MIDTERM MATERIAL

Public Law and Private Law: Public law governs matters between people and governments, including Constitutional Law, Criminal Law, Tax Law, and Administrative Law. Private law relates to individuals and their interactions, such as Tort Law and Contract Law. R esolving Legal Disputes : When people have a legal dispute, they can resolve it in three ways: Negotiation: This is an informal process where the disputing parties, possibly with a lawyer, try to reach a compromise. It's relatively low-cost but requires time for discussions. Alternative Dispute Resolution: If negotiation doesn't work, parties may turn to Mediation or Arbitration: 1-Mediation: Parties in a legal dispute meet with a mediator, an expert who reviews their positions, offers advice, and suggests solutions privately. Costs are shared and range from $500 to $5,000. The mediator doesn't impose binding decisions. 2-Arbitration: Parties agree to an arbitrator for a binding decision. It's less formal than court, but evidence is presented, and an "Arbitration Brief" is prepared. Costs are shared and similar to mediation. Common in international disputes for structured resolution without appeal. Litigation: If negotiation and alternative dispute resolution fail, the parties may go to court, where they become plaintiffs (those who initiate the lawsuit) and defendants (those who defend against the lawsuit). Depending on the case, there can be multiple plaintiffs and defendants. Additional parties, like third parties, can be brought in if someone else might be responsible for the dispute. *In international disputes, arbitration is common, while litigation involves going to court and following formal legal procedures. In a legal action with a claim of over $50,000 or as required by court rules, the following are the typical steps: 1-Statement of Claim: The plaintiff, usually with a lawyer, initiates the action by filing a legal document called a Statement of Claim, outlining the parties involved, the relief sought, and the circumstances of the claim. 2-Service: The plaintiff's lawyer serves the Statement of Claim to the defendant(s). 3-Statement of Defense: The defendant's lawyer prepares and serves a Statement of Defense, constituting the initial pleadings in the lawsuit. 4-Mediation: After the pleadings are exchanged, the parties usually engage in mediation to attempt a settlement. 5-Examinations for Discovery: If mediation doesn't lead to a resolution, the next step involves two forms of discovery: document discovery (where relevant documents are exchanged) and oral examinations, allowing each party's lawyer to question the other party. This process helps each side understand the other's case. 6-Setting for Trial: Once discoveries are done, the action is prepared for trial by setting it down for trial. 7-Pretrial Conference: A conference is held before a judge, not the trial judge, where the parties and their lawyers present their positions. The judge offers an opinion on the likely trial outcome, encouraging potential settlements. 8-Trial: If there's no settlement, the case proceeds to trial, either before a judge alone or a judge and a jury, depending on procedural rules. Evidence is presented, and a judgment is rendered. 9-Enforcement: The successful party can enforce the judgment against the losing party. 10-Appeal: If one party is dissatisfied with the trial's outcome, they have the right to appeal to a higher court, usually the Ontario Court of Appeal. Costs in litigation refer to the legal fees and reasonable expenses incurred by a party in a lawsuit. Generally, the rule is that the winning party at trial is awarded costs based on court-established scales. There are three : 1-Partial Indemnity Costs: This gives the winning party between half to two- thirds of their legal fees and all reasonable expenses. 2-Substantial Indemnity Costs: This award grants the winning party about three-quarters or slightly more of their legal fees and reasonable expenses. 3-Solicitor and His Own Client Costs: This punitive award aims to penalize a party for misconduct or bringing a frivolous action. The party is reimbursed for their legal expenses in full. The Ontario Small Claims Court handles cases up to $25,000. For claims up to $50,000, a simplified procedure can cut costs to around $5,000 to $20,000 by using affidavits instead of discovery. But in cases over $50,000, litigation costs rise rapidly, often reaching $50,000 to $100,000 or more, which can be financially challenging for even the winning party . 3

B-2- A Special Case of Invitation to Treat: Special Case: Common law distinguishes between the formation of contracts involving individuals and contracts for goods on store shelves or racks. Goods on store shelves with price tags are considered invitations to treat. The customer becomes the offer or when they take the goods to the cashier or seller. Acceptance: Some sources consider acceptance to occur when the cashier takes the money, while others, like the author, suggest that it happens when the cashier rings in the goods. Payment: Payment of the price is technically irrelevant to the formation of the contract; the crucial point is the act of taking the goods to the cashier and ringing in the price. C:EVENTS WHICH BRING AN OFFER TO AN END SO NO CONTRACT IS FORMED. There are a number of events which, should any of them occur, have the effect of terminating an offer. These are: Rejection, Revocation, Counter Offer, Lapse and Condition Precedent. C-1-Rejection occurs when the offeree explicitly says or does something that indicates the rejection of the offer. Examples: If the offeree responds with "No" or "I'm not interested," or simply remains silent or walks away, the offer is rejected. Consequence: Rejection ends the offer, making it impossible to form a contract. C-2- Revocation is the act of the offer or taking back or withdrawing the offer before it is accepted. Communication: For revocation to be effective, the offer or must communicate it to the offeree. Types: Revocation can be direct (communicated directly by the offer or to the offeree) or indirect (communicated through a third party). Consequence: Revocation terminates the offer, and the offeree cannot accept it to form a contract. C-3-Counter- Offer occurs when the offeree responds to an offer with a new offer, implicitly rejecting the original offer. Examples: If the offeree responds with a lower price, it is considered a counter-offer. Consequence: The original offer is terminated, and the roles of the offer or and offeree are reversed. Counter-offers can continue indefinitely. C-4- Lapse: There are four types of lapse: rejection, death of the offer or, death of the offeree, and reasonable time for acceptance based on the subject matter of the offer (perishable vs. non-perishable goods). Consequence: Lapse results in the offer coming to an end before acceptance, preventing contract formation. C-5- Condition Precedent: A condition precedent is a condition in an offer that must be fulfilled before an agreement can be formed. Example: An offer to buy a house is conditional on the offeree finding mortgage financing within a specified period. Consequence: If the condition precedent is not satisfied, no contract can be formed. THE CONCEPT OF CONSIDERATION REVISITED A quantum merit claim is a legal remedy used when there's no formal contract, and one party seeks compensation for services or goods provided. * It's used when there's no written contract or when existing contracts lack payment terms. *Based on the principle of unjust enrichment, ensuring one party isn't unfairly benefited. *Seeks payment for the reasonable value of services or goods and Doesn't require a pre-determined price. *Often used in oral agreements, contract disputes, emergency services, or unfinished work. *Courts determine fair compensation based on the circumstances. In essence, quantum merit ensures fairness when there's no clear contract, preventing one party from profiting unfairly at the expense of the other. "past and fresh consideration Fresh or New Consideration: When a new promise is made after a contract, it must be supported by fresh or new consideration. Fresh consideration essentially means that the new promise has its own consideration, separate from the original contract. 6

QUESTION 1: (a) A supplies vegetables to food stores. Today he met with B, a manager of a food store who needs to buy bushels of grapes. A sells the grapes for $ 10.00 a bushel. After looking at the grapes, B tells A that he’ll think about buying the grapes from A and will let him know later. Grapes are marketable within a two week period. 12 days have gone buy by and A has heard nothing from B. A now wants to sell the grapes to C. Advise A providing your reasons. Since the grapes are marketable within 14 days (2 weeks), and because common law says that A must have the right to sell the grapes, here, the failure by B to accept after 12 days, the offer has probably lapsed and so A can sell to C. (b) A and B are talking about A’s very sophisticated surround-sound amplifier which A bought for $ 8,000.00. A says he wants to sell the amplifier and B says I’ll give you $ 3,500.00 for it. A replies, I can’t give it up for less than $ 5,500.00, to which B says, I’ll give you $5,000.00. If A says “I’ll take the $ 5,000.00”, is there a contract. Explain your reasons. B’s first offer was for $3,500.00 (B was the offer or and A the offeree). When A replied he could not give it up for less than $5,500.00, this was a counter offer (making A the offer or and B the offeree) and brought the offer to buy at $3,500.00 to an end. When B says he’ll pay $5,000.00, this is a further counter offer by B to A (B is now the offer or and A the offeree) which brings the previous offer to an end, and when A says he will take the $5,000.00 this constitutes acceptance and creates a valid contract between A and B for purchase by B of A’s amplifier for $5,000.00. (c) A wants to build a house for his daughter, so he contacts, B, a builder and enters into a contract with B to build the house for 3 hundred thousand dollars. B, however, does a very poor job and when the daughter moves in she complains directly to B who tells her “too bad”. The daughter now wants to sue B. Advise the daughter providing your reasons. At common law, not being a party to the contract between A and B, C cannot enforce the contract against B by herself, since the Privity Rule says that only the parties to a contract can enforce the contract. However, now under consumer protection legislation C may now be able to sue B directly in damages. (d) A, a developer, enters into a contract with B, a land owner, to develop a subdivision on B’s land for $3 million dollars. The contract is oral. B allows A to begin development and so A begins to clear the land, and remove the soil. Shortly after A begins, B decides he does not want the land developed and cancels the contract with B, returning B’s money. Advise B providing your reasons. Since the contract is oral and in respect of land, under the Statute of Frauds, although there is a contract between A and B, the court will not allow B to enforce the contract against A, and thus B might be out of luck. Moreover, although B began to clear the land and remove the soil, there are no facts to tell us how much land was cleared and soil removed, so we may not be able to argue that these were acts of ownership in respect of the land which was the subject matter of the contract. Assuming a huge amount of land was cleared and soil removed and that this was at a substantial cost to B, then we could argue that this constituted evidence of ownership and then argue that the Doctrine of Part Performance applied to allow B to enforce the contract against A. However, we just do not have enough information from the facts in the question to make this conclusion. (e) C wants a loan and goes to B. B will not give C the loan unless someone guarantees it. C’s brother, A, now orally agrees with B to guarantee the loan and B gives C the money. When the loan comes due, C cannot pay it, so B brings an action against A on A’s guarantee. Explain whether C will succeed, providing your reasons. Under the Statute of Frauds, a guarantee must be in writing and signed by at least the guarantor to be enforceable. Since this guarantee was an oral guarantee, B will be out of luck and will not succeed in getting the money, because even if he tries to sue A, the court will refuse to enforce the guarantee and make A pay. QUESTION 2: (a) Which of the following can be revoked by the offer or? (a) an offer. (You cannot revoke a contract.) (a) an offer (b) a contract (b) At what stage in contracts would a party argue intention or capacity, before the contract or after it. Provide your reasons. After the contract was entered into, in order to try to get out of the contract by arguing that one of the parties did not have the capacity to enter into the contract. QUESTION 3 : (a) A has just offered to buy B’s boat for $ 20,000.00. In telling A he accepts the offer, B also tells him that the boat is in great condition, something that B knows is not true. When the contract is prepared it only refers to the boat and not B’s statement. Of course when A gets the boat, he finds is in need of substantial repairs. A wants to return the boat and get his money back. Advise A providing your reasons. (The answer can be approached in two ways based on different principles of contract law. However, for your purposes please use the Parol Evidence Rule Approach). Parol Evidence Rule – According to the parole evidence rule, A cannot do anything because the rule does not allow A to vary or contradict the terms of the written contract. However, there are exceptions to get around the rule. The first is condition precedent: A statement that ‘the boat is in great condition’ is a condition precedent, which must be satisfied before the written contract comes into existence. If accepted, this would mean that since the boat was not in great condition there is no contract and the parties would be restored to their pre- contract position. The second exception is collateral agreement. Here A will argue that his statement about the great condition of the boat was the consideration for the written contract. If accepted this would make the term a part of the contract and A would be entitled to either rescission (putting the parties back in their pre-contract position) or if they cannot be put back in their pre-contract position, A would sue B for damages amounting to the amount he paid for the boat. Misrepresentation - B’s statement about the great condition of the boat was a fraudulent misrepresented since B knew it was not true. Remedies for A would be rescission in contract and damages in tort. (b) On January 1 st , John enters into a contract with George whereby George will renovate John’s apartment building for $100,000.00 with the work to be completed by May 15th. The renovations will take 4 weeks (28 days) once construction starts. On April 16 th John offers George another $10,000.00 if George starts on time and so George starts on April 17 th , completing the work by May 15 th after which George asks John for $ 110,000.00. Advise John of his obligation(s) with your reasons. John is not obligated to give the extra $10,000 because there was no new/fresh consideration for his new promise of an extra $10,000 for finishing the work on time. John’s statement/promise is merely a gratuitous promise by John and thus John is not liable for the extra $10,000.00. (c) A offers to sell his truck to B, a minor for $ 5000.00. The truck is really only worth $2,500.00 and A is taking advantage of B. Trusting A, B pays the money and buys the truck, but later decides he does not want it. Providing your reasons, advise B. This is a contract by B, a minor for non-necessary goods. Thus B has the option of terminating the contract so long as he returns the truck in the same condition as he bought it. If B had entered into this contract in a drunken state, B would have the right to terminate the contract, return the truck in the same condition as purchased and get his money back as soon as he began to sober up and realize what he had entered 9

Defenses to Fundamental Breach: Limitation of Liability Clause: Limits one party's liability in case of a breach. Liquidated Damages Clause: Sets a specific monetary amount for damages if a breach occurs. Exclusion or Exemption Clause: Used to protect a party from liability for non-delivery or other failures due to certain events. Whether these clauses are enforceable depends on: (a) Whether the clause was brought to the innocent party's attention. (b) A strict common law approach that disallows the clause in case of a fundamental breach. (c) A construction/interpretation approach that examines the wording of the clause to determine its extent of protection based on the situation. **The enforceability of an exclusion/exemption clause involves all these considerations. Remedies of Injunction and Specific Performance: 1. Injunction: An injunction is a court order that restricts or prevents a party (usually the defendant) from performing a particular action or behaving in a specific way. It is commonly used alongside other remedies like rescission or damages. For instance, imagine a factory releasing toxic particles that harm a nearby neighborhood. In addition to seeking damages for cleanup and health issues, the affected individuals may request an injunction to immediately stop these emissions. An injunction is a vital remedy that helps prevent further harm before a court reaches a decision. 2. Specific Performance: Specific performance is another court order, but its purpose is to compel a party to fulfill their contractual obligations. For example, if an art collector (B) agrees to sell a unique Rembrandt painting to an art dealer (A) for $10 million but changes their mind, A may sue for specific performance. A wants the court to force B to deliver the painting as agreed. However, specific performance alone might not be sufficient since the legal process can take a long time, and B could dispose of the painting in the meantime. To safeguard A's interests, an injunction is also requested, which restricts B from dealing with the painting until a court judgment is made. *In practice, specific performance is usually used alongside an injunction. If a court grants specific performance, the party seeking it (A, in this case) typically must deposit the full contract price into court to show they are willing to perform as agreed. This ensures that if the court orders B to transfer the painting, B will receive the payment. *Specific performance is generally granted when the subject matter is unique or one-of-a-kind. If the item is readily available elsewhere, the court may not grant specific performance and instead recommend seeking damages. *In real legal cases involving specific performance, both an injunction and the deposit of the full contract price are often involved, in addition to potential claims for damages. CONTRACT SUMMARY 1. Mistake: Three types of Mistake: 1-1-Common/Mutual Mistake - where both parties are mistaken as to something in the contract 2-1-Unilateral Mistake – where one party is mistaken about something in the contract and the other party knows what the mistake is; generally contains an element of fraud 3-1 Mistake as to Identity – this occurs when one party wishes to enter into a contract with a second party, believing the second party is who it says it is; definitely involves fraud 2-The Remedy of Recission Recission is the remedy where a problem with a contract results in one party getting back what it gave and giving back what it received, restoring the parties to their pre-contract positions Recission = Problem with contract  Party A gets back what it received from B + Party B gives back what it received from A Where the court cannot restore the parties to their pre-contract positions through rescission, the remedy becomes damages 12

DISCHARGE OF CONTRACT QUESTION 1: Explain two main ways in which the obligations of the parties to a contract can be discharged. Performance of the contract and by agreement of the parties. QUESTION 2: On February 1 st A and B agree that A, in Montreal, will deliver goods to B, in London by ship on April 15 th . On March 21 st , A calls B and tells him that he will not ship the goods. a) Based on the above fact situation, advise B of his rights, providing your reasons. A has committed an express breach and express repudiation by telling B he will not ship the goods. A has also committed an anticipatory breach of contract. A having committed an anticipatory breach, B can choose/elect to either (a) affirm the contract and keep it alive, or (b) accept the breach, terminate the contract and sue B in damages, subject to mitigation. b) In the above fact situation assume that instead of telling B he will not ship the goods, A does ship the goods on April 1 st , and the route that A’s ship will take is first to Lisbon, Portugal, where it will remain for a week, then to Madrid, Spain, where it will remain for 6 days and then to London. Assume as well that when the ship gets to Lisbon on April 3rd, it has to stay in port for 8 days, because of a hurricane and does not get to Madrid until April 12 th and thus will not get to London by April 15 th . a) What is the event of the hurricane commonly called? Possibly a frustrating event but more likely a force majeure event b) Could A and B have contemplated that a hurricane might delay A’s ship getting to London on April 15 th so that A would be in breach of the agreement, and if so, what could they have done to deal with such a situation? Yes. A hurricane at sea can be contemplated by the parties. This it is not a frustrating event. To overcome this, A and B could put a limited liability clause or a liquidated damages clause into the contract. c) On January 1 st , A and B agree that A in Toronto will deliver goods by truck to B in Sarnia by February 1 st , for a contract price of $ 40,000.00. A’s truck leaves Toronto on January 27 th and while on route encounters a Winter snow storm in London, Ontario, that will keep the highway closed until February 2 nd . A can still get the goods to B by rail from London, Ontario, but it will cost A $ 15,000.00 that A really does not want to spend. Advise A whether he must complete the contract, providing your reasons. This is not a case of a frustrated contract. A must complete and deliver the goods because first, winter storms are foreseeable and even if they are not, A can still get them to Toronto, even though it is a hardship in costing him another $15,000.00. d) Same facts as in (c) except this time, on January 27 th when the truck get to London, Ontario, the highway is closed due to a freight train collision in London, in which a number of freight cars on one of the trains begin leaking toxic gas, requiring that the entire area of London be evacuated and closing the main highways, country roads and airports, stopping all methods of transportation to Sudbury until at least February 2 nd . This time advise A of his rights, providing your reasons. This would appear to be a case of a frustrated contract and A need not deliver. Both A and B are discharged from their respective obligations, since the circumstances are not foreseeable by the parties. e) A and B agree that A will sell a huge new turbine engine to B for use by B immediately on delivery for $ 150,000.00. B pays the purchase price on delivery, but finds that the turbine engine does not work, because it has not been assembled properly and is missing key parts. The contract contains a clause which reads, the parties agree that the seller will not be responsible for any loss or damage resulting from a failure of the engine to work properly and also will not be responsible for any damage or loss which the purchaser sustains should repairs to the engine become necessary . B estimates that getting the parts and then properly assembling the engine will cost him about $100,000.00. B now wants to return the engine and get his money back. Advise B of his rights providing your reasons. The issue here is whether the circumstances set out in the facts give rise to a fundamental breach by A (a breach going to the root or heart of the contract). Since the turbine engine does not work, because it has not been assembled properly and is missing key parts and the cost of repair is 2/3 the contract price, it can be argued that A has committed a fundamental breach. In this case, at strict common law, since A has committed a fundamental breach, the exclusion clause (the parties agree that the seller will not be responsible for any loss or damage resulting from a failure of the engine to work properly and also will not be responsible for any damage or loss which the purchaser sustains should repairs to the engine become necessary.) does not apply and B can either terminate the contract and get his money back (i.e. sue for rescission) or sue for damages to compensate him for his losses. However, there is a second approach when there is a fundamental breach. It is the construction/interpretation approach which requires that we read the exclusion clause to see if it is wide enough to protect A. Since the clause reads the parties agree that the seller will not be responsible for any loss or damage resulting from a failure of the engine to work properly and also will not be responsible for any damage or loss which the purchaser sustains should repairs to the engine become necessary, it would seem that it is wide enough to protect A. In such a case, B would have no rights against A. 15

Defenses to Negligence: Contributory Negligence: Contributory negligence is a partial defense in negligence cases, which reduces the damages awarded to the plaintiff if the plaintiff's actions contributed to their injuries. The reduction is based on the degree of the plaintiff's own negligence. Voluntary Assumption of Risk: is an absolute defense to negligence, often applied in sports. If individuals willingly engage in activities where they are aware of the risks involved, they cannot later sue for negligence if they are injured during the activity. This principle also applies outside of sports in cases where a person knowingly accepts the risks. Waiver: A waiver is a written agreement that allows one party to waive or give up their right to sue the other party for negligence. Typically used in contracts, such as sports leagues or recreational activities, it exempts one party from liability for injuries sustained during the activity. However, waivers must be read carefully, and they often apply only if the activity is conducted properly. Release: A release is a document where the injured party relinquishes their rights and releases the other party from any liability related to the injuries. It is used after negligence has occurred and may involve compensation for the injured party. The release is signed to protect the responsible party from future claims regarding the same incident. These defenses provide a legal basis for avoiding or reducing liability in negligence cases. THE CONCEPT OF VICARIOUS LIABILITY Vicarious liability is a legal concept where an employer or a party in a position of responsibility can be held liable for the actions or negligence of their employees or agents, as long as the actions occurred within the scope of employment. Primary Liability: In cases of negligence, the individual responsible for the negligence is primarily liable for any damages caused. Scope of Employment: Vicarious liability comes into play when an employee commits negligence during the scope of their employment. If the employee's actions were in the course of their work, their employer can also be held vicariously liable for the resulting damages 1-Delivery Driver: If a delivery driver causes an accident while working, both the driver and the employer can be held liable. 2-Surgeon and Hospital: A surgeon's negligence during surgery makes the surgeon primarily liable, but the hospital, as the employer, can be vicariously liable. 3-Contractor and Property Owner: If a contractor's negligence in construction leads to an injury, the contractor is primarily liable, and the property owner can be vicariously liable if they were part of the contract. Manufacturer's Liability: Strict Liability in the United States: Some U.S. jurisdictions have laws where manufacturers are strictly liable for injuries caused by defective products, without the need to prove negligence. This doesn't apply in Canada. Historical Context: In the past, consumers couldn't sue manufacturers directly for defective products due to privity of contract. They had to sue the retailer, who then sued the manufacturer. However, a landmark case in the 1930s, Donoghue and Stevenson, changed this, allowing consumers to sue manufacturers directly. Consumer protection laws have since strengthened these rights. Nuisance and Negligence: Nuisance can occur when one's actions interfere with another's property. In some cases, it can also involve negligence, such as when foreseeable harm results from a person's actions. For example, if a property owner, B, has an old and rusting tank that they know could leak, and it does, causing damage to A's property, it involves both negligence and nuisance. QUESTION 1: It is the middle of winter and the temperature is 0 degrees Fahrenheit or (30C). The furnace in Martin’s home stopped working, so Martin called a Happy Furnace Repair Company (HFRC) to have the furnace repaired. HFRC sent its best repairman, John, to Martin’s house to repair the furnace. John arrived at 5 p.m. and the repair to Martin’s furnace was his last call of the day. Also, John was in a hurry to get home, because it was his son’s first birthday. So John rushed the repairs and connected the wires very loosely. Then he turned the furnace on, made sure it was working, and left Martin’s house. During the day at Martin’s house and even in winter, the sunshine against the back of the house where the washroom was, heated the upstairs, so Martin had a habit of opening the window during the day to cool the upstairs of the house and then close it in the evening so the pipes would not freeze. Today and because of the repairs to the furnace, Martin forgot to close the window and left his house to go to stay with a friend for a couple of days. Just after Martin left, the furnace stopped working, because the vibration (shaking) caused when it was running, disconnected one of the loose wires. As a result, the temperature in the house continued to fall until it was well below freezing; and with the 18

Advantages of General Partnership: Lower startup costs compared to incorporation. Shared risk among partners, spreading the burden of financial losses. Access to more capital and expertise through multiple partners. Potential for every investor to be involved in managing the business. Risks of General Partnership: Personal assets of partners are exposed to claims by those dealing with the partnership, as well as judgment creditors. Partners can bind the partnership in contracts, and they have joint and several liability for debts and obligations. Difficulty in removing undesirable partners without explicit procedures in a partnership agreement, increasing the risk of liability due to their actions. Joint Liability: Joint liability means that if multiple individuals are jointly liable for a debt, all of them must be sued. Those who are sued can demand that the other liable parties be brought into legal action. A Limited Partnership: is an investment structure where one party, the limited partner, provides capital, while another party, the general partner, manages the business and assumes all liability. In this arrangement, the liability of limited partners is limited to their invested capital, while general partners are fully liable for the partnership's obligations. Profits are distributed according to a Limited Liability Partnership agreement, similar to a regular partnership agreement. To establish a limited partnership, a formal agreement is required, and the partnership must be registered with the government. If a limited partner becomes involved in managing or running the business, they lose their limited liability protection and become fully liable like general partners, essentially converting the partnership into a general partnership. Limited Partnerships provide some protection for investors but not for those actively involved in running the business. A Limited Liability Partnership (LLP) is a type of partnership with specific liability protections, and its treatment varies by province in Canada, including Ontario. In summary, a Limited Liability Partnership in Ontario offers specific liability protections, shielding partners from the negligence of others within the partnership. However, partners remain accountable for their own actions, and certain exceptions exist, such as criminal acts, fraud, or knowledge of negligence without appropriate preventive actions. General Description of Limited Liability Partnership: In most provinces, an LLP is essentially two partnerships: one is treated as a general partnership regarding debts and obligations, and the other is for cases of negligence. Treatment in Ontario: In Ontario, an LLP offers unique liability protections. It shields partners from the negligence or negligent acts of one partner, making only the negligent partner responsible for actions. Furthermore, in Ontario, it protects the other partners from any debts and obligations of the partnership incurred while it's designated as an LLP. Key Provisions from the Partnerships Act in Ontario: Partners in an LLP are not liable for the debts, liabilities, or obligations arising from the negligent or wrongful acts of another partner or employees, agents, or representatives of the partnership during the partnership's status as an LLP. This protection extends to other debts or obligations incurred during this status. 1. Limitations on Liability in Ontario: In Ontario, LLPs protect partners from the negligence of others in the partnership, but partners remain liable for their own negligence. Partners are also liable for the negligence of those they directly supervise. Partners can be held liable for the negligence of other partners or employees if the act is criminal, fraudulent, or if they knew about it but failed to prevent it. Partners' liability protection does not cover claims related to partnership obligations. 2. Applicability to Professionals: LLPs are typically for professionals in Canada. In Ontario, only certain professionals listed in Act and approved by their governing body can form LLPs. 3. Mandatory Requirements in Ontario: Forming an LLP in Ontario requires a Limited Liability Partnership Agreement that follows the Partnership Act. It must also be registered with the government under the Business Names Act of Ontario. 21

Corporation (Company) : is a legal entity granted the legal rights of a natural person, allowing it to conduct various activities such as owning, selling, leasing property, and legal actions like suing and being sued. In Canada, corporations are established under federal law, such as the Canada Business Corporations Act, or provincial legislation, like the Business Corporations Act in Ontario. Incorporation Procedure/Steps: 1-Begin by filling out the "Articles of Incorporation" form. The individuals initiating incorporation are called "first incorporators." 2-Choose a name for the corporation or opt for a numbered name if a suitable name isn't available. A NUANS search is performed to check name availability. If the name is acceptable, it is included in the Articles of Incorporation. However, if finding an available name is challenging or costly due to NUANS searches, the lawyer may suggest using a corporate number. In this case, the Articles of Incorporation leave a blank space for the government office to insert the number. For example, "Ontario Inc." could be paired with the number 12345679 to create "12345679 Ontario Inc." 3-Specify the share or unit ownership structure of the corporation in the Articles of Incorporation, typically including common shares and special/preference shares. 4-Submit the completed Articles of Incorporation to the government office responsible for incorporations. Upon approval, the government issues a certificate of incorporation, finalizing incorporation process. 5-Obtain corporate by-laws, outlining the rules for the corporation, and acquire a corporate minute book to document all corporation transactions. The first incorporators are designated as the directors. 6-Directors make resolutions or written decisions, including appointing officers, confirming the head office, issuing common and preferred shares, and passing a resolution to avoid costly annual audits. Officers may include positions like President, Vice-president, Secretary, and Treasurer. The first directors, who often also serve as the initial officers, are typically common shareholders. 7-Each year from the incorporation date, the corporation must hold an annual meeting of the directors and an annual general meeting of common shareholders. The directors approve financial statements during their annual meeting. At the annual shareholders' meeting, the acts of directors over the previous year are approved, new directors are elected, and officers for the next year are appointed. In small, privately-owned corporations, the first incorporators often continue as the initial directors, officers, and common shareholders. Publicly-traded corporations may have a different structure and governance. Ontario Inc.: "Inc." stands for "Incorporated." This suffix indicates that the business is incorporated and is a separate legal entity from its owners. This is a common choice for corporations in Ontario. Ontario Incorporated: This is an alternative to "Ontario Inc." The term "Incorporated" has the same meaning, indicating that the business is incorporated. Ontario Limited: "Limited" typically implies that the corporation's liability is limited. Shareholders are generally not personally responsible for the company's debts and obligations beyond their investments in the company. Ontario Ltd.: "Ltd." is an abbreviation for "Limited," and it carries the same meaning as "Ontario Limited." It indicates limited liability. Ontario Corp: "Corp" is a shortened form of "Corporation," which, like "Inc." and "Limited," signifies that the business is incorporated as a separate legal entity. Ontario Corporation: This is another option for indicating that the business is a corporation. "Corporation" carries the same legal implications as "Inc." or "Ltd." Each of these suffixes serves to inform others that the entity is a legally incorporated business and is subject to the associated legal regulations and protections. The choice of suffix is typically based on the preferences of the business owners and the availability of the desired name in the government's records. 22

Duties of Directors: Directors are responsible for the management decisions of the corporation but not day-to-day business affairs. They have a fiduciary duty to act in the corporation's best interests, avoiding conflicts of interest and not using insider information for personal gain. Breaching this duty can lead to personal liability for damages to the corporation. Directors owe a duty of loyalty, meaning they must not use corporate information for personal gain at the corporation's expense, like acquiring valuable property meant for the corporation. Shareholders Agreement: is important for common shareholders to define their rights and liabilities, appoint directors, specify the corporation's details, and resolve disputes, often by allowing a buyout of a shareholder's common shares in case of a deadlock. Liability of Shareholders: In a corporation, shareholders' liability is typically limited to the value of their shares or investment. However, in privately held corporations, directors (who are often common shareholders) may face personal liability for various reasons, including certain financial obligations and legal breaches. Rights of Minority Shareholders: Minority shareholders, who do not hold a majority of common shares, can seek protection under the oppression remedy in the governing statute to address unfair actions by majority shareholders or directors. How a Corporation Ends (Dissolution): Corporations must pay annual fees, and failing to do so can lead to the cancellation of their certificate of incorporation. Alternatively, its directors, approved by shareholders, or due to insolvency and creditor actions, can dissolve a corporation through a decision. Purchase and Sale of a Corporation: Corporations can sell their assets or common shares to buyers. There are tax differences between asset and share purchases, which can influence the choice of sale type. Public Offering Corporations: These are publicly traded corporations subject to specific securities regulations, and their governance structure may differ from privately held corporations. Directors in public corporations may not necessarily be shareholders. Franchise : A franchise is a business arrangement where a franchisee purchases the rights to operate from a franchisor. The franchisor provides support, training, and the use of its brand, but the franchisee operates independently. Franchise Components: Franchise include location assistance, training, supplier specifications, and trademark usage. Franchisees pay royalties and contribute to advertising funds for these benefits Independence and Responsibility: Despite franchisor support, the franchisee is considered an independent business person. The success of the franchise depends on the franchisee's management. Legislation and Disclosure: To protect franchisees, government regulations, such as the Arthur Wish art Act (Franchise Disclosure) in Ontario, require full and transparent disclosure by franchisors. If franchisors do not provide necessary disclosure, franchisees can terminate the contract within two years. QUESTION 1: Two professionals wish to start up a charitable organization. They will first pay their salaries out of the charitable donations received and then give the balance to charities they select. They want to start a partnership to do this. Advise them providing your reasons. The Partnership Act defines a partnership, as two or more individuals engaged in business with a view to profit. Since a charitable organization is not for profit, they cannot use a partnership for it. QUESTION 2: Explain a limited liability partnership and provide any mandatory requirements for it. In Ontario, a limited liability partnership protects the partners from the negligence or negligent acts of one partner who himself or herself is solely responsible for the negligence (only the negligent partner is responsible), and further, such a partnership protects the other partners from any debts and obligations of the partnership incurred while the partnership is a limited liability partnership. Mandatory to have a limited liability partnership agreement and must register it with the government. QUESTION 3: Explain a limited partnership and provide any mandatory requirements for it. it is a partnership where one person or group of persons, called the limited partner, puts up capital, and the other person or group of persons, called the general partner, runs the business and takes on all liability for it. In a limited partnership, the liability of the limited partner(s) is/are limited to the amount of his/her/its/their investment, while the general partner(s) is/are liable for everything. Profits are shared according to what is set out in the Limited Partnership agreement, which is very much like a regular partnership agreement, although here, it sets out who the limited partner is and who the general partner is. In fact, in order to create a limited partnership, there must be a limited partnership agreement and the partnership must be registered with the government. QUESTION 4: Explain why a partnership agreement is necessary for a general partnership. To permit a general partnership to sue and be sued in the firm/partnership name. This becomes very important where there are a number of partners because without registering, in a law suit each partner would either be plaintiff or a defendant, as the case may be. 23

QUESTION 5: Explain the following: a. what a corporation is: A legal entity created by statute and given the rights of a natural person. b. the role of the shareholders, if any in a corporation and the extent to which they would normally have liability The common shareholders vote for and elect the directors at each annual meeting of the shareholders. Normally, and subject only to fraud, their liability is limited to the amount they paid for their shares. Otherwise, they are fully insulated from liability. c. the role of the directors of a corporation The directors manage the affairs of the corporation. They are responsible for management only. d. the role of the officers of the corporation. The officers do the day-to-day business of the corporation UESTION 6: Provide 5 different ways that directors can incur personal liability. For GST not paid by the corporation For sales tax not paid by the corporation For an offence under the Competition Act For an offence under Environmental Protection legislation For a breach of fiduciary duty; For a breach of the duty of loyalty. QUESTION 7: Minority shareholders have two types of action that they can bring. State each type of action and the circumstances under which it can be brought. 1. Oppression Remedy brought under the oppression remedy section of the act, where the majority shareholders oppress one minority shareholder. 2. Derivative action, brought by one shareholder on behalf of himself and all other shareholders against the directors usually for a breach of the duty of loyalty or sometime a breach of fiduciary duty. QUESTION 8: A Corporation can be sold in two different ways. State and explain each way. It can sell its assets to someone who wants to buy them (commonly referred to as an asset purchase) or sell its common shares to someone. Here, the purchaser buys the assets of the corporation, such as real property, and personal property including, inventory, customer and supplier lists, patents, trademarks, copyrights, fleet of trucks, receivables and bank account moneys and other of its investments. A second way in which a corporation can be bought and sold is where the purchaser buys all of the common/voting shares in the corporation (commonly referred to as a share purchase). In this case the purchaser buys everything that belongs to the corporation, including the potential for liability arising out of any legal actions against it. QUESTION 9: Two friends want to start up a business. One has money to invest but wants nothing to do with running it and the other is simply prepared to run the business. Explain with your reasons the form of business they will choose. Limited Partnership is the best form, since the one with money will become the limited partner, whose liability is limited to the amount invested and who does not rum the business and the other becomes the general partner liable for everything. Parties in Agency: The parties involved in agency are the principal, agent and a third party. Types of Agency: Contractual Agency: The principal retains an agent to facilitate a contract with a third party through a direct contract. Employer/Employee Agency: The principal is the employer, and the employee acts as an agent in contracting with third parties. Partner/Agent Agency: A partner in a partnership can act as an agent for the other partners and the partnership itself . Types of Agency Contracts: Agency arises through oral or written contracts. Contracts specify the agent's express authority to enter into contracts with third parties. Ostensible or apparent authority can also exist when the principal holds the agent out as having additional authority, making third parties believe so. Methods of Determining Contract Formation: To determine if a contract exists between the principal and third party: Check for express authority. If it exists, a contract exists. If no express authority, check for apparent or ostensible authority. If present, move to the next step. Assess whether the third party knew the agent lacked authority. If not, a contract exists. Liability of the Agent: When an agent enters into a contract without express authority, the principal can sue the agent for damages. However, if the agent has no assets, recovery might not be possible. Fiduciary Duty of Agents: All agents have a fiduciary duty to act in the best interests of the principal. Breaching this duty can lead to non-payment and potential lawsuits. Terminating the Agency Relationship: The agency relationship can be terminated in various ways: By performance (when the agent successfully procures a contract). According to the terms of the contract, which may specify notice for termination. Before performance, without specific contract terms, by giving reasonable notice of termination. 24

Key Points: Agency relationships involve the principal, agent, and third party. Different types of agency include contractual, employer/employee, and partner/agent agency. Express and ostensible authority determine whether a contract exists between the principal and third party. Agents may be liable for damages if they act without authority. Agents have a fiduciary duty to act in the best interests of principal. Termination of the agency relationship can occur through performance, contract terms, or reasonable notice. Bailment Definition and Types: Bailment is the voluntary transfer of possession of personal property from the owner (bailor) to a third party (bailee) for a specific period, with the expectation of its return. Bailments can be either gratuitous (without money exchange) or for reward (with payment). Example of Gratuitous Bailment: A lends a lawnmower to B. Example of Bailment for Reward: A stores furniture with a storage company, B, under a contract where A pays B. Types of Bailment: Gratuitous Bailment: Benefit of the Bailor: Bailor gets the benefit, and the standard of care by the bailee is low. Duty of Care: Bailee must take reasonable care, protecting the goods from foreseeable harm. Bailment for Reward: Benefit of the Bailee: Bailee gets the benefit, and the standard of care is high. Duty of Care: Bailee must take strict care of the goods, except for reasonable wear and tear. Commercial Bailments: Both bailor and bailee benefit. Liability : Liability can be limited by legislation, and the defense is the guest's negligence. Bailment relationships are created through contracts between bailors and bailees. The type of bailment and the standard of care are determined by whether the bailment is gratuitous or for reward, as well as the specific circumstances of the arrangement. Types of Commercial Bailment: A. Storage/Warehousing: Bailee stores bailor's property for a fee. Duty of Care: Bailee must treat property as a skilled storekeeper would treat their own. Liability: Bailee may use limitation of liability clauses, has a lien on bailor's goods for non-payment, and can sell goods to recover losses. B. Repair: Bailee repairs bailor's property for payment. Duty of Care: Bailee must provide reasonable safekeeping and complete repairs competently. Liability: Bailee has a lien on the bailor's goods for unpaid repairs. C. Transportation/Carriage of Goods : Bailee transports bailor's goods for a fee. Two Types: Common Carrier (high standard of care) and Private Carrier (reasonable care). Liability: Common carriers have a duty to protect goods as an insurer, while private carriers have a duty to take reasonable care. D. Lodging/Inn keeping: Provides food and lodging in return for payment. Duty of Care: Bailee must take care of the bailor's property and protect it from harm. Employment Law: Employment law deals with the relationship between employers and employees, primarily governed by common law and statutes. The employment relationship is essentially a contractual one, whether oral or written. Written employment contracts, if present, may include provisions concerning the parties, remuneration, term, obligations of both parties, default, and restrictive covenants. 25

Statutory Regulations: Ontario's Employment Standards Act sets minimum terms and provisions for all employment contracts, such as sick days and minimum wage. *Written employment contracts cannot provide terms less favorable than those mandated by the Employment Standards Act but can offer more generous terms. *Other legislation, like human rights laws and workplace safety regulations, prohibits discrimination and mandates accommodations for disabilities. Accommodations for Disabilities: Employers are obligated to accommodate employees with disabilities during their employment unless it causes undue hardship. The accommodation should be reasonable and necessary, adopted in good faith, and not result in undue hardship, often measured in terms of significant financial burden. IV. Employee vs. Independent Contractor: * Differentiating between employees and independent contractors is important in employment relationships. *Various factors, such as ownership of tools, control, chance of profit, and risk of loss, help distinguish between employees and independent contractors. *Organizational tests examine whether the services provided are integral or accessory to the business. Termination of Employment: Employment can be terminated by the expiry of the term, for breach of contract, or for just cause. Just causes for termination include serious misconduct, habitual neglect of duty, incompetence, conduct incompatible with the employer's business, wilful disobedience, and breach of the common law duty of loyalty. Wrongful Dismissal: occurs when a dismissal doesn't fit termination by term, breach of contract, or just cause. *Constructive dismissal can occur when employers take actions to make employees quit. *To determine damages for wrongful dismissal, courts consider factors like age, position, length of employment, and education. The duty to mitigate requires employees to search for similar employment. *Wallace damages may be awarded to punish employers for misconduct during dismissal. VII. Monitoring and Testing of Employees: *Employers can use video surveillance and monitor employee computer usage, but privacy laws restrict placing video cameras in sensitive areas. *Random alcohol testing is permitted, but random drug testing is generally not due to its inaccuracies. VIII. Amendments and Addendum: *An addendum clarifies the concept of constructive dismissal, emphasizing that it is designed by the employer to force the employee to quit. *The reasonable notice period for wrongful dismissal is determined based on various factors. *Employees have a duty to mitigate damages by seeking similar employment. *Remedies for wrongful dismissal include damages based on the reasonable notice period, reinstatement, and, where appropriate, Wallace damages. Note: The specific calculation of damages for wrongful dismissal is not required for examination purposes. 26

Consumer Rights and Quality Assurance: Strengthens consumer rights related to quality and fitness for purpose. Implies warranties on durability and holds sellers accountable for representations. Itinerant Sales and Cooling-Off Period: Regulates door-to-door sales with a "cooling-off period" for contract cancellation. Varies by province, allowing consumers to cancel contracts within a set time frame. Unfair Business Practices: Regulates car repair costs to not exceed estimates by more than 10%. Restricts collection agencies from harassing debtors or seeking payments from family members. Oversees credit granting and credit reporting practices. Penalties and Fines: Imposes fines for offenses under the Act: up to $50,000 for individuals and up to $250,000 for corporations. Consumer protection laws ensure fair transactions, address unfair practices, and provide legal recourse for consumers. COMPETITION LAW: The Competition Act in Canada governs business practices to promote fair competition. It classifies offenses into criminal and regulatory categories. Criminal offenses require proof of intent and a high standard of evidence, while regulatory offenses are less severe and allow for a defense of due diligence. Dual offenses can be both criminal and regulatory. 1. Prohibited Offenses: The Commissioner of Competition, who can investigate and refer cases to the Attorney General for criminal prosecution, often handles these. Examples include resale price maintenance (controlling prices), false advertising, and conspiracies to reduce competition. 2. Reviewable Offenses (also Regulatory Offenses): Usually addressed by the Competition Tribunal, consisting of judges and non-judges. The tribunal can order companies to cease harmful practices, make necessary changes, and restore competition. Examples include cases related to mergers, dominant businesses, and marketing practices like exclusive dealing. 3. Penalties: Criminal Offenses: Fines up to $10 million and imprisonment up to five years. Regulatory Offenses: Remedies may include prohibition orders, injunctions, stop orders, rectification orders, and civil actions for damages. Competition Act Offenses : The Competition Act in Canada addresses various offenses related to anticompetitive and unfair business practices. Competition Act offenses Examples: Bid Rigging-Bait-and- Switch Advertising- Resale Price Maintenance- Price Discrimination Bid Rigging: Occurs when competitors collude to manipulate the bidding process, often by agreeing on who will submit the winning bid and how the work or contracts will be divided among them. This undermines fair competition in the bidding process. Bait-and-Switch Advertising: Involves false or misleading advertising where businesses lure customers with an enticing offer but then switch to a different, more expensive product or service when the customer arrives, without a reasonable effort to maintain adequate stock of the advertised item. Resale Price Maintenance: Happens when a manufacturer dictates the price at which retailers, often threatening penalties or the termination of dealer relationships if prices are not adhered to, must sell their products. This practice restricts price competition. Price Discrimination: Price discrimination involves charging different prices to different customers for the same product or service. The Competition Act seeks to prevent this practice as it can unfairly disadvantage some buyers. 27

Environmental protection laws in Canada operate at both federal and provincial levels, each with its own Environmental Protection Tribunal or Agency responsible for enforcement. Various statutes, including the Hazardous Products and Wastes Act, aim to safeguard the environment. 1. Environmental Audits and Assessments: Land developers must provide comprehensive environmental audits/assessments, detailing the intended development and its potential impact on the environment. 2. Strict Liability for Pollution: Pollution is a strict liability offense. Companies found to have polluted the environment can be held accountable for their actions. 3. Director's Liability: Directors can face personal liability, including fines, damages, or imprisonment, in cases of environmental law violations. The due diligence defense requires directors to take extensive measures to ensure compliance and prevent violations. Environmental protection laws in Canada aim to prevent harm to the environment, holding both companies and their directors accountable for any environmental violations. Violations can result in significant fines and personal liability for those responsible. The Sale of Goods Act in Ontario is a crucial piece of legislation governing the buying and selling of tangible personal property, excluding land. It is essential for businesses and individuals involved in the sale of goods to understand its fundamental principles. Scope of the Act: The Act specifically applies to the sale of personal property, which includes tangible and movable items like chairs, televisions, cars, and boats (known as chattels in common law). Protecting Buyer and Seller: The Act serves to protect the interests of both buyers and sellers, even in transactions involving non-consumer goods. It achieves this by implying certain terms into every sales contract and establishing rules for determining when the title or property in the goods is transferred from the seller to the buyer. Implied Terms: The Act includes implied terms that automatically become part of a sales contract, ensuring a basic level of protection and clarity for both parties. Passing of Title: The Act defines rules for the transfer of title, indicating when the ownership and risk associated with the goods pass from the seller to the buyer. This helps determine who is responsible for insuring the goods against potential loss/damage, offering a risk management strategy for both parties. The Sale of Goods Act aims to protect buyers by addressing the common law principle of "caveat emptor," which means "let the buyer beware." Under this principle, buyers had little recourse if goods were found to be defective, provided the seller didn't make any representations about the goods. The Act was passed to provide better protection for buyers. The Act implies two types of terms in sales contracts: 1. Conditions: These are essential terms to the contract. If a seller breaches a condition, the buyer can terminate the contract without fulfilling their obligations. 2. Warranties: These are non-essential terms. If a seller breaches a warranty, the buyer cannot end the contract but can sue for damages. Conditions Implied by the Sale of Goods Act: 1.Seller's right to sell the goods (ownership or authorization). 2.Goods will be fit for the purpose intended if conveyed to the seller or evident. 3.Goods bought by description must be of merchantable quality. 4.Goods sold by sample must correspond to the sample. 5.Goods sold by description must correspond to the description. Warranties Implied by the Sale of Goods Act: 1.Buyer's right to quiet possession of the goods. 2.Goods are free from liens and encumbrances unless declared by the seller at the time of sale. The Act's implied terms offer protection and clarity to buyers, ensuring goods are as described, fit for their intended purpose, and free from certain legal claims or burdens. 28

THE RULES RELATING TO WHEN TITLE IN THE PROPERTY PASSES FROM SELLER TO BUYER can be categorized as follows: Rule 1: Title passes at the time of the sale for goods in a deliverable state, regardless of when delivery or payment occurs. Rule 2: For specific goods that require seller action for delivery, title passes when the seller completes the necessary actions and notifies the buyer. Rule 3: If the goods are in a deliverable state but require additional actions to determine the price, title passes when these actions are completed, and the buyer is notified. Rule 4: Title passes for goods delivered "on approval" or "sale or return" when the buyer approves or retains the goods beyond a reasonable return time. Rule 5: For unascertained or future goods, title passes when the seller or buyer, with mutual consent, appropriates the goods for the contract. These rules determine when ownership (title) of the goods transfers from the seller to the buyer and are important for understanding the allocation of risk and responsibilities in sales transactions. Remedies of the Seller for Non-Payment: Lien: The seller can retain possession of the goods until payment is received. Right of Repossession: The seller can take the goods back from the buyer. Resale: If the seller has retained the goods or has a right of stoppage in transit in shipping contracts, they can sell the goods after notifying the buyer and keep the proceeds of the sale. Sue for Damages: The seller can sue the buyer for damages if the buyer does not accept the goods. Balance of Price: If the buyer has paid a down payment and title has passed to the buyer, the seller can sue for the balance of the price. If title has not passed, the seller can deduct damages and return any excess from the down payment. Action for Full Price: When title has passed to the buyer, the seller can bring an action for the full price, even if the buyer has not taken delivery. Remedies of the Buyer: The buyer has various remedies in contract, tort, and consumer protection legislation. These remedies include: Damages for Breach of Contract: The buyer can sue for damages in case of a breach of contract. Tort of Wrongful Detention: If the buyer has title but the seller refuses to deliver, the buyer can sue for the tort of wrongful detention. Specific Performance: The buyer can seek a court order for specific performance to compel the seller to fulfill the contract. Rescission: The buyer can seek to rescind or cancel the contract. The specific remedy used by buyer depends on the circumstances of case. ANGENCY LAW QUESTION 1: Give an example of: a) express authority: Principal tells agent/or employee to buy 100 crates of a particular type of goods. b) apparent/ostensible authority: Employee is responsible for sales, but the employee responsible for purchases is sick so the other employee is told to do purchases. The party from whom the employee did a purchase comes back to him and tells him he has more to sell and the employee buys the goods. QUESTION 2: An agent has express authority from its principal to procure contracts for 25-inch diameter telescope lenses and has procured contracts for different diameter telescope lenses from suppliers from time to time. However, when the agency contract is prepared, it simply says the agent can procure contracts for telescope lenses. The agent approaches a supplier, shows it the agency contract and procures a contract for 35-inch telescope lenses. Providing your reasons, a) Providing your reasons, explain what is the contract, if any, is between the principal and the agent. Here you must get beyond the parol evidence rule to prove the written contract since the term 25 inch diameter lenses is missing from it. You would use intention of the parties or collateral agreement to get the term into the written contract. b) Providing your reasons explain whether there a contract between the principal and the supplier? Yes, by apparent authority given the agent in the written contract to procure contracts for telescope lenses. c) If the agent was to be paid a commission on the sale, would the principal have to pay it? Explain you reasons. No. Since the actual express authority was to buy 25-inch lenses, the agent has breached his fiduciary duty and loses his commission. Also explain any other liability the agent would have. The agent would be sued by the principal for the value of the contract for 35-inch lenses. 29

EMPLOYMENT LAW QUESTION 1: Read each of the following fact situations and discuss whether each sets out a proper case for wrongful dismissal, stating your reasons why it does or does not. a) In the two months since he was hired by his employers, John has been constantly late arriving for work and has been absent from work for 18 days without his employer’s consent or a valid excuse. Not a case for wrongful dismissal. Employer has just cause on the basis of Johns habitual neglect of duty. b) Alfred’s employment contract with his employer contains a non-disclosure clause prohibiting Albert from disclosing any information about this employment or employer and allowing his employer to terminate his employment without notice if he breaches the clause. Alfred, who is in debt, sells his employer’s client list to a competitor for $200,000.00 which he uses to pay off his debt. Not a case of wrongful dismissal. This is dismissal for breach of contract. c) Mary is employed as an administrative assistant for a large accounting partnership. She is extremely conscientious, comes into work early and stays late to get her wok finished. Alice another administrative assistant wants Mary’s job, so she goes to the managing partner and tells him that Mary spends most of her day surfing the internet and chatting on MSN and she also takes offices supplies home with her. On hearing this, the managing partner immediately fires Mary . This is a case of wrongful dismissal. Manger should have made inquiries into whether Mary’s conduct was as alleged. Moreover, manager should have given Mary a warning to correct first. QUESTION 2: a) John has been employed with a Toronto company for 10 years as its Vice president in charge of sales, with a salary of $ 150,000.00, a yearly bonus and company car. One day, John receives a memo from head office telling him that he is no longer Vice President in charge of sales, and is being sent to a regional office where he will be the Regional manager with a consequential reduction in salary to $100,000.00, without his yearly bonus and company car. Briefly explain to John his rights, providing your reasons. This is a case of constructive dismissal since “John receives a memo from head office telling him that he is no longer Vice President in charge of sales, and is being sent to a regional office where he will be the Regional manager with a consequential reduction in salary to $100,000.00, without his yearly bonus and company car.” If John quits it is wrongful dismissal and his remedies are first damages, based on the reasonable notice period, based on three factors such as age, position, length of employment etc…. He can also seek re-instatement. It is not a case for Wallace damages. b) During the performance of his work as a structural engineer, an employee prepares structural designs which, when reviewed by his employer, are so full of errors and problems that the structure being designed could collapse and cause death. After giving the employee notice to correct his behavior, the employee’s designs continue to be full of errors and problems, and so the employer fires the employee without notice. Explain whether the actions of the employer constitute wrongful dismissal, providing your reasons. No this is dismissal for just cause, because the employee is incompetent and his designs are so full of errors and problems that the structure being designed could collapse and cause death. Moreover, he was given a warning to correct and did not do so. QUESTION 3: a) For 10 years, John Jones has been the national sales manager of Multinational Company Inc. (MCI) which manufactures LCD televisions for sale in North America. John is paid an annual salary of $ 250,000.00, gets an expense allowance of $30,000.00 per year, a company car to drive and a gasoline allowance. He also gets a bonus of $ 50,000.00 in each year that the company makes a profit. Last week, John had a meeting with the company’s president, during which John identified some policies of the president that were causing company sales to decrease. Today, John has just received a memo from the president advising him that he is being transferred to Manitoba where he will become the provincial sales manager, with a decrease in his annual salary to $ 150,000.00; the loss of his expense account, the company car and gas allowance, and a reduction in his bonus to $ 22,500.00. John has come to you, an employment lawyer for advice as to his rights against MCI. What will you advise John? A case of constructive dismissal. John received memo from the president advising him that he is being transferred to Manitoba where he will become the provincial sales manager, with a decrease in his annual salary to $ 150,000.00; the loss of his expense account, the company car and gas allowance, and a reduction in his bonus to $ 22,500.00. If he quits it is wrongful dismissal and his remedies are first damages, based on the reasonable notice period, based on three factors such as age, position, length of employment etc…. He can also seek re-instatement. It is not a case for Wallace damages. b) Last year, Harvey began to work for Very Big Company (VBC) as its production line manager. This position required Harvey to do repairs to the production line when it broke down and to ensure that it was safe to use by the employees. The production line carries large and small steel parts which are very sharp. Over the past few months, Harvey’s repairs to the production line have been very poor because he appears to have a drinking/alcohol problem and on a couple of occasions, two employees were injured by small, sharp steel parts thrown from the line when it suddenly stopped. At that time, the company gave Harvey a notice in writing that there were problems with his repairs and that he had a month to correct his behaviour, failing which the company would have to let him go. Last week, when the line broke down again, Harvey was drunk again and his repairs were so bad that it seemed like he did not really know what he was doing, and the production line was stopped while another repairman was brought in. This new repair man told the company that if the line had been started again after Harvey’s repairs, there could have been a major accident involving the employees on the production line. As a result, the company fired Harvey without notice. Harvey believes that he has been wrongfully dismissed and has come to you, an experienced employment lawyer, for advice. Based on the facts above, what will you advise Harvey? 30

This may be dismissal for just cause. Harvey is incompetent because his repairs were so bad that it seemed like he did not really know what he was doing, and the production line was stopped and the new repair man told the company that if the line had been started again after Harvey’s repairs, there could have been a major accident involving the employees on the production line. However, the facts suggest that Harvey has a drinking problem which is a disability and the employer has a mandatory duty to accommodate this disability by helping Harvey seek help for his alcohol problem. If he does not it is wrongful dismissal and Harvey has the remedies of damages based on reasonable notice period, based on three factors (see 2(a) above) or reinstatement. QUESTION 1: CONSUMER PROTECTION AND COMPETITION 1. A is employed by a large camera company to make door to door sales. Today A has sold a camera to B, an elderly lady, after she let A into her house. After A leaves, B decides she does not want the camera. Providing your reasons, advise B. This question deals with itinerant sales. Please remember that Itinerant Sales has been abolished. Today, if an Itinerant salesperson were to cause someone to purchase something, the sale would be void; the person could immediately return the goods and the seller would be open to stiff fines and penalties. 2. A, B, C and D are the largest highway developers in southern Ontario where the government has just asked for tenders on a new highway to be built. Hearing about the call for tenders, the four developers meet and decide that only D will submit a tender and if it is accepted, D will divide the work between himself and A, B and C. Providing your reasons, state whether the actions of the four contractors is legal. The meeting and decision of the developers constitutes a conspiracy which is bidrigging under the Competition Act Canada. Bidrigging is both a prohibited (Criminal) and Regulatory offence. As a criminal offence the developers can be heavily fined and penalized and the directors imprisoned for up to 5 years (subject to the defence of due diligence). As a regulatory offence, the tribunal can issue a stop order, an injunction, a prohibition order, a rectification order and the party affected has a civil action against them in damages. 3. During a meeting between a snowmobile manufacturer and its dealers, the manufacturer tells the dealers that they cannot sell the manufacturer’s snowmobiles for less that $ 25,000.00 and if any dealer is caught selling for less, he will lose his dealership rights. Are the actions of the manufacturer proper? Provide your reasons. This is retail price maintenance under the Competition Act, Canada, because the manufacturer threatens the dealers if they do not sell at its prices. Like bidrigging in the previous question, it is both a prohibited and regulatory offence with the corresponding remedies. QUESTION 2: ENVIRONMENTAL PROTECTION LAW: 1. A coal mining company has been mining coal in Northern Saskatchewan for 20 years, without incident. A couple of months ago, the directors of the company changed and the new directors issued memos and bulletins to all employees of the mine, to make sure that steps were taken to prevent waste from getting into the river close to the mine. The directors also hired engineers and had meetings with them to ensure that preventative measures were being taken, and they also went to the construction site not only to inspect the preventative measures taken, but also to make sure that their memos and bulletins were being followed by the employees. Recently, however, conservationists noticed that waste from the coal mining was getting into the river and notified the federal government. An investigation disclosed that the source of the waste was a pipe which had been broken as a result of an Earthquake in the area, making it virtually impossible to spot. The company and its directors now wish to know their rights. Advise them, providing your reasons. First as for the company this is a strict liability criminal offence. The company will be heavily fined and penalized. It will be responsible for the cost of cleanup and for any damages sustained as a result of the polluting event. Secondly, as to the directors, they would be liable to imprisonment for up to 5 years subject to the defiance of due diligence, so the question here is whether they are entitled to this defiance. On the facts the directors issued memos and bulletins to all employees of the mine, to make sure that steps were taken to prevent waste from getting into the river close to the mine. The directors also hired engineers and had meetings with them to ensure that preventative measures were being taken, and they also went to the construction site not only to inspect the preventative measures taken, but also to make sure that their memos and bulletins were being followed by the employees. In essence the directors have done everything possible to prevent a polluting event and therefore have met the requirements for the defence of due diligence. In answering a question like this, make sure you set out all facts that are pertinent to the defence of due diligence. Definition of "Land": (a) Vacant Land: This includes open land without any structures. (b) Land with Improvements: Land with dirt, trees, rocks, or water running through it is still considered "land" even with natural elements present. (c) Buildings as Land: Any building, such as a house, apartment building, or individual apartments within a building, is also legally categorized as "land." (d) Condominium Units: According to the Condominium Act of Ontario, a condominium unit is also considered "land." Real Property : The text highlights that "real property" is essentially synonymous with "land" in the context of property law. 31

A. Fee Simple: Fee simple represents the highest form of land ownership, akin to absolute ownership, subject to government rights. Common law allows owners to possess, buy, sell, transfer, divide, lease, and develop their land. Government statutes may impose restrictions on these rights. B. Easements: Easements are rights that provide one person with possession of another person's land for specific uses. Easements can be seen as a lesser estate since they grant possession, not ownership. Practical rights of easement often resemble those of fee simple. Easements can be created through adverse possession, agreements, expropriation, subdivision agreements, or by law in cases of landlocked properties. C. Restrictive Covenants: Restrictive covenants are provisions in title documents that affect land ownership by prohibiting specific actions or uses of the land. They are inserted by the vendor at the time of property sale to retain control over the property. Examples include restrictions on tree removal or keeping animals on the property. D. Encroachments: Encroachments are rights of possession over another person's property acquired through the passage of time, typically due to adverse possession. Common examples include roof overhangs that extend beyond property lines. Encroachments can create issues, particularly in older urban areas. A. Joint Tenancy: In joint tenancy, co-owners are referred to as joint Tenants. Each joint tenant has an undivided and undisclosed interest in the entire property, and there is no specific portion that belongs exclusively to any tenant. During their lifetimes, joint tenants cannot deal with their ownership interests without the consent of the other joint tenant(s). This includes selling, leasing, mortgaging, or transferring their interest. Joint tenants cannot leave their ownership interest by will. On the death of a joint tenant, their ownership interest is automatically transferred to the surviving joint tenant through the right of survivorship. Joint tenancy is often recommended for spouses or family members to facilitate a seamless transfer of property to the survivor and for tax planning purposes. B. Tenancy in Common: In tenancy in common, co-owners are referred to as tenants in common. Each tenant in common has a definable and distinct ownership interest, which can be quantified. Tenants in common can deal with their respective interests during their lifetimes, including selling, leasing, transferring, or dividing their ownership. Each tenant in common can leave their ownership interest by will. There is no right of survivorship in tenancy in common. Friends, relatives, partners, or individuals who understand the nature of this form of ownership may choose tenancy in common. If ownership is not specified as joint tenancy in the transfer document, the law automatically presumes tenancy in common as the chosen form of co-ownership. 32

Mortgage Definition: A mortgage is an agreement where a debt or loan is secured by land. The borrower, who is the landowner, is referred to as the mortgagor. The lender, the entity providing the loan and taking security in the form of the borrower's land, is known as the mortgagee. Lenders can be banks, finance companies, or private individuals. The borrower gives the mortgage to the lender as security for the mortgage loan. Process of Mortgage: The borrower, such as landowner A, seeks to borrow a specific amount of money, e.g., $200,000.00. The lender assesses the value of the borrower's property to determine if it's sufficient collateral for the loan. The lender also examines the borrower's assets and income to assess their ability to repay the loan. If the lender approves the loan and the borrower agrees to use their property as security, both parties enter into a mortgage agreement for the specified loan amount. The lender provides the borrower with the loan amount, and a mortgage is registered on the title of the borrower's property, securing the debt. Mortgages are considered formal contracts due to their specific form. Multiple Mortgages on a Property: Depending on the property's value, multiple mortgages can be given by the property owner to different lenders. The total value of all mortgages on the property must not exceed the property's overall value. This rule safeguards each mortgagee and ensures that they can be repaid even if the property owner defaults on the terms of the mortgage. For instance, if a property is worth $300,000.00, the total value of mortgages secured by it should not exceed $300,000.00. Mortgages are often registered in priority order, with first mortgages taking precedence over second mortgages, and so on. This information outlines the nature of mortgages, the roles of the mortgagor and mortgagee, and the principles governing the value of mortgages in relation to the property's worth. Common Law Mortgage: At common law, a mortgage involved the actual transfer of property ownership from the borrower (mortgagor) to the lender (mortgagee). When a mortgage was placed on a property, the borrower lost ownership rights until they fully repaid the mortgage loan, which was called "redemption." Property Ownership and Mortgages: If, for example, property owner A, with a property worth $200,000.00, obtained a $100,000.00 mortgage (first mortgage), ownership of the property would be transferred to the first mortgagee until A fully repaid the mortgage loan (redeemed the property). In the example, $100,000.00 of value remained in the property after first mortgage. If A wanted to borrow more money, common law allowed A to give a subsequent mortgage representing his right to redeem the property. The property owner's interest or value in the land is referred to as their equity, calculated by deducting the debt (mortgage amount) from the property's value. The amount required to pay off or redeem a first mortgage is known as the equity of redemption, and this amount decreases with each mortgage payment. Subsequent Mortgages at Common Law: At common law, if a subsequent mortgage (e.g., second mortgage, third mortgage) was registered on the property after a first mortgage, it would always be a mortgage of the equity of redemption. This means that the subsequent mortgage represented the property owner's right to redeem the property once the first mortgage was paid off. 33

Priority of Mortgages: The priority of mortgages, whether at common law or under present-day statutes (such as the Ontario Registry Act and the Ontario Land Titles Act), is determined by the date and time each mortgage is registered on the title of a property. The registration date and time define which mortgage holds the position of the "first mortgage" and which are subsequent mortgages. Examples of Priority Determination: A borrows $100,000.00 from a lender, secured by a mortgage, and later borrows an additional $50,000.00, also to be secured by a mortgage. The first mortgage is registered on June 1st at 1:02 p.m., while the second mortgage is registered on the same day at 1:05 p.m. In this case, the mortgage registered at 1:02 p.m. becomes the first mortgage, and the one registered at 1:05 p.m. becomes the second mortgage. A borrows $300,000.00 from the Royal Bank on June 10th and $150,000.00 from the Bank of Nova Scotia on June 18th. The Bank of Nova Scotia mortgage is registered on June 20th at 10:05 a.m., while the Royal Bank mortgage is registered on June 21st at 2:02 p.m. Here, the Bank of Nova Scotia mortgage holds the position of the first mortgage, and the Royal Bank mortgage is considered the second mortgage. Registration Date and Time: The priority of mortgages is solely based on the date and time of their registration on the borrower's (mortgagor's) property title. The date when the mortgage is initially created does not determine its priority status; it is the registration date and time that matter. This information emphasizes the significance of registering mortgages on the property title in chronological order to establish their priority in case of default or other legal issues. Mortgages Today: Contemporary mortgages are not governed by common law. Mortgages no longer involve transferring property ownership from the owner (mortgagor) to the lender (mortgagee). Under modern regulations, such as the Registry Act and Land Titles Act, mortgages are considered charges or debts on the property, with ownership retained by the mortgagor. Mortgagor's Obligations Under a Mortgage: Under the terms of a mortgage, the mortgagor has several key obligations, including: Repayment: The mortgagor must make timely and prompt mortgage payments according to the agreed-upon schedule. Property Insurance: It is the responsibility of the mortgagor to ensure the property is adequately insured against the risk of fire or other specified hazards as outlined in the mortgage agreement. Property Taxes: The mortgagor must pay property (real estate) taxes imposed or required by the relevant city or municipality. Property Maintenance: The mortgagor is obligated to maintain the property in good condition and prevent it from falling into disrepair. Default and Remedies: Failure to fulfill any of these obligations by the mortgagor constitutes a default in the mortgage. In the case of a default, the mortgagee (lender) has the legal right to utilize the remedies for default as stipulated in the mortgage document. These obligations and terms in a mortgage agreement form the legal framework for the relationship between the mortgagor and mortgagee during the mortgage term. Mortgagee's Remedies on Default by Mortgagor: The choice of remedy depends on various factors, such as property value and the economic climate. In the case of default by a mortgagor, particularly in failing to make mortgage payments on time, the mortgagee (lender) has several legal remedies, including: 34

1.Suing for Payment: The mortgagee can initiate a lawsuit against the mortgagor, seeking a judgment on the covenant for payment in the mortgage. This allows the mortgagee to sue for the remaining balance on the mortgage. 2.Seeking Possession: The mortgagee can pursue possession of the property by obtaining a court order for possession. Typically, this is done when the mortgagee intends to employ the next remedy. 3.Sale Under Power of Sale: The mortgagee can choose to sell the property under a power of sale. This process begins with the mortgagee giving the mortgagor notice, allowing a specified period to repay the mortgage. If the mortgagor doesn't do so, the mortgagee can hire a real estate agent to sell the property at its fair market value. After repaying all outstanding mortgages, any remaining sale proceeds are returned to the mortgagor. A first mortgagee usually opts for this if the property's value can cover the first mortgage entirely. Subsequent mortgagees must ensure the first mortgage will be paid before selling the property under power of sale. 4.Foreclosure Action: In a foreclosure action, the mortgagee aims to eliminate the owner's ownership rights in the property and potentially extinguish any subsequent mortgages. The mortgagee effectively becomes the owner. This remedy is employed in cases of significantly reduced property values, making it financially unviable to recover the mortgage through a sale. The mortgagor has a right to redeem (repay) the mortgage until a judgment of foreclosure is granted to the mortgagee, provided they can secure the necessary funds. Foreclosure is often used when property values plummet and the mortgagor cannot find alternative means to repay the mortgage. The mortgagee may eventually sell the property when the real estate market improves, potentially making a profit if the property's value exceeds the outstanding mortgage balance. The choice of remedy depends on various factors, such as property value and the economic climate. For instance, foreclosure is more common in dire economic conditions when property values significantly drop, and the mortgagor can no longer afford to repay the mortgage. Real Property: Leases Leases are legal agreements that involve the transfer of exclusive possession of real property from the property owner (landlord or lessor) to a third party (tenant or lessee) for a specified period, typically in exchange for rent. Leases can apply to both residential and commercial properties. This summary focuses on commercial leases in Ontario and differentiates between two main types of leases: periodic leases and leases for a fixed term. Types of Leases: 1.Periodic Lease: A periodic lease covers a short period of time or term, which could be as brief as a day, a week, or a month. Periodic leases can be either oral or in writing. If neither the landlord nor the tenant cancels or terminates the lease by providing notice, it automatically renews for the same duration. For example, a daily lease renews for another day, a weekly lease for another week, and so on. 2.Lease for a Fixed Term: A lease for a fixed term extends beyond one year and usually includes lease agreements for multiple years, such as two or five years. In most cases, both the landlord and tenant are obligated to adhere to the lease for the entire fixed term. In Ontario, the Statute of Frauds dictates that any lease extending beyond three years must be in writing and is generally signed by both parties. Leases at Common Law: Common law principles govern commercial leases, imposing obligations on both landlords and tenants. These obligations are often explicitly stated within the lease contract. 35

Landlord's Obligations: Common law holds that every lease includes a covenant for the landlord to provide quiet enjoyment of the leased premises. This means the landlord cannot interfere with the tenant's lawful use of the property during the lease term. The lease can contain additional obligations for the landlord, and failure to fulfill these obligations gives the tenant legal rights against the landlord. Tenant's Obligations: 1.Pay rent in a timely manner, with the payment frequency agreed upon in the lease. 2.Maintain the leased premises in good repair and avoid causing damage. 3.Leave the premises in the same condition as when leased. 4.Fulfill any other obligations specified in the lease. Common Law Remedies for Breach of Lease Terms: Landlord's Remedies for Tenant Default: Sue the tenant for unpaid rent. Use the remedy of distress: Enter the premises, seize the tenant's personal property, and sell it to reduce rent owed. Distress is only available if the lease remains in effect. Lock out the tenant, effectively terminating the lease and forfeiting the right to distress. Evict the tenant through a court order, although eviction doesn't always terminate the lease. Tenant's Remedies for Breach of Covenant of Quiet Enjoyment: If the landlord breaches the covenant of quiet enjoyment, the tenant can take legal action, seeking an injunction to stop the breach and claiming damages. For example, if the landlord's actions interfere with the tenant's use of the property (e.g., leasing adjacent units to competitors), it constitutes a breach of the covenant. Can the Tenant Withhold Rent if the Landlord is in Breach? No, tenants do not have the right to withhold or reduce rent even if the landlord breaches the lease. Regardless of the landlord's conduct, the tenant is still obligated to pay rent and fulfill lease obligations. If the landlord breaches the lease, the tenant should follow the proper legal procedures to address the breach, which may include bringing legal action against the landlord and paying rent into court to the credit of the action. The tenant should continue to meet their obligations under the lease. Commercial Leases: Commercial leases for shopping centers, malls, and strip malls typically favor landlords. They can be lengthy, outlining tenant obligations and default conditions. These leases often make tenants responsible for additional costs beyond rent, making them essentially "net leases." In such leases, landlords collect rent and shift various expenses to tenants. Tenant's Obligations: Rent: The rent is the amount paid by the tenant over the lease term and is typically calculated based on the cost per square foot of the leased premises. Suppose a tenant rents 1,000 square feet of space for three years at $25.00 per square foot. They pay $25,000 annually, usually in monthly installments. In many commercial leases, tenants also pay additional rent. This includes costs like common area maintenance, real estate taxes, business taxes, insurance, and repairs for the shopping center or mall. While landlords are often responsible for structural repairs according to common law, some leases may make tenants handle these too. In lease negotiations, landlords in shopping centers or malls usually have the upper hand. 36

Benefits to Landlords: Rent and Additional Rent: Landlords collect the rent as well as additional rent, which covers various costs associated with maintaining the shopping center or mall. Net Leases: These leases are often referred to as net leases because landlords pay for very little, and tenants essentially cover most of the expenses related to the leased premises, in addition to rent. THE CONCEPT OF SUBLEASE A sublease is a mechanism that allows a tenant under a commercial lease to find another party (a sub-tenant) to take over their lease before its end. Commercial leases often restrict subletting. When a tenant enters a sublease, the original lease with the landlord becomes the "head lease," and the lease between the tenant and the sub-tenant is the "sublease." Privity of contract becomes a key issue. The head landlord can enforce the lease against the tenant, but the tenant enforces the sublease against the sub-tenant. In case the sub-tenant doesn't fulfill obligations under the sublease, the head landlord's remedies are against the original tenant, creating potential legal complexities. To avoid this, landlords often terminate the original lease and enter into a new lease with the sub-tenant. This way, the landlord can directly enforce the new lease against the sub-tenant. Commercial landlords are often cautious about permitting subleases due to the complexities and potential issues they can create. Subletting is typically restricted in commercial leases. If a landlord approves a new tenant, they may terminate the existing lease and establish a new one to avoid privity issues. TERMINATING A LEASE When a tenant wants to terminate a commercial lease, they can do so through a "surrender of lease." This document is an agreement between the landlord and tenant that terminates the lease, returning the remaining lease term to the landlord.Typically, the landlord will only agree to a surrender of lease if the tenant provides some form of compensation. Assignment of a Lease: Assignment of a lease involves transferring the lease rights to another party, known as the assignee. In certain cases, a landlord may assign a lease, allowing the assignee to directly enforce the lease terms against the tenant. The assignment may be statutory, allowing the assignee to take over the lease without the need for the original landlord's involvement. Statutory assignment enables the assignee to enforce the lease directly against the tenant, eliminating the need for the original landlord's continued participation REAL PROPERTY LAW, MORTGAGES AND LEASES QUESTION 1: 1. At common law what is the effect of a first mortgage and a second or subsequent mortgage. First mortgage: is the equity of redemption, at common law the property would be transferred from the borrower/mortgagor to the first mortgagee (lender), who would be the owner of the property until the mortgagor repaid the mortgage loan in full at which time ownership of the property would be transferred back to the borrower. Second mortgage: is a mortgage of the equity of redemption. What does priority of mortgages mean under the Registry and Land Titles Acts and how do you determine priority of mortgages. Priority of mortgages is a way to determine which the first mortgage is and which one is/are subsequent mortgage(s). The priority of mortgages depends on the date and time that each mortgage is registered on title of a property. 2. A mortgage for $ 300,000.00 is registered on title of land January 1 st at 12:01 p.m. while another mortgage is registered on the same land at 11:49 a.m. the same day. Which is the first mortgage and which is the second. The first mortgage is the one registered at January 1 st at 11:49 a.m. The second mortgage is the one registered at January 1 st 12:01 p.m. On June 1 st the value of a property is $500,000.00. There are two mortgages on the property, one registered at 12.03 p.m. June 1 st for $ 300,000.00 and one registered at 10:05 p.m. on June 1 st for $ 175,000.00. Two months later the value of the property is still $ 500,000.00, the second mortgage goes into default and the second mortgagee has come to you to ask your advice on what to do. (i) Advise the second mortgagee. (ii) If it had been the first mortgage and not the second mortgage that 37

had gone into default, what would you advise the first mortgagee to do. (iii) if at the time of default the value of the property had dropped to $ 285,000.00 and the second mortgage was in default what would you advise the second mortgagee to do.(iv) same as in (iv), but this time it is the first mortgagee who is in default - what would you now advise the first mortgagee to do? The first mortgage is the one registered June 1st at 12:03 p.m. The second mortgage is the one registered June 1st at 10:05 p.m. i) The 2nd mortgagee with the consent of the 1st mortgagee will sell the property under power of sale. From the sale proceeds he will pay the 1st mortgagee $300,000, then he will pay himself $175,000 and he will give the remaining $25,000 to the mortgagor. ii) The 1st mortgagee will sell the property under the power of sale. From the sale proceeds it will pay itself $300,000, and then it will pay the 2nd mortgagee the $175,000 and will give the remaining $25,000 to mortgagor. iii) At the value of $285,000 there is not enough equity to pay both mortgages, effectively the 2nd mortgagee cannot power of sale, but can to sue the mortgagor for $175,000. However, if the second mortgagee has enough money to pay off the first mortgage, it can pay the first mortgagee $300,000, become the first mortgagee and then foreclose the property, become its owner and hold it until market conditions improve. This will only happen where the first and second mortgagees do not have extensive portfolios of similar mortgages where there has been a substantial drop in the property’s value. iv) The 1st mortgagee does not need to care or worry about the 2nd mortgagee. It will sell the property under the power of sale; it wants as much money as it can get. I will thus sell the property under power of sale, pay itself the 285,000 and sue the mortgagor for $15,000. 3. A, a tenant, has a weekly lease with B, a landlord, and the week is just about up. A is needs to know whether she should call B to ask him to renew the lease. Advise A with your reasons. A does not need to call B to ask him to renew the lease. Weekly lease is a periodic lease, and periodic lease will automatically renew itself for the same period of time. 4. A owns a building which he has leased to B. A wants to sell the building. If A finds a purchaser, C, for the building explain with your reasons how C can ensure that he can get the tenant B to pay him instead of paying A? What principle of contract law is being avoided? Assignment of the lease by statutory assignment. 1. The assignment must be absolute. 2. The assignment must be in writing and must be signed at least by the assignor. 3. A notice of the assignment must be given to B in writing. This will permit C to buy the building and enforce the lease directly against the tenant. The principle being avoided is the Privity principle of contract. 5. A landlord leases business premises (a unit) in a strip mall to John Smith to use as a grocery store with the right of Mr. Smith to set up tables outside his unit on which he puts vegetables for sale. The rent payable by Mr. Smith is $ 5,500.00 per month and the lease, which is 4 years long, is silent as to what constitutes default by the tenant. A year after granting the lease to Mr. Smith, the landlord rents the unit right beside John’s grocery store to Henry White who uses the unit to make wood furniture of all kinds. To make the furniture, Mr. White has to saw the wood, put it together, and either stain it, varnish it or paint it. Mr. White likes keeping the front door to his unit open, to vent (reduce/cut down on) the fumes and smell that come from the paint, stain and varnish. However, because the door is open the sawdust from cutting the wood escapes outside, gets into the air and is blown on Mr. Smith’s vegetables and into his store. Also the fumes and smell from the paint, stain and varnish seep into Mr. Smith’s store. Needless to say, When Mr. Smiths customers see sawdust on the vegetables outside his unit they decide not to buy them and the fumes and smell of the paint, varnish and stain is so strong that Mr. Smith’s customers do not like coming into his store. The result is that Mr. Smith is losing so much money that he is unable to make a living and can hardly make his rent payments. In fact, Mr. Smith has decided to that from now on he will only pay $ 500.00 per month as rent until the landlord remedies the situation. You are and expert in Landlord and tenant law to whom Mr. Smith has come for advice. Advise Mr. Smith fully of his rights and liabilities, providing your reasons. Would your answer be substantially different if the landlord assigned the lease to a third person? This is commercial lease. This constitutes a breach of covenant of quiet enjoyment by the landlord because:  The landlord rents the unit right beside John’s grocery store to Henry White who uses the unit to make wood furniture of all kinds.  Mr. White likes keeping the front door to his unit open, to vent (reduce/cut down on) the fumes and smell that come from the paint, stain and varnish.  Because the door is open the sawdust from cutting the wood escapes outside, gets into the air and is blown on Mr. Smith’s vegetables and into his store.  Also the fumes and smell from the paint, stain and varnish seep into Mr. Smith’s store.  When Mr. Smith’s customers see sawdust on the vegetables outside his unit they decide not to buy them and the fumes and smell of the paint, varnish and stain is so strong that Mr. Smith’s customers do not like coming into his store.  The result is that Mr. Smith is losing so much money that he is unable to make a living and can hardly make his rent payments. In such case Mr. Smith would bring a law suit against the landlord for the following relief: 38

1. An injunction to make the landlord do stop the smell and the contamination of Mr. Smith food by Mr. White. 2. Damages for the tort of nuisance amounting to the loss of income and cost of contamination of the food. 3. An accounting for lost profits. 4. Since Mr. Smith is losing so much money that he is unable to make a living and can hardly make his rent payment, this might be considered an eviction of Mr. Smith by the landlord, in which case the lease is considered to be terminated by the conduct of the landlord and Mr. Smith has his remedies in damages. Mr. Smith doesn’t have the right to reduce the rent to $500. Regardless of the conduct of landlord, the obligation of Mr. Smith under the lease continues. Because Mr. Smith reduced the rent to $500, he is in default under the lease and the landlord can assert these remedies: 1. The landlord can sue Mr. Smith for the balance of the rent due. 2. The landlord has a right of distress, he can distrain/seize the personal property of Mr. Smith in the rented premises. 3. The landlord can lockout Mr. Smith or re-enter and that effectively terminates the lease. However, if the landlord wants to both distrain and lock out Mr. Smith, the landlord must distrain before he locks out Mr. Smith. Patents in Intellectual Property Patents protect new and useful inventions, including arts, processes, machines, manufactures, compositions of matter, and their improvements. 1. New: Inventions must be novel, distinct from prior knowledge, and not disclosed to the public. 2.Useful: They must have practical functionality and benefit society by improving production or quality of life. 3.Non-Obvious: The invention should not be an obvious improvement for someone with similar knowledge. 4. 20-Year Protection: A patent lasts for 20 years from the application date. Inventor ship: The inventor, whether an individual or employee, is usually the patent holder. Employment contracts may specify ownership rights; otherwise, the employee retains them. Compulsory Licenses: If a patent holder denies usage, a government can issue a compulsory license. The user typically pays a royalty. Patent Infringement: Occurs when someone uses or produces a patented invention without consent. Legal remedies include actions for damages, interim and permanent injunctions. Territorial Scope : Patents are valid only in the country of issuance. International treaties may allow for priority registration in other signatory countries. Trademarks Two Ways of Establishing Trademarks and Trade Names: 1)Common Law: Trademarks and trade names can be established through common law by consistent use over time, leading to public recognition and association with a specific business. 2)Registration: To enhance protection and establish rights across Canada, owners can register their trademarks and trade names under the Trade Marks Act in Canada. Trademark Registration Duration: Registered trademarks in Canada are valid for 15 years and can be renewed. In summary, registering a trademark or trade name under the Trade Marks Act in Canada provides better nationwide protection and legal remedies, while common law remedies are available for unregistered marks. Trademark owners have multiple options to protect their intellectual property rights, whether through common law or statutory provisions, and this can help avoid disputes and maintain the exclusivity of their branding and products 39

Remedies for Trademark Infringement: a. Common Law Remedies: If an unauthorized party uses a trademark or trade name without consent, the owner can seek remedies through common law, including: Damages for the tort of passing off: Compensation for the harm caused by the unauthorized use. An injunction: A court order to restrain the infringing party from continuing to use the name or mark improperly. b. Remedies Under the Trade Marks Act: Damages for trademark infringement: Owners can sue for damages when their registered trademark is infringed. Injunction: The court can issue an injunction to stop or restrain the unauthorized use of the trademark or trade name. Accounting for lost profits: Owners may receive compensation for profits they lost due to the unauthorized use of their mark or name. Criminal Penalties: In cases of fraud or malicious intent, criminal penalties, such as fines or imprisonment, may apply. Common Law Remedies: Owners can still seek common law remedies for the tort of passing off in addition to the remedies available under the Trade Marks Act. Copyright in Intellectual Property: Copyright protects original literary, dramatic, musical, and artistic works. Eligible Creations: Literary Works: Books, pamphlets, compilations, translations, and computer programs. Dramatic Works: Pieces for recitation, choreography, scenic arrangements, plays, operas, films, and screenplays. Musical Works: Melody and harmony combinations, including sheet music. Artistic Works: Paintings, drawings, photographs, sculptures, architectural works, etc. Copyright Ownership: Copyright holders are the authors, composers, or creators of the work. If created during employment, the employer may hold the copyright. Registration: Copyright does not require registration but can be registered to confirm its existence. Copyright Holder's Rights: Copyright holders have various rights, including reproduction, public performance, publication, translation, and authorization for others to perform these actions. Duration: Copyright typically lasts for the lifetime of the copyright owner plus 50 years. Copyright Protection: Copyright is protected in the country where registered and in other signatory countries of international treaties like the Berne Convention. Copyright Assignment or Transfer: Copyright holders can assign or transfer their rights to another party using statutory assignment. Copyright Infringement: Infringement occurs when anyone without the owner's consent performs actions only the copyright owner can do. Defenses include fair dealing and making copies of software for adaptation and backup. Unregistered copyright infringement involves remedies under the Copyright Act, including seeking damages and injunctions. Registered copyright infringement follows similar legal actions with statutory support. 40

General Rules for Intellectual Property Infringement Actions When considering actions for patent, trademark, industrial design, or copyright infringement, some general principles apply. The following specifically pertains to copyright infringement but can be adapted to other types of intellectual property infringement: Nature of the Action: Copyright infringement actions typically seek damages and injunctive relief. Preparation for Action: In the case of copyright infringement, one should consider obtaining an Anton Pillar Order, a form of injunctive relief. This order can be obtained before initiating the infringement action, provided there is specific evidence of the infringement. The Anton Pillar Order allows the copyright owner to enter the premises of the alleged infringing party and seize infringing copies and copying equipment. Advantages of the Anton Pillar Order: It enables the copyright owner to gather evidence of infringement before the alleged infringer can destroy such evidence. For example, if a company holds copyright for films and credible evidence shows another party is making unauthorized copies of DVDs of these films, an Anton Pillar Order would allow the copyright owner to seize infringing copies and copying equipment promptly. By doing this, the copyright owner can secure evidence of infringement before the alleged wrongdoer can dispose of it. Preventative Measure: By obtaining an Anton Pillar Order and injunction before initiating the action, the infringer has less opportunity to defend themselves. The primary issue becomes the assessment of damages incurred by the copyright owner. This approach is proactive and helps protect the intellectual property owner's rights effectively. Similar strategies can be adapted to other forms of intellectual property infringement. Owners may choose to license their rights when they are not suited for certain activities related to the intellectual property but still want to benefit from those activities. For example, Disney Studios licenses its characters and trademarks for use in toys and games, allowing Disney to focus on filmmaking while receiving royalties from product sales. Types of Intellectual Property Licenses: Exclusive License: Grants the licensee the exclusive right to use the intellectual property, even to the exclusion of the licensor . Non-Exclusive License: Allows multiple licensees to use the intellectual property simultaneously without exclusivity. Sole License: Grants intellectual property rights exclusively to one licensee for a specified period, preventing the licensor from granting similar rights to others during that time. Assignments and licenses offer intellectual property owners different approaches to managing their rights, depending on their objectives and business strategies. UPDATE: When the United States-Mexico-Canada Agreement on trade (the successor to NAFTA) was ratified, Canada's copyright period was raised to lifetime plus 70 years, and lifetime plus 75 years for recordings. INTELLECTUAL PROPERTY AND LICENSES QUESTION 1: a) A writes a book and gives it to B, his friend, to read. B likes the book so much that he takes it to a publisher telling the publisher it is his book and the publisher publishes it. Advise A of his rights. So long as A can prove he wrote the book, he has a common law copyright on it. A will sue B and the publisher for an injunction to stop the publication and distribution of the book and also for copyright infringement under the common law damages section of the Copyright Act, Canada 41

b) same situation as (a), but this time A has copyrighted the book under the proper statute. Advise A of his rights. This time A will sue B and the publisher for an injunction to stop the publication and distribution of the book and also for copyright infringement under the statutory damages section of the Copyright Act, Canada c) HHC has established its name in the community and is known for selling quality shoes. Another company decides to sell shoes of similar quality under the name HH-C. Advise HHC of its rights. Would your answer be different if HHC had registered its name under the appropriate statute? First, having established its name in the community HHC has also established a common law trademark/tradename. Since the public would be confused between HHC and HH-C’s products, this is trademark infringement by HH-C. HHC will sue HH-C for damages the tort of passing off at common law and seek an injunction to stop HH-C from selling the shoes It will also seek damages for trademark infringement; an accounting for lost profits and possibly criminal sanctions. If it was already registered under the Trademarks Act, HHC would have the common law remedy of damages for the tort of passing off, and an injunction. Under the Act, it will also seek damages for trademark infringement; an accounting for lost profits and possibly criminal sanctions. d) A has invented a new type of light bulb and now wants to protect his invention. How will he do it and what is the length of protection? What if A worked for X Company and invented the light bulb as part of his employment. Assume there is no contract that deals with inventions. He will patent it and the protection is 20 years from the date of the application for patent. If A worked for X Company under Patent law he is the owner/holder of the patent if the contract between them is silent. (e) A who works for X Co., as part of his job, has designed a symbol/logo for a new line of short sleeve shirts. Can he protect his design if there is no contract that deals with such matters. Since this is Copyright law and since there is nothing in the facts that suggests that there is an employment contract under which deals with ownership of designs/symbols/works created by A, then unlike patent law, the employer is the owner of the design/logo created by A. Thus, A's employer is the one entitled to copyright A's design/logo or the copyright owner/holder and not A. Note: If this question dealt with something that could be patented, then on the facts, there being no contract about ownership of the thing created by A, A, the employee, would be the one entitled to patent it (i.e. the patent owner/holder) and not A's employer. f) What is the main difference between a license and intellectual property rights. Also what type of licenses are there? In an assignment, the owner of the property, called the assignor, could transfer, convey and sell all of his ownership or title in that property to another person, called the assignee. Being property, intellectual property and the rights that go with it, can also be assigned, and where this occurs, the assignee acquires and owns all the interest and title in the assigned intellectual property (including the rights that go with it), subject only to any restrictions provided for in the assignment agreement. A license of intellectual property rights is a permission granted by contract given by the owner of the intellectual property, (called the “licensor”) to another person (called the “licensee”) to use or exploit the intellectual property rights in a manner that, without the license, the owner of the intellectual property would be able to legally prevent. Exclusive, non-exclusive and sole License. 42