . . . . 40
1 Foundations of Business Law
in Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 The Role of Canadian Courts . . . . . . . . . . . . . . . . . . . . . . . . 40
Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Business and the Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Interpretation of Legislation . . . . . . . . . . . . . . . . . . . . . 40
Managing Legal Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Constitutional Interpretation and Protection
Preparing to Learn About Canadian of Rights and Freedoms . . . . . . . . . . . . . . . . . . . . . . . . 41
Business Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Review of Government Agencies . . . . . . . . . . . . . . . . . 42
The Canadian Legal System: A Framework for an
Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Orderly Society . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
The Pre-Litigation Process . . . . . . . . . . . . . . . . . . . . . . . 42
Canada’s Two Legal Systems . . . . . . . . . . . . . . . . . . . . . 6
The Litigation Process in Superior Court
The Canadian Constitution and Other Sources (Trial Division) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
of Law in Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 The Litigation Process in the Small
The Constitution Act, 1867 (formerly the British Claims Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
North America Act, 1867) . . . . . . . . . . . . . . . . . . . . . . 7 Civil Court Remedies: Damages . . . . . . . . . . . . . . . . . . 47
The Constitution Act, 1982 and the Canadian Mitigation of Damages . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Charter of Rights and Freedoms . . . . . . . . . . . . . . . . 14 Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Legal Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Categories of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Post-Trial Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Substantive Law Versus Procedural Law . . . . . . . . . . 16
Public Law Versus Private Law . . . . . . . . . . . . . . . . . . . . 16 Alternatives to Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Interests and Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Legal Aspects of Business Activity . . . . . . . . . . . . . . . . . . . 23
Negotiation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
The Answer to Every Legal Question . . . . . . . . . . . . . . . . 24 Mediation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Facilitative Mediation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Business Law and Business Ethics . . . . . . . . . . . . . . . . . . . 25
Rights-Based Mediation . . . . . . . . . . . . . . . . . . . . . . . . . 55
Transformative Mediation . . . . . . . . . . . . . . . . . . . . . . . 56
2 Resolving Disputes and Navigating
Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Canada’s Court System . . . . . . . . . . . . . . . . . 31
Understanding When Legal 3 Tort Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Assistance Is Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
What Is a Tort? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Providers of Legal Services:
Lawyers and Paralegals . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 The Importance of Tort Law for Business People . . . . . 67
Lawyers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Vicarious Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Paralegals in Ontario . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Customizing Legal Services . . . . . . . . . . . . . . . . . . . . . . 34 Negligence Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Retaining a Lawyer’s Services . . . . . . . . . . . . . . . . . . . . 34
Elements of a Tort . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
v
vi CONTENTS
Categories of Torts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Disclaimer (or Limitation of Liability) . . . . . . . . . . . . . 126
Intentional Torts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
Intentional Torts Involving Verbal Exclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
or Physical Aggression . . . . . . . . . . . . . . . . . . . . . . . . . 71 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
Intentional Business Torts . . . . . . . . . . . . . . . . . . . . . . . . 74 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
Venue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
Unintentional Torts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
Definition and Scope of Negligence . . . . . . . . . . . . . . 78
Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
Elements of Negligence . . . . . . . . . . . . . . . . . . . . . . . . . 78
Negligence Torts Common in Business . . . . . . . . . . . 83
5 Working with Contracts . . . . . . . . . . . . . . . 143
Strict Liability Torts and the Rule in
Rylands v Fletcher . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 Formation of a Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Intention to Create a Legal Relationship . . . . . . . . . . 144
Intentional or Unintentional Torts . . . . . . . . . . . . . . . . . . . 89
Offer and Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Common Business Torts Involving Property . . . . . . 89
Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
Defending Against Tort Actions . . . . . . . . . . . . . . . . . . . . . 92 Legality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
Failure to Prove the Tort . . . . . . . . . . . . . . . . . . . . . . . . . 92
Consequences of a Breach of Contract . . . . . . . . . . . . . . 151
Contributory Negligence . . . . . . . . . . . . . . . . . . . . . . . . 93
What Constitutes a Breach of Contract? . . . . . . . . . . 151
Voluntary Assumption of Risk . . . . . . . . . . . . . . . . . . . . 94
Breach of Condition or Breach of Warranty? . . . . . . 152
Statutory Compensation Schemes . . . . . . . . . . . . . . . 98
Liability of Directors, Officers, and Employees
Remedies for Torts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 for a Breach of Contract . . . . . . . . . . . . . . . . . . . . . . . . 153
Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
4 Understanding Contracts . . . . . . . . . . . . . 103
Duty to Mitigate Damages . . . . . . . . . . . . . . . . . . . . . . . 155
What Is a Contract? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 Punitive Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157
Alternative Methods for Performance . . . . . . . . . . . . 157
Contracts in the Business Context . . . . . . . . . . . . . . . . . . . 105
Unenforceable Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 158
The Importance of Contract Law
Misrepresentation of Material Fact . . . . . . . . . . . . . . . 159
for Business Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Economic Duress, Undue Influence, and
The Importance of Written Contracts . . . . . . . . . . . . . . . . 107 the Unconscionable Agreement . . . . . . . . . . . . . . . . 159
Writing a Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 Minors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
What Is in a Contract? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 What Can You Do About a Breach of Contract? . . . . . . . 162
Standard Form Contracts . . . . . . . . . . . . . . . . . . . . . . . . 110 Ignore the Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162
Missing and Implied Terms . . . . . . . . . . . . . . . . . . . . . . 111 Negotiate a Compromise . . . . . . . . . . . . . . . . . . . . . . . . 162
Use Alternative Dispute Resolution . . . . . . . . . . . . . . 163
Reading the Fine Print: Typical Terms
Litigate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163
in Business Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Identification of Parties . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Description of Product or Service . . . . . . . . . . . . . . . . 114 6 Facilitating Business, Protecting
Quantity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
Consumers, and Safeguarding
Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
the Marketplace . . . . . . . . . . . . . . . . . . . . . . . . . 167
Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 Moving Beyond the Common Law: The Need
Deadline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 to Protect Important Societal Interests . . . . . . . . . . . . . 168
Liquidated Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
Why Is Knowledge of These Laws Important
Automatic Renewal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
to Your Business? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169
Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
Condition Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124 Facilitating Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170
Condition Subsequent . . . . . . . . . . . . . . . . . . . . . . . . . . . 124 Sale of Goods Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170
Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 Electronic Commerce Act, 2000 . . . . . . . . . . . . . . . . . . 180