RCOMM-393_2023W2.pptx
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School
University of British Columbia *
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Course
393
Subject
Communications
Date
Apr 3, 2024
Type
Pages
51
Uploaded by ProfessorEnergy937
(COMM*ER(C*E M*ENTORSHIP PROGR&AM
FIN&AL R*EVI*EW S*ESSION
0<:: )/)
Prepared by:
&&olan !%%iu and 552Tommy Zhang
°nstruJJGcted IIFby: &&olan !%%iu and 552Tommy Zhang
±mails:
tommyzhang0000@gmail.JJGcom
liumolan@hotmail.JJGcom
Who we are
Molan
Tommy
~18b\mYSic]n/topYSiJLNMG
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''$))&552T°: ±arIIFbara uses issue, law, faJJGcts, JJGconJJGclusion, preJJGcedent. 552The format we’re using (!%%²³) works for °liJJGcia and ;;8Vanessa.
''$))&552T°: <<9We IIFboth took this JJGcourse with °liJJGcia. ´f you’re from ±arIIFbara’s JJGclass, IIFbe wary that some things aren’t JJGcompletely the
same, espeJJGcially with regards to the legal tests she uses. µust IIFbe sure to douIIFble JJGcheJJGck with your material!
'Breach ° )Damages
&&ajor v &&inor ²reaJJGch
±²
&&ajor ²reaJJGch
•
&&ajor IIFbreaJJGches JJGcan IIFbe disJJGcharged
•
¶oes to the foundation of the JJGcontraJJGct, suIIFbstantially
deprives party of IIFbenefit of JJGcontraJJGct
•
·or example, JJGcar engine doesn’t work
•
¸isJJGcharge IIFbefore reJJGceive IIFbenefits from JJGcontraJJGct, or else
JJGcontraJJGct still valid
³²
&&inor ²reaJJGch
•
damages availaIIFble, IIFbut usually JJGcannot IIFbe disJJGcharged
•
·or example, one of the interior lights doesn’t work
552Types of &&ajor ²reaJJGches
1.
±xpress 330Repudiation
2.
³JJGctions rendering performanJJGce impossiIIFble
(negligenJJGce/saIIFbotage)
´²
´ailure to perform (when JJGcontraJJGct is performed IIFbut there
was a major failure)
552Types of µamages
579XRhRQK YSib\mportACEDc]nt tXRhYSic]nWQg to uc]nPOIRQKrstACEDc]nPOI ACEDIKMLout POIACEDb\mACEDWQgRQKs YSis tXRhACEDt a[lossRQKs b\must
“VPfa[low c]nACEDturACEDa[la[ly VPfrob\m IKMLrRQKACEDJLNMGXRh”, wXRhYSiJLNMGXRh b\mRQKACEDc]ns tXRhRQK POIACEDb\mACEDWQgRQKs tXRhACEDt tXRhRQK
IKMLrRQKACEDJLNMGXRhYSic]nWQg pACEDrty owRQKs b\must IKMLRQK
rPQK>CDsoc]n>CDKLa[ly UVPforPQKsPQKPQK>CDKLa[lPQK. °>CDsPQK: !>CDNOIa[lPQKy
8= ±>CDxPQKc]nNOI>CDa[lPQK.
•
±xpeJJGctation damages JJGcompensate the injured party for the loss of the
expeJJGcted IIFbenefit of the JJGcontraJJGct if it had IIFbeen performed
•
¶onsequential damages, are not a direJJGct result of the IIFbreaJJGch IIFbut are
reasonaIIFbly foreseeaIIFble damages that would IIFbe inJJGcurred as a result of
the IIFbreaJJGch.
•
''$ote: make sure you understand this part.
•
³ase: ¹adley ;;8V IIFbaxendale
•
·eneral damages JJGcompensate for intangiIIFble injuries suJJGch as mental
anguish or trauma, whiJJGch are hard to quantify
•
330RelianJJGce damages are awarded to JJGcompensate the injured party for any
expenses or losses inJJGcurred in relianJJGce on the JJGcontraJJGct.
•
00-unitive damages are not intended to JJGcompensate for any speJJGcifiJJGc loss
IIFbut rather to punish and deter wrongful JJGconduJJGct.
•
²lmost never happens in ³anada, only happens when JJGcourt finds
an aJJGction really maliJJGcious
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Question µ'Breach ° )Damages¶
µohn owns a restaurant and has hired µim, a professional JJGcleaner, to JJGclean his kitJJGchen IIFbefore
yearly health inspeJJGctions to avoid fines. 552The JJGcontraJJGct signed IIFbetween the two parties
stipulates that "µim must perform the JJGcleaning serviJJGces a week IIFbefore yearly health
inspeJJGctions.”
552This year, µim had IIFbeen siJJGck the week prior to the inspeJJGction and forgot to inform µohn that
he JJGcannot JJGclean his kitJJGchen. ²t the time of the inspeJJGction, µohn was out of town and trusted
that µ´m would have JJGcleaned his kitJJGchen IIFbased on their JJGcontraJJGct.
552Two days after the inspeJJGction, µohn reJJGceived a letter from the ³anadian ·ood ´nspeJJGction
²genJJGcy due to a unsanitary ventilation system. ²s a result, µohn was fined $100k, and the
restaurant was JJGclosed for 4 months. ²n enraged µohn JJGcalls µim for failing to JJGclean his kitJJGchen
as agreed. µim was apologetiJJGc for IIFbeing siJJGck and said he would reimIIFburse µohn $1,000 for the
damages.
²n angry µohn responded IIFby saying: "²re you joking? ´ have to pay $100k in fines and lost
out on 4 months of profits, ´’ll see you in JJGcourt!"
a¶
°f ¸ohn deJJGcides to sue ¸im, would ¸ohn suJJGcJJGceed in his legal aJJGction against ¸im? <<9What will the extent of damages extend to?
b¶
441Suppose ¸im did perform the serviJJGce and due to his JJGcarelessness, the ventilation system JJGcaught fire during the inspeJJGction. ¸ohn
JJGclaims that sinJJGce this inJJGcident almost "killed" several of his employees, ¸im should IIFbe liaIIFble for punitive damages IIFbeJJGcause there was
a IIFbreaJJGch of JJGcontraJJGct. °s ¸ohn right or wrong?
441Solution
µ'Breach ° )Damages¶
a¶
°f ¸ohn deJJGcides to sue ¸im, would ¸ohn suJJGcJJGceed in his legal aJJGction against ¸im? <<9What will the extent of damages extend to?
!%%aw
: (
(3WrJFHMh ± *5FmFLgJXs²
•
552Test: ¹adley v ±axendale (the defendant did not know the reperJJGcussions that followed, house of lords JJGcase)
•
<<9Was there a IIFbreaJJGch?
•
¹ave damages arisen naturally from the IIFbreaJJGch itself (in the usual JJGcourse) ))&330R as may reasonaIIFbly IIFbe JJGcontemplated IIFby IIFboth parties
at the time the JJGcontraJJGct was made, i.e. were the damages reasonaIIFbly foreseeaIIFble
•
¸amages might extend further if speJJGcial JJGcirJJGcumstanJJGces were made known to the party IIFbreaJJGching the JJGcontraJJGct (tell JJGcontraJJGctor "´
want a speJJGcifiJJGc thing" or “if you don’t JJGclean this kitJJGchen, i will get a huge $100k fine")
•
¸amages should put the injured party in the position it should have IIFbeen in had the JJGcontraJJGct IIFbeen performed. !%%osses must IIFbe
mitigated.
³ppliJJGcation
:
•
552There was a major IIFbreaJJGch of JJGcontraJJGct; µim did not perform as was stipulated in the JJGcontraJJGct.
•
¹owever, it’s assumed that µim JJGcannot reasonaIIFbly foresee that his failure to JJGclean µohn’s kitJJGchen would lead to $100k in fines and
hundreds of thousands in lost profits when he signed the JJGcontraJJGct. µ´m would only IIFbe liaIIFble for the portion of damages that are
reasonaIIFbly foreseeaIIFble if he does not perform his JJGcleaning serviJJGces.
•
´f µohn told µim that his failure to perform the serviJJGces would lead to $100k in fines and hundreds of thousands in lost profits, then µim
would JJGclearly IIFbe liaIIFble for those damages sinJJGce he JJGcan now foresee those losses.
¶onJJGclusion
:
•
µim is oIIFbliged to JJGcompensate µohn for the losses that he JJGcould reasonaIIFbly foresee µohn inJJGcur as a result of his non-performanJJGce.
¹owever, µim is not liaIIFble for the JJGconsequential damages of the lost profits and the fine if he was not informed.
²) 441Suppose ¸im performed the serviJJGces and JJGcleaned his kitJJGchen IIFbut JJGcarelessly JJGcaused the ventilation system
to JJGcatJJGch fire, almost "killing" several of ¸ohn’s employees. <<9Would ¸im IIFbe liaIIFble for punitive damages?
•
552The ventilation system JJGcatJJGching fire should IIFbe deemed a &&ajor ·ailure (rememIIFber the <<9Walmart v 552Tesla
JJGcase).
•
552This is a failure to perform; µim had fulfilled most of his oIIFbligations as stipulated in the JJGcontraJJGct
(JJGcleaning the kitJJGchen). ¹owever, his JJGcarelessness while performing his duties JJGcould have resulted in dire
JJGconsequenJJGces; he is liaIIFble for damages.
•
00-unitive damages will only arise when IIFbad faith or maliJJGcious IIFbehavior is involved. ´t is assumed that µim
did not purposely JJGcause the ventilation to JJGcatJJGch fire in an attempt to hurt µohn's employees.
•
552Therefore, punitive damages are likely not awarded in this JJGcase.
441Solution
µ'Breach ° )Damages¶
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±xJJGclusion ¶lause
±xJJGclusion ¶lause ±xplanation
•
552The purpose of an exJJGclusion JJGclause is for a IIFbusiness to proteJJGct itself from any damages that may oJJGcJJGcur to you as a JJGconsumer.
•
°xJJGclusion JJGclauses aJJGctually don't need to IIFbe a signed JJGcontraJJGct if the IIFbusiness takes steps to IIFbring it to your attention. ·or
example, it JJGcan IIFbe a sign in a parking lot.
•
³olour
•
±old
•
00-rominent display
•
´t JJGcan also IIFbe on the IIFbaJJGck of your tiJJGcket!
•
!%%aw:
<<9What is the position of the plaintiff? (330Relevant in JJGcases where JJGclause is on tiJJGcket, ¶reeven ;;8V ±laJJGckJJGcomIIFb)
±RQK wACEDry oVPf wXRhACEDt typRQK oVPf RQKxJLNMGa[lusYSioc]n JLNMGa[lACEDusRQK wACEDs YSic]n tXRhRQK quRQKstYSioc]n (JLNMGoc]ntrACEDJLNMGt, sYSiWQgc]n, or tYSiJLNMG`ZkRQKt)
±xJJGclusion JJGclause test
!%%aw:
to IIFbe enforJJGceaIIFble, the exJJGclusion JJGclause needs to pass a three-part test from
&&aloney ;;8V µoJJGckside
:
°³
µoes the JJGclause apply to the faJJGcts?
´³
°s the JJGclause unJJGconsJJGcionaIIFble: 552There was an (1) inequality in the proJJGcess of JJGcreating the JJGclause and (2) an unfair outJJGcome?
•
552The writer of the JJGclause had speJJGcial knowledge and did not disJJGclose important information. °ssentially, the writer of the
JJGclause was quite JJGcertain something IIFbad will happen to the plaintiff, so they JJGcreated the JJGclause to proteJJGct themselves.
•
552The writer intended to deJJGceive the plaintiff (&&aloney)
•
552The position of the plaintiff meant that they are unlikely to IIFbe aware of JJGcertain dangers
•
579ob\mb\my: °c]n JLNMGACEDsRQKs wXRhRQKrRQK ACED IKMLusYSic]nRQKss YSis sRQKa[la[lYSic]nWQg ACED usRQKPOI WQgooPOI, tXRhRQKrRQK YSis XRhYSiWQgXRhRQKr oc]nus VPfor POIYSisJLNMGa[losYSic]nWQg tXRhRQK usRQKPOI WQgooPOI’s POIRQKVPfRQKJLNMGts. ²or
YSic]nstACEDc]nJLNMGRQK, ACED POIRQKACEDa[lRQKrsXRhYSip sXRhoua[lPOI a[lRQKt you `Zkc]now XRhow b\mACEDc]ny JLNMGACEDr ACEDJLNMGJLNMGYSiPOIRQKc]nts tXRhRQK usRQKPOI JLNMGACEDr wACEDs YSic]n.
µ³
°s the JJGclause JJGcontrary to puIIFbliJJGc poliJJGcy?
•
552The JJGcommerJJGcial impliJJGcations of this would destroy trust
…
•
¹omiJJGcide is not JJGcovered IIFby puIIFbliJJGc poliJJGcy
552Things to watJJGch out for in enforJJGceaIIFbility of exJJGclusion JJGclauses: when will the JJGcourt side against the IIFbusiness?
°³
00-))&441S°552T°))&''$ ))&´ 00-!%%³°''$552T°´´ &&³552T552T±330R441S µ±00-±''$µ°''$· ))&''$ 552TY00-± ))&´ ¶!%%³663U441S± (552T°¶ $$±552T ;;8V441S ¶))&''$552T330R³¶552T).
´f the
exJJGclusion JJGclause is signed in a JJGcontraJJGct, the plaintiff JJGcannot JJGclaim that they were not aware of the JJGclause.
¹))&<<9W°;;8V°330R, ¶reeven ;;8V ±laJJGckJJGcomIIFb shows that if the JJGcustomer is a foreign national, there JJGcan IIFbe evidenJJGce
that ¶reeven was never aware of the existenJJGce of the exJJGclusion JJGclauses on the IIFbaJJGck of the tiJJGcket.
°³
¶reeven ;;8V ±laJJGckJJGcomIIFb, ¸awe ;;8V ³ypress
´³
00-art 2 in &&aloney test: °&&²³!%%³''$¶± ))&´ $$''$))&<<9W!%%±µ·±/µ±¶±°552T ))&''$ 00-³330R552T ))&´ 441S±!%%!%%±330R.
³ourts strike down
exJJGclusion JJGclauses if there is an imIIFbalanJJGce of knowledge, i.e. the seller wrote the JJGclause to insulate
themselves from damages that they knew would likely oJJGcJJGcur. ·or instanJJGce, ´ sold you a JJGcar that ´ knew had
proIIFblems IIFbefore and did nothing to tell you aIIFbout it. 552The exJJGclusion JJGclause in this JJGcase is just another part
of my attempt to deJJGceive you IIFbeJJGcause ´ know it will IIFbreak
µ³
00-art 2 of &&aloney 552Test: 663U441S±µ ·))&))&µ441S.
¸id the seller take extra steps to warn IIFbuyer of the good's
previous defeJJGcts? ´f ´ knew my JJGcar had IIFbeen in 5 aJJGcJJGcidents, IIFbeen IIFblown up twiJJGce, and frequently has its
wheels fall off on the highway, ´ should tell you. ´f ´ don't the JJGcourts won't JJGcare aIIFbout my exJJGclusion JJGclause.
552The exJJGclusion JJGclause in this JJGcase is just another part of my attempt to deJJGceive you IIFbeJJGcause ´ know it will
IIFbreak down soon anyways, whiJJGch the JJGcourt will likely rejeJJGct.
µean µarren µahl takes the 393 JJGclass on a field trip to µisney"&&olan"d, to have some
fun IIFbefore the final. ))&nJJGce they were there, the admissions offiJJGce, whiJJGch normally gets all
attendees to sign a waiver with an exJJGclusion JJGclause, ran out of paper :(( . ³s a result, they
just let the entire 393 JJGclass into the park sinJJGce there was an exJJGclusion JJGclause on the IIFbaJJGck
of the tiJJGcket anyways. °t read in IIFbold letters " µisney&&oland" is not responsiIIFble for any
IIFbodily harm suffered from partiJJGcipating in aJJGctivities within the park".
552There is evidenJJGce that &&olan, the owner of the park, knew aIIFbout the frequent
IIFbreakdowns and dangers of his ride. >>;Yet, he never had his employees tell any attendees.
22/Questions:
±²
µoes the exJJGclusion JJGclause IIFbeing on the IIFbaJJGck of a tiJJGcket affeJJGct its enforJJGceaIIFbility?
³²
³n international student from <<9Wakanda, 552Tommy, went on one of the rides got severely injured from
the entire ride IIFblowing up. 552There are no theme parks in <<9Wakanda and this is 552Tommy's first time. <<9Will
552Tommy IIFbe suJJGcJJGcessful in suing &&olan's theme park?
´²
<<9Will the ride operators IIFbe personally liaIIFble?
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±²
µoes the exJJGclusion JJGclause IIFbeing on the IIFbaJJGck of a tiJJGcket affeJJGct its enforJJGceaIIFbility?
•
´f the park got the students to sign a waiver, it would signify that students have read it. 552Then, the 3 part &&aloney test is applied.
•
330R°!%%°;;8V²''$552T ·))&330R ·´''$²!%%: <<9With tiJJGcket JJGcases, you must take an extra step to look at whether the IIFbusiness took reasonaIIFble steps to IIFbring it
to notiJJGce. 552The IIFbold letters likely JJGcount IIFby a JJGcourt. ´t would IIFbe even IIFbetter if the employees told the attendees aIIFbout the JJGclause on
the IIFbaJJGck of the tiJJGcket. ¹))&<<9W°;;8V°330R, the tiJJGcket might not IIFbe enforJJGceaIIFble depending on position of plaintiff (greeven v ±laJJGckJJGcomIIFb)
³²
³n international student from <<9Wakanda, 552Tommy, went on one of the rides got severely injured from the entire ride IIFblowing up. 552There
are no theme parks in <<9Wakanda and this is 552Tommy's first time. <<9Will 552Tommy IIFbe suJJGcJJGcessful in suing &&olan's themepark?
•
!%%aw:
&&aloney ;;8V ¸oJJGckside 552Test. ''$ormally, you always run maloney for exJJGclusion JJGclause JJGcases.
°³
¸oes the JJGclause apply? >>;Yes it does, aJJGctivities within the park inJJGcludes going on rides.
´³
´s the JJGclause unJJGconsJJGcionaIIFble?
°³
>>;Yes, &&olan had speJJGcial knowledge that the rides were all dangerous yet told none of the attendees aIIFbout it. °ven if the
JJGclause applies, JJGcourt will strike it down IIFbeJJGcause they would view &&olan's attempt to hide the dangers of the park as
unJJGconsJJGcionaIIFble when he knew aIIFbout it.
µ³
´s the JJGclause JJGcontrary to puIIFbliJJGc poliJJGcy?
°³
552This applies in JJGcases like murders. ´t's quite aJJGcJJGceptaIIFble for a theme park to use exJJGclusion JJGclauses
•
!%%aw: 00-osition of plaintiff in tiJJGcket JJGcases.
¶reeven ;;8V ±laJJGckJJGcomIIFb states that "00-))&441S´552T´))&''$ ))&· 00-!%%²´''$552T´·· &&²552T552T°330R441S". ´n ¶reeven ;;8V
IIFblaJJGckJJGcomIIFb, a european tourist was aIIFble to suJJGcJJGcessfully sue ±laJJGckJJGcomIIFb IIFbeJJGcause ¶reeven was a stranger to the JJGcountry, never had
skied IIFbefore, and there was no evidenJJGce that ¶reeven was aware of the exJJGclusion JJGclause on the IIFbaJJGck of the tiJJGcket. ²s a result,
exJJGclusion JJGclause doesn't even apply to 552Tommy as an international student.
•
¶onJJGclusion
°³
³ourt sides against &&olan IIFbeJJGcause of 552T<<9W))& reasons. ·irstly, the JJGclause is unJJGconsJJGcionaIIFble, whiJJGch fails maloney v ¸oJJGckside.
441SeJJGcondly, the position of the 00-laintiff matters as we've seen in ¶reeven. ³ourt will also JJGconJJGclude 552Tommy would not have not
known aIIFbout the JJGclause on the IIFbaJJGck of the tiJJGcket.
µ³
<<9Will the ride operators IIFbe personally liaIIFble?
''$o, IIFbeJJGcause of viJJGcarious liaIIFbility. °mployer would IIFbe liaIIFble for aJJGctions of employee during their work.
³nswers:
·eedIIFbaJJGck
•
·eedIIFbaJJGck on our format?
•
!%%et us know what you like or don’t like so far?
•
¸on’t feel afraid to ask questions!
441S·³
•
441S·³ was passed to give JJGconsumers more rights. 441S·³ lays out terms that IIFbusinesses must follow when selling to
JJGcustomers.
•
441SeJJGction 16: implied that the seller has the right to sell the goods.
•
441SeJJGction 17: ¶oods sold must JJGcorrespond with desJJGcription/sample (more related to desJJGcription)
•
17 (1) ´mplied JJGcondition that the goods sold IIFby desJJGcription must meet desJJGcription. (for example, no piJJGctures on
a weIIFbsite)
•
17 (2) ´mplied JJGcondition sold IIFby sample ²''$¸ desJJGcription, goods must still JJGcorrespond with desJJGcription.
•
441SeJJGction 18:
•
a) 00-urpose made known to seller
•
3 part test on next slide
•
IIFb) if IIFbought IIFby desJJGcription, then it has to IIFbe of merJJGchantaIIFble quality
•
JJGc) duraIIFbility
•
441SeJJGction 19: 441Sale IIFby 441Sample: sample should matJJGch the IIFbulk/free from defeJJGcts/IIFbuyer inspeJJGcts
•
441SeJJGction 20: ±xJJGclusion of implied terms
•
°xJJGclusion JJGclauses JJGcan only IIFbe used if
•
441Sales to another
IIFbusiness
•
441Selling
used
goods
•
441Someone selling goods who does not normally sell that good (
JJGcraigslist
)
³ACEDc]nc]not IKMLRQK usRQKPOI IKMLy rRQKtACEDYSia[l sACEDa[lRQKs (wACEDa[lb\mACEDrt,ACEDppa[lRQK, RQKtJLNMG.)`
•
441SeJJGction 21(3):
5 risks for title and risk -> add it into seJJGction 21(3) [when title passes]
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441SeJJGction 18a 3 part test
3 part test for 441SeJJGction 18(a): <<9Warranty or ¶ondition re 22/Quality or ´itness for 00-artiJJGcular 00-urpose:
•
552The implied terms of the 441S¶² state that goods must IIFbe fit for their purpose if:
°³
the IIFbuyer JJGcommuniJJGcates the purpose for the goods to the seller ;
´³
so as to show that the IIFbuyer is relying on the seller’s skill and judgment ;
µ³
and it is in the usual JJGcourse of the seller’s IIFbusiness to supply those goods ( $$oIIFbelt); and
´f it fulfills the three part test, goods must reasonaIIFbly fulfill purpose 663U''$!%%°441S441S JJGcustomer asks for trade name
22/Question (441S·³)
²fter making $2,000,000 upon selling his JJGcompany, ''$alom went to IIFbuy himself an exotiJJGc JJGcar at &&ot’s dealership. ²fter
asking &&ot whiJJGch JJGcar has the IIFbest aJJGcJJGceleration, &&ot reJJGcommended the new °nzo &&odel. ''$alom deJJGcided against &&ot’s
reJJGcommendation and deJJGcided to purJJGchase a JJGclassiJJGc 00-orsJJGche 911 instead. 552Though disappointed that ''$alom did not IIFbuy the
automoIIFbile he reJJGcommended, &&ot was happy to see his JJGclient find a JJGcar he liked. ±efore ''$alom left, &&ot told him, “´t
seems you didn’t rely on my professional expertise; IIFbut this is a great JJGchoiJJGce too! 552The 911 has always IIFbeen known to have
good aJJGcJJGceleration!"
²fter driving the JJGcar for a JJGcouple of days, ''$alom felt he had made a mistake in purJJGchasing the 911. ¹e JJGcomplained to his
friends aIIFbout the JJGcar's engine and the laJJGck of aJJGcJJGceleration. ''$alom was unsure whether he JJGcould return the vehiJJGcle.
¶an ''$alom return the JJGcar? ±xplain the legal IIFbasis for your JJGconJJGclusions.
¶an ''$alom return the JJGcar? ±xplain the legal IIFbasis for your JJGconJJGclusions.
•
!%%aw:
•
00-urpose of 441S·³:
•
552The 441S¶² applies where there is a sale of goods from a dealer (where they sell the good in the ordinary
JJGcourse of their IIFbusiness) to a JJGcustomer. ´n this JJGcase, &&ot is in the IIFbusiness of selling JJGcars (a good) and ''$alom
IIFbought the JJGcars with JJGcash, so the 441S¶² will apply, inJJGcluding the “implied terms of the 441S¶²”. ´f an implied
term is IIFbreaJJGched, ''$alom would IIFbe aIIFble to return the goods (resJJGcission). ¹owever, given the IIFbelow analysis,
it is not likely that ''$alom will IIFbe aIIFble to return the goods.
•
552The 3 part test for 441SeJJGction 18(a): <<9Warranty or ¶ondition re 22/Quality or ´itness for 00-artiJJGcular 00-urpose:
•
552The implied terms of the 441S¶² state that goods must IIFbe fit for their purpose if:
°³
the IIFbuyer JJGcommuniJJGcates the purpose for the goods to the seller ;
´³
so as to show that the IIFbuyer is relying on the seller’s skill and judgment ;
µ³
and it is in the usual JJGcourse of the seller’s IIFbusiness to supply those goods ( $$oIIFbelt); and
´f it fulfills the three part test, goods must reasonaIIFbly fulfill purpose 663U''$!%%°441S441S JJGcustomer asks for trade name
•
³pply:
•
´n this JJGcase, it would appear that ''$alom IIFbought the 911 (JJGcar) at his disJJGcretion despite &&ot reJJGcommending a
different JJGcar. 552Though the first JJGcriteria had IIFbeen met (''$alom told &&ot he wanted a vehiJJGcle with good
aJJGcJJGceleration), he did not rely on &&ot's skill and judgment (he IIFbought a 911 instead of an °nzo). ·urther, it
appears that he purJJGchased the vehiJJGcle IIFby providing the model numIIFber of the JJGcar (akin to a trade name), thus
failing the requirements of this seJJGction.
•
¶onJJGclusion:
•
''$alom is likely unaIIFble to return the JJGcar.
441Solution:
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00-rivity
))&nly parties in the JJGcontraJJGct JJGcan enforJJGce the JJGcontraJJGct IIFbeJJGcause IIFboth provided JJGconsideration. ¹))&<<9W±;;8V±330R, tort allows parties outside JJGcontraJJGct to
enforJJGce JJGcontraJJGct if the duty of JJGcare extends to them.
±xJJGceptions to privity.
552These are legal situations that allow people that don’t have a JJGcontraJJGct with eaJJGch other to still sue.
•
441Statute also extends duty of JJGcare to parties outside JJGcontraJJGct
•
³onsumer produJJGct safety: manufaJJGcturers
•
))&JJGcJJGcupiers liaIIFbility: IIFbuildings. ·or example, the engineer that the JJGconstruJJGction JJGcompany JJGcontraJJGcted is responsiIIFble for the safety of your
house even if they don’t have a direJJGct JJGcontraJJGct with you.
•
Trusts
•
))&riginally under privity, IIFbenefiJJGciaries (JJGchildren, widows) JJGcannot sue to enforJJGce the trust IIFbeJJGcause they were not the original parties in
the JJGcontraJJGct. ±ut, IIFbenefiJJGciaries are now given rights under trusts to enforJJGce the JJGcontraJJGcts
•
Insurance
•
±enefiJJGciaries of insuranJJGce JJGcan also sue to enforJJGce the insuranJJGce JJGcompany to pay out even though they were not originally in the
JJGcontraJJGct
•
&Agents
•
²gents represent the undisJJGclosed prinJJGciple to JJGcarry out a JJGcontraJJGct. ²s a result, privity is only IIFbetween the agent and the other party
and the undisJJGclosed party is not in the JJGcontraJJGct.
•
¸isney sent out their lawyers to IIFbuy the land as their agent. ¹omeowners JJGcan sue the undisJJGclosed agent (¸isney), IIFbeJJGcause
they are the undisJJGclosed agent and will IIFbe JJGconsidered a party in the JJGcontraJJGct too
•
Land
•
´f someone makes a JJGcontraJJGct regarding land and then sells the land to a new owner, the new owner will inherit the oIIFbligations and
will replaJJGce the old owner in the JJGcontraJJGct
•
*Enurement clause:
•
²llows suJJGcJJGcessors to replaJJGce the original party in the JJGcontraJJGct as they are entitled to the IIFbenefits
-2rYSic]nLMGYSipa[lPQKNOI PQKxLMGPQKptYSioc]n to prYSivYSity:
²n exJJGclusion JJGclause written IIFby the IIFbusiness JJGcan extend to the employee even if the JJGclause was originally
IIFbetween IIFbusiness and JJGcustomer. ³²441S°: !%%ondon ¸rugs.
•
552Two part test
1.
552The exJJGclusion JJGclause extends to employees if the original parties intended to extend it to them, impliedly or expliJJGcitly
2.
552The employees must have IIFbeen performing serviJJGces on IIFbehalf of employer and is aJJGcting within the sJJGcope of their joIIFb
00-rivity (22/Question)
Zhang development is IIFbuilding a new apartment in <<9WesIIFbrook. Zhang development hires a JJGcontraJJGctor (imperial
JJGconstruJJGctions) to IIFbuild the apartment. 552The JJGcontraJJGctor also JJGcontraJJGcted the world-famous arJJGchiteJJGct &&olan !%%iu as
a suIIFbJJGcontraJJGctor. ±eJJGcause of &&olan's poor work ethiJJGc (terriIIFble!), he was unaIIFble to get the plan for the IIFbuilding
done. 552The projeJJGct missed many deadlines and JJGcosts were greatly inJJGcreased IIFby $100k. Zhang development sues
&&olan IIFbut &&olan rememIIFbers the 393 JJGclass he took with °liJJGcia! &&olan says to himself: 'heh heh heh, they JJGcan't
sue me in JJGcontraJJGct, ´'m safe!".
22/Questions:
1.
<<9Why does &&olan think he JJGcannot IIFbe sued in JJGcontraJJGct? °s he right?
2.
³ssume that &&olan was not a suIIFbJJGcontraJJGctor and was an employee under the JJGcontraJJGctor (°mperial
¶onstruJJGction). ³lso, assume that there is a totally legal enforJJGceaIIFble exJJGclusion JJGclause that states
"°mperial JJGconstruJJGctions will not IIFbe liaIIFble for any damages JJGcaused IIFby delays in the JJGconstruJJGction proJJGcess".
<<9Will Zhang dev IIFbe aIIFble to sue &&olan?
1.
<<9Why does &&olan think he JJGcannot IIFbe sued in JJGcontraJJGct? °s he right?
○
!%%aw:
663Under privity, only parties to a JJGcontraJJGct JJGcan enforJJGce the JJGcontraJJGct or have
the JJGcontraJJGct enforJJGced on them IIFbeJJGcause the parties provided JJGconsideration
○
³ppliJJGcation
: &&olan is right that Zhang dev JJGcannot IIFbe sued for IIFbreaJJGch of
JJGcontraJJGct sinJJGce they do not have a direJJGct JJGcontraJJGct together. 00-rivity states that
only parties to a JJGcontraJJGct JJGcan sue for IIFbreaJJGch of JJGcontraJJGct.
○
¶onJJGclusion:
Zhang dev will not IIFbe aIIFble to sue for IIFbreaJJGch of JJGcontraJJGct.
¹owever, &&olan JJGcan still IIFbe sued under
tort
or
negligenJJGce
.
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2. ³ssume that &&olan was not a suIIFbJJGcontraJJGctor and was an employee under the JJGcontraJJGctor (°mperial
¶onstruJJGction). ³lso, assume that there is a totally legal enforJJGceaIIFble exJJGclusion JJGclause that states "°mperial
JJGconstruJJGctions will IIFbe not liaIIFble for any damages JJGcaused IIFby delays in the JJGconstruJJGction proJJGcess, inJJGcluding IIFby its
agents, employees or suIIFbJJGcontraJJGctors". <<9Will Zhang dev IIFbe aIIFble to sue &&olan?
○
!%%aw: 00-rinJJGcipled exJJGception to privity:
²n exJJGclusion JJGclause written IIFby the IIFbusiness extends to the
employee even if the JJGclause was originally IIFbetween the IIFbusiness and JJGcustomer
1.
552The limitation JJGclause extends to employees if the original parties intended to extend it to them
2.
552The employees must have IIFbeen performing serviJJGces on IIFbehalf of the employer and is aJJGcting
within the sJJGcope of their joIIFb
○
!%%aw: viJJGcarious liaIIFbility:
the employer is liaIIFble for damages JJGcaused IIFby mistakes JJGcommitted IIFby employee
within sJJGcope of employment
○
³ppliJJGcation
: ±eJJGcause of the prinJJGcipled exJJGception to privity, Zhang dev JJGcannot sue &&olan. 552The exJJGclusion
JJGclause extends to &&olan IIFbeJJGcause it’s expressly stated.
○
³ppliJJGcation
: Zhang ¸ev also JJGcannot sue &&olan personally IIFbeJJGcause viJJGcarious liaIIFbility states that the
employer (´mperial) would IIFbe liaIIFble for all damages JJGcaused IIFby employees. &&olan was aJJGcting within the
sJJGcope of employment as an arJJGchiteJJGct. (not IIFbeing within sJJGcope would IIFbe if &&olan JJGcrashed a lamIIFbo on a
raJJGce traJJGck, whiJJGch is totally unrelated to what he was employed to do at ´mperial)
○
¶onJJGclusion
: Zhang ¸ev JJGcannot sue &&olan personally IIFbeJJGcause of viJJGcarious liaIIFbility and prinJJGcipled
exJJGception to privity.
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''$egligenJJGce
●
''$egligenJJGce 552Test
●
))&JJGcJJGcupiers !%%iaIIFbility
●
''$egligenJJGce -> 552Tort
●
·ull/00-artial ¸efense IIFbased on whether one voluntarily assumed the risk
○
³ontriIIFbutorily ''$egligenJJGce (00-edestrian JJGcrossing the street when the stop
sign in on)
○
duty to mitigate, report/sue as soon as possiIIFble
●
330Remedies (usually money; IIFbased on expeJJGctational and general damages etJJGc)
●
<<9Warnings required IIFby statute (duty to warn: JJGchildren’s toys, presJJGcription
drugs or JJGcleaning produJJGcts)
1.
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''$egligenJJGce 552Test
')+otRQK: ±ACEDrIKMLACEDrACED’s tRQKst YSis sa[lYSiWQgXRhta[ly POIYSiVPfVPf- !%'oss, ´uty oVPf ³ACEDrRQK, ±rRQKACEDJLNMGXRh oVPf 468tACEDc]nPOIACEDrPOI oVPf ³ACEDrRQK, ³ACEDusACEDtYSioc]n
!%%aw:
·or the aJJGct to IIFbe negligenJJGce, it must pass 4 steps:
1.
552There was a
µuty of JJGcare
in relationship
1.
·oreseeaIIFbility and 00-roximity: JJGcan reasonaIIFbly see that harm JJGcan IIFbe JJGcaused
1.
driver/pedestrian
2.
restaurant/JJGcustomer
2.
´ndeterminate/indisJJGcriminate duty JJGcan IIFbe removed due to
00-uIIFbliJJGc poliJJGcy
if the duty of JJGcare would extend too IIFbroad
2.
±reaJJGch of standard of JJGcare: 552The JJGconduJJGct fell IIFbelow the required
standard
for the situation
1.
))&IIFbjeJJGctive JJGcodes like ¶²²00- estaIIFblish standard
2.
<<9What would other reasonaIIFble people/professionals have done
3.
<<9Was there evidenJJGce of
µamage
? >>;You JJGcan point to a IIFbroken JJGcar or loss of share value.
1.
³an IIFbe physiJJGcal, mental, property, loss of profits/wages
4.
³ausation: <<9Was damage
JJGcaused
IIFby the
failure to meet standard
?
1.
552The
"IIFbut for"
test: if it was not IIFbeJJGcause of the defendant's aJJGctions, the injury would not have oJJGcJJGcurred
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µefenses to negligenJJGce:
/4uPQKstYSioc]n >CDa[la[l UVPfour stPQKps oUVPf tXRhPQK c]nPQKVWQga[lYSiVWQgPQKc]nLMGPQK.
1.
552There was no duty of JJGcare, and it JJGcannot IIFbe reasonaIIFbly seen that ´ JJGcould hurt them
2.
±reaJJGch of standard: my JJGconduJJGct was aIIFbsolutely normal in this situation. ² doJJGctor failing one in a million surgeries is allowed under the standard.
3.
¸amage: your emotional distress does not qualify as damages, here are piJJGctures of you in ;;8Vegas
4.
³ausation: the asIIFbestos did not JJGcause your JJGcanJJGcer, it was your smoking.
°oc]ntrYSiKLutory c]nPQKVWQga[lYSiVWQgPQKc]nLMGPQK: >CDs >CD p>CDrtYSi>CDa[l NOIPQKUVPfPQKc]nsPQK, tXRhPQK pa[l>CDYSic]ntYSiUVPfUVPf LMGoc]ntrYSiKLutPQKNOI to XRhYSis owc]n YSic]n_Yjury &+05 two pPQKopa[lPQK >CDrPQK >CDt UVPf>CDua[lt
552The defendant's negligenJJGce was only partially responsiIIFble for the plaintiff's injuries. 552The plaintiff was also aJJGcting negligently, meaning that
they JJGcan only reJJGcover part damages.
²uty to b\mYSitYSiVWQg>CDtPQK NOI>CDb\m>CDVWQgPQKs rPQK>CDsoc]n>CDKLa[ly
8=oa[luc]nt>CDry >CDssub\mptYSioc]n oUVPf rYSis`Zk >CDs >CD UVPfua[la[l NOIPQKUVPfPQKc]nsPQK
●
<<9When there is a real risk of injury yet the plaintiff reJJGcognizes the risk and fully assumes risk IIFbut risk must IIFbe ordinarily expeJJGcted in that
aJJGctivity ie. ²ssuming a JJGcar will run over you in a parking lot ´441S ''$))&552T ordinarily expeJJGcted
¶ontriIIFbutorily negligent/ joint liaIIFbility:
³ourt JJGcan find joint liaIIFbility to negligenJJGce and apportion damages IIFbased on degree of fault. (&&orsi ;;8V ·ermer)
●
))&ne person is more liaIIFble and will pay more damages IIFbased on their aJJGctions
…
330Remedies:
if found to IIFbe negligent, the defendant will IIFbe required to pay money to restore plaintiff to the position they would IIFbe in without the tort
●
³osts of repair, treatment, loss of profits or wages
●
³ost of litigation
●
²pportioning liaIIFbility
: 552The JJGcourt might also find two people at fault and portion damages IIFbetween them
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22/Question (''$egligenJJGce)
441Samantha went to a popular restaurant in town to meet her friends for lunJJGch. ´t was a rainy day, and
the restaurant floor was wet. 663Unfortunately, the restaurant did not have a wet floor sign displayed.
²s 441Samantha walked towards the taIIFble, she slipped on the wet floor and fell, fraJJGcturing her hip.
441Samantha deJJGcides to sue the restaurant for negligenJJGce. 552The restaurant argues that 441Samantha is
partially to IIFblame for not notiJJGcing the wet floor.
³ssess the legal rights and liaIIFbilities of 441Samantha
and the restaurant in this situation.
µoes 441Samantha have a JJGcase against the restaurant?
<<9What if 441Samantha was exJJGcitedly running around the restaurant when she slipped?
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²nswer (''$egligenJJGce)
³ssess the legal rights and liaIIFbilities of 441Samantha and the restaurant in this situation. µoes 441Samantha have a JJGcase against the restaurant?
¹ow might JJGcontriIIFbutory negligenJJGce apply in this JJGcase?
³nswer:
!%%aw: ''$egligenJJGce test
²ppliJJGcation: 552The negligenJJGce test involves four elements: duty of JJGcare, IIFbreaJJGch of duty, JJGcausation, and damages. ±arIIFbara’s is slightly diff (refer to prev slide)
1.
¸uty of ³are: 552The restaurant owes a duty of JJGcare to its JJGcustomers to provide a reasonaIIFbly safe environment. 552This inJJGcludes taking reasonaIIFble steps to
ensure that JJGcustomers are not exposed to foreseeaIIFble risks of harm, suJJGch as slipping on a wet floor.
F³
·oreseeaIIFbility and 00-roximity: it’s quite foreseeaIIFble that a restaurant’s wet floor JJGcan JJGcause damage to JJGcustomers. 552The relationship IIFbetween restaurant and JJGcustomer
is also quite proximate (JJGclose)
2.
±reaJJGch of ¸uty: 552The failure to put up a sign warning JJGcustomers of the wet floor JJGcould IIFbe a IIFbreaJJGch of the restaurant's duty of JJGcare.
3.
³ausation: 552The aIIFbsenJJGce of a warning sign JJGcould IIFbe the JJGcause of the JJGcustomer slipping and falling. <<9We JJGcan look to standard praJJGctiJJGce in the industry, whiJJGch
is to have a JJGcaution sign when there is a wet floor. ²lso, it’s required IIFby standards in the restaurant industry as well.
4.
¸amages: 552The JJGcustomer IIFbreaking their IIFbaJJGck JJGcould IIFbe JJGconsidered as damages resulting from the fall.
¶onJJGclusion:
552The restaurant JJGcould IIFbe liaIIFble for negligenJJGce in this situation.
<<9What if 441Samantha was exJJGcitedly running around the restaurant when she slipped?
³ontriIIFbutory negligenJJGce would apply in this situation. ´f 441Samantha was running around the restaurant or not exerJJGcising reasonaIIFble JJGcare in avoiding the wet
floor, they may IIFbe found to have JJGcontriIIFbuted to their own injury. 552This JJGcould result in a reduJJGction of the damages awarded to the JJGcustomer in proportion to their
degree of fault.
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''$egligent &&isstatement
•
³ases: ¹edley ±yrne, 330Rangen, ¹erJJGcules
')+RQKWQga[lYSiWQgRQKc]nt b\mYSisstACEDtRQKb\mRQKc]nt YSis wXRhRQKc]n pACEDrty µ rRQKa[lYSiRQKs oc]n 024ACEDrty ±’s stACEDtRQKb\mRQKc]nt tXRhACEDt turc]ns out to IKMLRQK VPfACEDa[lsRQK, ACEDc]nPOI 024ACEDrty µ suVPfVPfRQKrs ACEDs ACED rRQKsua[lt.
´YSiVPfVPfRQKrRQKc]nt VPfrob\m c]nRQKWQga[lYSiWQgRQKc]nJLNMGRQK IKMLRQKJLNMGACEDusRQK tXRhRQKrRQK wACEDs ACED VPfACEDYSia[lurRQK to provYSiPOIRQK ACEDJLNMGJLNMGurACEDtRQK ACEDPOIvYSiJLNMGRQK/stACEDtRQKb\mRQKc]nt.
!%%aw: ''$egligent misstatement
has the same test as negligenJJGce with a few differenJJGces.
1.
¸uty of JJGcare
○
·oreseeaIIFbility and proximity: JJGcan IIFbe reasonaIIFbly seen that damages JJGcan IIFbe JJGcaused IIFby a misstatement
○
´ndeterminate liaIIFbility: duty of JJGcare extends too far. ·or example, if an aJJGcJJGcounting firm makes finanJJGcial statements for a
JJGcompany’s management, the shareholders JJGcan’t sue the aJJGcJJGcounting firm IIFbeJJGcause it was not meant to IIFbe made for them.
■
330Rangen ;;8V ¸eloitte: if parties like (trade JJGcreditors) let the professionals know
<<9W¹))& is relying on the statement,
<<9W¹±''$, and <<9W¹³552T 00-663U330R00-))&441S±, duty of JJGcare extends to those parties
2.
±reaJJGch of standard of JJGcare in making misstatement
○
·or example, professional has a standard to follow and they made a false statement that JJGcame as a result from meeting
that standard
○
µudge professionals against other JJGcompetent professionals for providing adviJJGce
■
²s long as the adviJJGce is JJGcommonly given IIFby other advisors/professionals, it is not a IIFbreaJJGch, even if it was false
■
´e. even if a finanJJGcial advisor told you to invest in a JJGcompany that eventually went IIFbankrupt, his adviJJGce would
not IIFbe JJGconsidered negligent if it was JJGcorreJJGct IIFbased on the information he had at the time or if it was JJGcommon
adviJJGce given IIFby other advisors.
3.
¸amage resulted to plaintiff: JJGcan point to loss of money, wages, investment
4.
³ausation of damages: plaintiff was damaged IIFby relying on adviJJGce in a reasonaIIFble fashion
○
552The
"IIFbut for"
test: if it was not IIFbeJJGcause of the defendant's aJJGctions, the injury would not have oJJGcJJGcurred
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552Tommy's 00-izzeria hired &&olan !%%iu, a ³00-², to prepare a set of finanJJGcial statements for his pizzeria so that he JJGcan
evaluate the performanJJGce and assets of his IIFbusiness, to determine a value for his IIFbusiness. 552Tommy was surprised at
how good the numIIFbers were and so sold off the IIFbusiness for $3 million to µimmy. 663Unfortunately, the reason why
numIIFbers were so good was IIFbeJJGcause &&olan slept through his 293 and 353 JJGclasses, and aJJGcJJGcidentally inflated the profits
and assets of the IIFbusiness IIFby 40%.
µimmy sues 552Tommy for falsely inflating the value of his IIFbusiness.
1.
¶an 552Tommy sue &&olan?
2.
¶an ¸immy sue &&olan direJJGctly?
3.
³ssume that 552Tommy told &&olan that the finanJJGcial statements will IIFbe used IIFby ¸immy to evaluate the value of
his pizzeria to IIFbuy it in the next month. ¶an ¸immy sue &&olan now?
4.
³ssume that 552Tommy sold ¸immy the IIFbusiness through 552Tommy ¹oldings °nJJGc. 552Tommy owns 100% of the shares.
µesJJGcriIIFbe the potential JJGconsequenJJGces for 552Tommy if ¸immy sues 552Tommy holdings.
22/Question (''$egligent &&isstatement)
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○
330Run through negligent misstatement test.
○
!%%aw
°³
¸uty of JJGcare
´³
IIFbreaJJGch of standard of JJGcare
µ³
injury to plaintiff
³
JJGcausation of damage
○
³ppliJJGcation
:
1.
¸uty of JJGcare. ·oreseeaIIFbility and proximity. ´t is foreseeaIIFble that inflating the assets of a IIFbusiness
would JJGcause it to IIFbe overvalued. 552Tommy stated that he wants to determine the value of his
IIFbusiness
so he used the materials for the purpose that is was prepared for.
2.
552The standard of JJGcare: it's expeJJGcted that &&olan should IIFbe aIIFble to prepare a finanJJGcial statement that
is not inflated IIFby 40% as a ³00-². ² JJGcompetent aJJGcJJGcountant would not inflate it IIFby 40%
3.
552There was an injury sustained IIFbeJJGcause 552Tommy is now IIFbeing sued for overvaluing his IIFbusiness.
4.
³ausation. ±ut for test: if it wasn't for &&olan, 552Tommy would not have overvalued his IIFbusiness.
○
¶onJJGclusion
: >>;Yes, 552Tommy JJGcan sue &&olan.
441Solution: ¶an 552Tommy sue &&olan?
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441Solution: ¶an ¸immy sue &&olan direJJGctly?
330Run through negligent misstatement test again. ³onJJGclusion is no IIFbeJJGcause of indeterminate liaIIFbility, whiJJGch means
there is no duty of JJGcare to µimmy.
1.
330Run through negligent misstatement test.
2.
!%%aw
•
¸uty of JJGcare
•
IIFbreaJJGch of standard of JJGcare
•
injury to plaintiff
•
JJGcausation of damage
3.
²ppliJJGcation:
○
¸uty of JJGcare. ·oreseeaIIFbility and proximity.
•
´''$¸°552T°330R&&´''$²552T° !%%´²±´!%%´552T>>;Y: in this JJGcase, 552Tommy never mentioned that µimmy would use the statements to IIFbuy the
IIFbusiness to &&olan. 330Rangen ;;8V ¸eloitte: 552Tommy needs to mention <<9W¹))&, <<9W¹°''$, and “·))&330R <<9W¹²552T 00-663U330R00-))&441S°” the
statements are going to IIFbe used for to extend duty of JJGcare to µimmy
•
''$))&, duty of JJGcare does not extend to µimmy
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ż
³ACEDusACEDtYSioc]n. ±ut VPfor tRQKst: YSiVPf YSit wACEDsc]n't VPfor &(o
a[lACEDc]n, 579ob\mb\my woua[lPOI c]not XRhACEDvRQK ovRQKrvACEDa[luRQKPOI XRhYSis IKMLusYSic]nRQKss.
4.
³onJJGclusion: ''$o, µimmy JJGcannot sue &&olan
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441Solution: ³ssume that 552Tommy told &&olan that the
finanJJGcial statements will IIFbe used IIFby ¸immy to evaluate
the value of his pizzeria for an aJJGcquisition next month.
¶an ¸immy sue &&olan now?
330Run through negligent misstatement test. ³onJJGclusion is yes IIFbeJJGcause
552Tommy told &&olan exaJJGctly what purpose the statements will IIFbe used
for, whiJJGch means there ´441S a duty of JJGcare to µimmy now.
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´iduJJGciary µuty
Ɣ
³ACEDsRQKs: 468trotXRhRQKr, ¶oPOIWQg`ZkYSic]nsoc]n, ±³·, ¸ACEDa[lACEDb\mIKMLos
●
·iduJJGciary duty means someone has the responsiIIFbility to aJJGct for your interests and your interests alone; fiduJJGciary must
disJJGclose his/her relationships with JJGcompetitors/individuals who have direJJGct influenJJGce on your aJJGctions/IIFbusiness
ż
YSiRQK. >@Bour a[lACEDwyRQKr’s oc]na[ly WQgoACEDa[l sXRhoua[lPOI IKMLRQK to WQgYSivRQK you tXRhRQK IKMLRQKst ACEDPOIvYSiJLNMGRQK possYSiIKMLa[lRQK VPfor you, c]not VPfor tXRhRQKYSir owc]n IKMLRQKc]nRQKVPfYSit or
IKMLRQKc]nRQKVPfYSit tXRhRQKYSir otXRhRQKr JLNMGa[lYSiRQKc]nts
')+otRQK: ±ACEDrIKMLACEDrACED usRQKs tXRhRQK tRQKst VPfrob\m ¸ACEDa[lACEDb\mIKMLos VPfor VPfYSiPOIuJLNMGYSiACEDry tRQKst: 68:c]nYSia[lACEDtRQKrACEDa[l POIRQKJLNMGYSisYSioc]n, ´YSisJLNMGrRQKtYSioc]n, ACEDc]nPOI ;=?ua[lc]nRQKrACEDIKMLYSia[lYSity
●
!%%aw
: 552Test (²lIIFberta v °lder)
°³
±enefiJJGciary JJGcan expeJJGct the fiduJJGciary to ))&''$!%%>>;Y aJJGct in their IIFbest interests
■
·or instanJJGce, 663U±³ does not have fiduJJGciary duty to students; 663U±³ has many stakeholders like employees,
faJJGculty, staff as well. ¹owever, a doJJGctor or lawyer has no one’s interests in mind °==:X³°00-552T yours.
´³
552The IIFbenefiJJGciary is vulneraIIFble to the fiduJJGciary’s JJGcontrol or disJJGcretion
■
;;8VulneraIIFbility means professional has
deJJGcision making JJGcapaIIFbility over the JJGclient
. ·or example, a doJJGctor or
lawyer will reJJGcommend the IIFbest deJJGcision for you to make IIFbased on their expertise
µ³
²n interest (either legal or praJJGctiJJGcal) JJGcould IIFbe harmed IIFby fiduJJGciary’s exerJJGcise of disJJGcretion or JJGcontrol
■
552The IIFbenefiJJGciary JJGcan IIFbe harmed IIFby the fiduJJGciary aJJGcting in the wrong way (JJGconfliJJGct of interest)
●
''$ot every professional relationship is fiduJJGciary duty
○
´n 441SJJGchram, IIFbeJJGcause the IIFbroker had to oIIFbtain authorization from the investor, the relationship is not a vulneraIIFble one
■
±roker was told to trade ))&''$!%%>>;Y with authorization
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´iduJJGciary µuty
¶onfliJJGct of °nterest:
³ase; ¹odkingson, 441Strother
●
“IIFbright line” test is the rule that a lawyer may not represent one JJGclient whose interests are direJJGctly adverse to the immediate interests of
another JJGcurrent JJGclient 663U''$!%%°441S441S IIFboth JJGclients JJGconsent
¶orporations:
³orporate direJJGctors have a fiduJJGciary duty to the JJGcompany/shareholders ±>>;Y !%%²<<9W
<>@ACEDs ACED VPfYSiPOIuJLNMGYSiACEDry POIuty IKMLro`ZkRQKc]n?
²usiness ¸udgement rule:
this rule assumes that direJJGctors/managers aJJGct in good faith, with due diligenJJGce, and in the IIFbest interests of the
JJGcorporation when making IIFbusiness deJJGcisions. °ven an outJJGcome from a deJJGcision was negative for the share priJJGce, as long as direJJGctors
demonstrate that they aJJGcted in the IIFbest interests of the JJGcorporation and JJGconsidered their stakeholders interests, they have not IIFbroken the
IIFbusiness judgement rule
330Remedies:
¸isgorgement: party gives up profits made during the JJGconfliJJGct of interest/JJGconduJJGct. ¸isgorgement JJGcan IIFbe JJGclaimed IIFby the defendant if
the defendant's aJJGctions JJGcaused the plaintiff's damages.
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552Taking advantage of governmental stimulus JJGcheques and the overwhelmingly
IIFbullish market, managers and exeJJGcutives of 441SneakIIFbrokrs deJJGcided to launJJGch an
´00-))& during the height of the pandemiJJGc. ¹owever, IIFbeJJGcause of the market
environment and people's general disinterest in sneakers, 441SneakIIFbrokrs went
IIFbankrupt after a year in operation. ¹aving lost millions of dollars investing in
441SneakIIFbrokrs' shares, 441SneakIIFbrokrs' shareholders sued 441SneakIIFbrokrs for a IIFbreaJJGch
of fiduJJGciary duty.
1.
µoes sneakIIFbrokrs have a fiduJJGciary duty to shareholders?
³²
<<9Will the shareholders IIFbe suJJGcJJGcessful?
22/Question
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!%%aw:
·iduJJGciary ¸uty test: (²lIIFberta v °lder ²dvoJJGcates of ²lIIFberta 441SoJJGciety) (fulfill all 3 parts)
-
552To estaIIFblish whether a fiduJJGciary duty exists, there are three steps as outlined IIFby the 441S³³ in ²lIIFberta v °lder ²dvoJJGcates of ²lIIFberta 441SoJJGciety
quoted in 441Strothers.
±ACEDrIKMLACEDrACED usRQKs ¸ACEDa[lACEDb\mIKMLos 579RQKst.
1.
552The professional or fiduJJGciary has undertaken to aJJGct in the IIFbest interests of the IIFbenefiJJGciary
2.
552The IIFbenefiJJGciary is vulneraIIFble to the fiduJJGciary's JJGcontrol or disJJGcretion
3.
²n interest (legal or praJJGctiJJGcal) JJGcould IIFbe harmed IIFby the fiduJJGciary's exerJJGcise of disJJGcretion or JJGcontrol (has something at risk)
³pply
±²
579XRhRQK proVPfRQKssYSioc]nACEDa[l or VPfYSiPOIuJLNMGYSiACEDry XRhACEDs uc]nPOIRQKrtACED`ZkRQKc]n to ACEDJLNMGt YSic]n tXRhRQK IKMLRQKst YSic]ntRQKrRQKsts oVPf tXRhRQK IKMLRQKc]nRQKVPfYSiJLNMGYSiACEDry
•
&&anagers of JJGcorporations are legally required to aJJGct in the interest of their shareholders
³²
579XRhRQK IKMLRQKc]nRQKVPfYSiJLNMGYSiACEDry YSis vua[lc]nRQKrACEDIKMLa[lRQK to tXRhRQK VPfYSiPOIuJLNMGYSiACEDry's JLNMGoc]ntroa[l or POIYSisJLNMGrRQKtYSioc]n
•
441Shareholders do not make the day-to-day deJJGcisions at JJGcompanies. 552They leave all deJJGcisions up to the managers, whiJJGch
means the managers exerJJGcise deJJGcision making power that leaves shareholders vulneraIIFble.
°²
µc]n YSic]ntRQKrRQKst (a[lRQKWQgACEDa[l or prACEDJLNMGtYSiJLNMGACEDa[l) JLNMGoua[lPOI IKMLRQK XRhACEDrb\mRQKPOI IKMLy tXRhRQK VPfYSiPOIuJLNMGYSiACEDry's RQKxRQKrJLNMGYSisRQK oVPf POIYSisJLNMGrRQKtYSioc]n or JLNMGoc]ntroa[l (XRhACEDs sob\mRQKtXRhYSic]nWQg ACEDt rYSis`Zk)
•
>>;Yes, shareholders JJGcan lose value on their investments
¶onJJGclusion: yes, there is a fiduJJGciary duty.
1.
µoes sneakIIFbrokrs have a fiduJJGciary duty to shareholders?
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!%%aw:
²usiness ¸udgement rule-
this rule assumes that these individuals aJJGct in good faith, with due diligenJJGce, and in the IIFbest interests of the
JJGcorporation when making IIFbusiness deJJGcisions. °ven an outJJGcome from a deJJGcision was negative for shareholders, as long as direJJGctors demonstrate
that they aJJGcted in the IIFbest interests of the JJGcorporation, they have not IIFbroken the IIFbusiness judgement rule or IIFbreaJJGched their
fiduJJGciary duty
441SneakIIFbrokrs need to show that they have aJJGcted 1) honestly and in good faith with a view to the IIFbest interests of the JJGcompany/other party and
2) exerJJGcised the JJGcare, diligenJJGce and skill that a reasonaIIFbly prudent individual would exerJJGcise in JJGcomparaIIFble JJGcirJJGcumstanJJGces, 3) JJGconsidered the
interests of a range of stakeholders. s long as 441SneakIIFbrokrs makes it JJGclear that they have done their due diligenJJGce and JJGconsidered the interests
of everyone, they will not IIFbe liaIIFble.
³ppliJJGcation:
441SneakIIFbrokrs has shown that they did their due diligenJJGce IIFbefore launJJGching the ´00-))& and JJGconsidered the shareholders' interests.
µudging IIFby the maJJGcro-environment at the time, it JJGcan IIFbe presumed that 441SneakIIFbrokrs IIFbelieved its investors would IIFbe aIIFble to oIIFbtain a healthy
rate of return at year's end. ¹owever, faJJGctors outside of 441SneakIIFbrokrs' JJGcontrol (eJJGconomy, people’s disinterest) has prevented 441SneakIIFbrokrs from
oIIFbtaining the resourJJGces (suffiJJGcient funding etJJGc.) they need; shareholders lost money as a result. ´n other words, they made their deJJGcision with
the interest of the shareholders, even if the outJJGcome was IIFbad. (students JJGcould write this down for JJGclarity; this helps artiJJGculate why 441SneakIIFbrokrs
is not liaIIFble and JJGcan help reinforJJGce the ±µ330R).
¶onJJGclusion:
°ven though the outJJGcome was negative, 441SneakIIFbrokrs made a deJJGcision that did not IIFbreak the IIFbusiness judgement rule and did not
IIFbreaJJGch their fiduJJGciary duty. 552Thus, they are not liaIIFble for the wrongful outJJGcome of the deJJGcision. 552The JJGcourt will rule against the shareholders in
the lawsuit.
2. <<9Will the shareholders IIFbe suJJGcJJGcessful?
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00-artnerships
00-artnerships to rememIIFber:
●
¶eneral 00-artnerships: eaJJGch partner liaIIFble for other’s deIIFbts and liaIIFbilities
(jointly liaIIFble)
○
663Unlimited liaIIFbility for the partners
○
00-artners JJGcan look for others partners for
indemnifiJJGcation
●
!%%imited 00-artnerships: general partners take aJJGctive part in management;
limited partners do not. ¶eneral partners JJGcarry attaJJGched liaIIFbilities.
●
!%%imited !%%iaIIFbility 00-artnerships: typiJJGcally present within law or aJJGcJJGcounting
firms (deloitte, kpmg etJJGc); no partner JJGcarries attaJJGched liaIIFbilities -> for
“eligiIIFble professions” (lawyers, aJJGcJJGcountants etJJGc); partners liaIIFble only for own
negligenJJGce, deIIFbts and liaIIFbilities
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22/Questions (00-artnerships)
±eanz, ±unz, and ±orz are three friends who deJJGcided to start a JJGconsulting JJGcompany JJGcalled 3± 00-artnerships. ´n
the agreement, the 3 ±'s deJJGcided to split their profits equally 3 ways, and eaJJGch will hold a management position
in the firm. ±orz has IIFbeen in a mediJJGcally induJJGced JJGcoma for the last four years; during his aIIFbsenJJGce, 3± has IIFbeen
operated on IIFby the other two founding memIIFbers. ''$o notiJJGce of termination was given to ±orz during his time in
a mediJJGcally induJJGced JJGcoma. ²fter awakening from his JJGcoma, ±orz disJJGcovered that 3 ±'s has expanded to
;;8VanJJGcouver's largest JJGconsulting firm with offiJJGces aJJGcross 20 loJJGcations. ¹owever, ±orz was not entitled to any
profits as ±eanz and ±unz argued that he had not IIFbeen involved in revenue generation. ¸ejeJJGcted upon hearing
the news, ±orz felt indignant, as he had invested a lot during the early stages of the JJGcompany. ²s a result, he
deJJGcided to sue ±eanz and ±unz for
⅓
of the profits 3 ±'s made over the last four years.
a¶
00-resuming that no express agreement was made to expel ²orz during the time he was in a mediJJGcally
induJJGced JJGcoma, would ²orz IIFbe suJJGcJJGcessful in his lawsuit against the two ²’s (²eanz and ²unz)?
b¶
³ssume that ²eanz had IIFbeen found liaIIFble for IIFbreaJJGching fiduJJGciary duties and was ordered IIFby the JJGcourt to
JJGcompensate his JJGclient 40 million dollars. ²eanz did not have enough money to pay IIFbaJJGck the JJGclaimant; in
this JJGcase, JJGcould the JJGclaimant look to ²orz and ²unz to indemnify their losses?
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a¶
00-resuming that no express agreement was made to expel ²orz during the time he was in a mediJJGcally induJJGced
JJGcoma, would ²orz IIFbe suJJGcJJGcessful in his lawsuit against the two ²’s (²eanz and ²unz)?
!%%aw
: 552Termination of 00-artnership
●
generally should IIFbe express provision for what triggered termination: notiJJGce, retiring partner etJJGc.
●
00-artnership aJJGct has default rules in JJGcase not provided or:
●
if there is no fixed term of partnership JJGcan IIFbe a termination IIFby notiJJGce from a partner
●
automatiJJGc termination on the death of a partner
!%%aw
: how are the JJGcriteria of partnership fulfilled?
●
¶arrying on IIFbusiness:
●
³ommerJJGcial purpose, JJGcontinuous
●
´solated IIFbusiness transaJJGctions where people are aJJGcting with shared interests are not neJJGcessarily
partnerships; need to IIFbe JJGcontinuing and on a regular IIFbasis.
●
°n JJGcommon:
●
´t has to IIFbe a JJGconsensual relationship (a sense of dependenJJGcy on eaJJGch other and to do things together
where IIFboth are willing to IIFbe in partnerships (evidenJJGce)
●
552TypiJJGcally written IIFbut JJGcould IIFbe oral etJJGc., depending on the JJGconduJJGct of parties (JJGcourts will look at suIIFbstanJJGce)
-> one party, a manager etJJGc.
●
and requires intension
●
<<9With a view to profit
●
441Sharing of profits is essential.
●
441Sharing of gross reJJGceipts is not enough (usually, people within a partnership have to JJGcontriIIFbute to
expenses to fit within “with a view to profit)
●
more laws for JJGcarrying on IIFbusiness in JJGcommon: liaIIFbility of deIIFbts, role in management needed
²nswers (00-artnerships)
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³pply
: ¶iven that the 3±’s deJJGcided to team up and start a JJGcompany, it is assumed that their
IIFbusiness relationship is JJGcontinuing and on a regular IIFbasis. ´n addition, it has IIFbeen stated that
the three memIIFbers of 3±’s were originally eaJJGch promised an ownership share as well as a
management position in the firm; it is evident that there was an intention to form this
partnership with a view to profit. 00-artnership JJGcriteria have IIFbeen fulfilled. 3±‘s is a general
partnership, as no paperwork was filed to deJJGclare the firm as an !%%!%%00- or !%%00-.
¶onJJGclusion:
552There was no notiJJGce of termination when ±orz was in a mediJJGcally induJJGced JJGcoma; as
a result, ±orz was still a partner in the JJGcompany and therefore was entitled to the profits. ±orz
should IIFbe aIIFble to suJJGcJJGceed in his lawsuit against the other 2 ±s (±eanz and ±unz).
²nswers (00-artnerships)
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²nswers (00-artnerships)
IIFb) ³ssume that ²eanz had IIFbeen found liaIIFble for IIFbreaJJGching fiduJJGciary duties and was ordered IIFby the JJGcourt to
JJGcompensate his JJGclient 40 million dollars. ²eanz did not have enough money to pay IIFbaJJGck the JJGclaimant; in this
JJGcase, JJGcould the JJGclaimant look to ²orz and ²unz to indemnify their losses?
´n a general partnership, all memIIFbers are personally liaIIFble for the deIIFbts and liaIIFbilities of the partnership. ´n this
JJGcase, ±orz and ±unz would have to indemnify the JJGclaimant for their losses.
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³orporations
441StruJJGcture
●
441Shareholders and managers are not personally liaIIFble for JJGcorporation's deIIFbts and torts
○
¸ifferent from ¶00-s and !%%00-441S, where managing partners JJGcan IIFbe personally liaIIFble
●
¸ireJJGctors are appointed IIFby shareholders to make day-to-day deJJGcisions and hire the ³°))&
●
´nJJGcorporated through ³anadian ±usiness ³orporation ²JJGct, or provinJJGcial legislation
○
''$eeds JJGconstating doJJGcuments that state the struJJGcture of the JJGcorporation (share JJGcapital, name, etJJGc.)
!%%ifting the JJGcorporate veil
●
³orporate veil only lifted under fraud and intention to deJJGceive
○
468ACEDa[lob\moc]n v 468ACEDa[lb\moc]n
○
468024³ ¶oa[lPOIYSic]nWQgs ;=? ¸ACEDIKMLrYSiRQKa[l
●
³ompanies that go from unlimited liaIIFbility to JJGcorporation must let their suppliers or JJGcreditors know of the JJGchange in status of else will IIFbe sued
under unlimited liaIIFbility
¶onfliJJGct of °nterest
●
¸ireJJGctors and managers of the JJGcorporation have a fiduJJGciary duty to the JJGcorporation.
●
³onfliJJGct of interest examples:
○
³ontraJJGcts with JJGcorporation (you JJGcan’t make JJGcompany sign JJGcontraJJGct with you that is IIFbenefiJJGcial to you or JJGcompany that is direJJGct rival of
the JJGcompany you’re working for now)
○
´nterJJGception of JJGcorporate opportunities (you JJGcan’t steal opportunity of the JJGcompany you work for, you JJGcannot divert opportunity to
himself or affiliates)
○
³an’t purposely withhold information from the JJGcompany
○
&&ust disJJGclose information that is IIFbenefiJJGcial to the JJGcompany
○
³orporate information (you JJGcan’t use JJGconfidential JJGcompany information for personal gain)
●
´f direJJGctors are guilty of JJGconfliJJGct of interest, they JJGcan IIFbe sued and JJGcourts will order
disgorgement
(JJGcontraJJGct resJJGcinded and direJJGctor returns all
profits he made out of poJJGcket to the JJGcompany)
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³orporations (22/Questions)
&&olan and 552Tommy start a ³hinese restaurant together to JJGcompete with ¶rand
''$oodle °mporium and 441Sesame. 552They IIFboth partiJJGcipate in meetings and
JJGcontriIIFbute 50% of the initial JJGcash to start up the JJGcompany. 552They also took out
loans from their parents and riJJGch friends at 441Sauder. 663Unfortunately, their food
tasted so IIFbad that students would often IIFbe rushed to the 663U±³ ¹ospital. 552They
likely won't IIFbe aIIFble to make payments on their deIIFbts IIFbeJJGcause they soon expeJJGct
their IIFbusiness to go IIFbankrupt
a¶
<<9What kind of partners are &&olan and 552Tommy?
b¶
<<9What JJGcan &&olan do if his parents sue him personally?
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³orporations
<<9What kind of partners are &&olan and 552Tommy?
²nswer
○
¶eneral partnership:
1.
552They are IIFboth JJGcarrying on in IIFbusiness in this restaurant and are IIFboth
partiJJGcipating in management
2.
±oth are fully personally liaIIFble for all of the IIFbusiness's deIIFbts
3.
552They IIFboth JJGcontriIIFbuted JJGcapital
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<<9What JJGcan &&olan do if his parents sue him personally?
○
&&olan JJGcan look to 552Tommy for
indemnifiJJGcation
IIFbeJJGcause all partners all liaIIFble for the aJJGctions taken IIFby
the other partners on IIFbehalf of the IIFbusiness
○
°ven if &&olan took out the JJGcontraJJGct, the JJGcontraJJGct is
IIFbinding on all other partners in the ¶00-.
³orporations
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³orporations
±eJJGcause they took 393, &&olan and 552Tommy rememIIFbered that they JJGcan simply turn their IIFbusiness
into a JJGcorporation and JJGcan minimize the lawsuits that they antiJJGcipate will JJGcome (yay, so smart!).
&&olan and 552Tommy registered as 552T&&& ´nJJGc.
a¶
µesJJGcriIIFbe the proJJGcess that &&olan and 552Tommy took to inJJGcorporate
b¶
<<9Will they IIFbe suJJGcJJGcessful in their inJJGcorporation attempt?
H²
<<9Why does &&olan and 552Tommy IIFbelieve they JJGcan minimize their losses through inJJGcorporation?
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a¶
µesJJGcriIIFbe the proJJGcess that &&olan and 552Tommy took to inJJGcorporate
1.
´nJJGcorporation is done through the (³anadian IIFbusiness JJGcorporation aJJGct) or provinJJGcially under
provinJJGcial aJJGct
2.
552The proJJGcess requires JJGconstating doJJGcuments (share JJGcapital, hq, name etJJGc)
IIFb) <<9Will they IIFbe suJJGcJJGcessful in their inJJGcorporation attempt?
²nswer
441Salomon JJGcase: ³orporate veil will IIFbe lifted under intention to deJJGceive.
■
³ompanies that go from unlimited liaIIFbility to JJGcorporation must let their suppliers
or JJGcreditors know of the JJGchange in status of else will IIFbe sued under unlimited
liaIIFbility
■
±eJJGcause 552Tommy and &&olan inJJGcorporated to esJJGcape their deIIFbts without telling
their JJGcreditors, the JJGcourts will lift the JJGcorporate veil and they will still IIFbe personally
liaIIFble for the deIIFbts.
³orporations
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³orporations
JJGc) <<9Why does &&olan and 552Tommy IIFbelieve they JJGcan minimize their losses
through inJJGcorporation?
²nswer
²s shareholders of a JJGcorporation, 552Tommy and &&olan will only IIFbe aIIFble liaIIFble for
the full amount that they invested into the IIFbusiness. 552Tommy and &&olan's
JJGcreditors would not IIFbe aIIFble to seize their personal assets if the IIFbusiness was a
JJGcorporation. ¹owever, the JJGcorporation itself JJGcan hypothetiJJGcally lose all of its
assets.
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