Chapter 1 The Law and the Legal System

The Legal Environment for Business

Tort law
o Law that involves injuring others physically or resulting in economic
loss to others due to indirect or direct actions of the company, or on
company property
Contract law
o Laws relating to business activity
o Law that governs how a business operates, its structure/formation, how
employees are treated... etc
o Ex: labour law and employment, negotiable instruments, consumer
protection... etc

The Nature of Law

Law reflects the society that we live in

Shows what we value and what influences our social ordinance

Definitions of Law

Rules that enable people to live together and respect each others rights

Right versus Privileges

Right we can do a particular act with impunity

o Our rights to do an act imposes a duty on others not to interfere with
our actions
Privileges actions that may be taken by an individual under specific
circumstances and that may be withdrawn or curtailed by the state
o Rights can become privileges license fees can increase cash flow to
the government
o Ex: drivers licence and ownership

The Role of the Law

Law the body of rules of conduct that are obligatory in the sense that
sanctions are normally imposed if a rule is violated
The law usually changes to the needs of the people, rather than shapes the
people

Social Control

Sometimes laws arise not due to the demands of society, instead because the
law enforces behaviour that the legislator feels is desirable
o To shape and redirect social behaviour

o A type of social engineering

o Reflects the values of the person in political power at the time
Done by restricting individual rights and freedoms
o Will transfer the individual right to the governing body
These types of laws are usually ineffective unless there is punitive action or
complete government control of the activity
o Tend to be of a confiscatory nature
o Impinges on the freedom of the individual and alters the rights and
behaviour patterns

Settlement, Rules, and Protection

There are three functions of the law

o Settling disputes
o Establishing rules of conduct
Modern Ex: how to drive on a road
o Providing protection for individuals

The Early Development of Law

Within the Family

Passed on from word of mouth

To ensure ordinance between family members, then between families who
lived in close proximity
In the early days, individuals would be selected to settle disputes and offer
methods of settlement
o Disputants were forced to accept the decisions as binding
o Eventually, similar disputes led to consistent decisions, which shaped
how the community operated

Within the City-State

When a city or city-state emerged, there was a common desire to solve

common problems
o They needed to form an organization (government) to deal with
matters
Laws emerged slowly over a long period of time
When tribes invaded each other, the less civilized tribes would be influenced
by the existing government and laws
o How laws were passed on

The Rise of the Courts and the Common Law

Customary Law

Consistency in the decisions handed down by courts in similar cases created

the body of rules known as the law

The decisions were based on a religious foundation or the approval of the

assembled citizens of the community

Pre-Norman England

The early courts and law were imposed by successive invaders of England
The law was developed according to local custom or need
The small number of laws established were related to general crimes
o Penalties were monetary

Normal England and the Common Law

From decentralized, it became centralized

o The king had control over the shires
The right of hearing cases was transferred to the kings justices from the
shire courts
Common law justices of the royal court traveled throughout the country to
hear cases
o They would meet up in London and discuss their decisions with one
another
o Became the common law

The Sources and Components of Modern Canadian Law

Source: The Common Law

Common Law the law as found in the recorded judgements of the courts
o Aka Case Law
o The law is not found in a code, but in the recorded judgements of the
courts
o The Common Law provided the decision, reasoning and logic used in
each case
Statute Law a law passed by a properly constituted legislative body

Stare Decisis

to let a decision stand or To stand by a previous decision

The theory of precedent in Common Law
The decision of a similar case from before must be applied so long as
o It is from the same court
o Of equal rank (from their jurisdiction)
o Or from a higher court (from their jurisdiction)
Supreme Court
o Only the Supreme Court of Canada has the ability to overrule a
previous decision
o All decisions of the Supreme Court is binding on lesser courts
From other jurisdictions

o
There
o
o

Not binding, but are persuasive

is a need of predictability of the law and flexibility
Predictability allowed for stability
Flexibility was needed because it is seldom that two cases would be
exactly the same
Flexibility allowed for the Common Law to absorb many legal
principles, customs and laws from other legal systems and
sources

Source: Canon Law

Canon Law The law developed by the church courts to deal with matters
that fell within their jurisdiction
In the early days, the Church had jurisdiction over a few matters that
eventually found its way into the judicial courts
The judges looked at the Churchs previous decisions in order to come to their
own decisions
Canon Law found its way into the Common Law

Source: Law Merchant

Law Merchant the customs or rules established by merchants to resolve

disputes that arose between them, and that were later applied by Common
Law judges in cases that came before their courts
Trades within Europe developed common customs, which became standard
rules
o Disputes amongst the merchants were settled by the application of
these rules
Merchants belonged in guilds, who would have their disputes resolved by the
senior merchant of the fair/market
Eventually merchants who did not belong in a guild would appeal to the
judicial system for disputes
o The judicial system looked to the Law Merchant to resolve conflicts

Source: Equity

Equity Rules originally based on decisions of the king rather than on the
law, and intended to be fair
It is not part of the Common Law, but a supporting body
Takes precedence over the Common Law when the Common Law and rules of
equity conflict
Arose because the application of the Common Law became too rigid and
citizens began to appeal their cases to the King
o The King would resolve the issues based on what he considered fair
o Eventually, the principles he used to resolve a case became known as
principles of equity

When the Common Law is inappropriate to a case, the equitable

remedy is usually available to ensure a fair and just result

Component: Statute Law

Laws that are established by the governing bodies of particular jurisdictions

Rooted in the Latin word statutum it is decided
Wishes of the people as interpreted by the members of a provincial
legislature or Parliament of Canada are brought forward for debate in the
legislative assembly
o Will vote on and examine the proposed statute
Will be examined by the House of Commons and the Senate
Steps
1. Bill a proposed law presented to a legislative body
2. Motion the decision to read a bill a fist time
a. And printed for circulation
b. Members are given a period of time to read the bill and prepare to
debate its contents before it is brought forward again
3. Bill comes before legislature for a second hearing to be debated in
principle
4. Passes sent to a committee of the House or legislature for study on a
clause by clause basis
a. The Bill will be amended as necessary
5. Passed by committee Chair of the Committee reports the bill in final
form to the legislature
a. More debate and amendment before a third reading
6. Passed third reading
a. Sent to Senate at the federal level
b. Must be approved by a similar process
7. Once a bill has been passed by the House of Commons and Senate
royal assent
a. Royal assent approval by the Governor General (Federal) or
Lieutenant Governor (provincial)
b. Needed in order for a bill to become law
8. Bill does not become law until it is proclaimed when a law is effective
a. The government may not want to implement the law until sometime
in the future
b. Will be proclaimed then
Revised statutes updated or amended statutes
When a statute is properly enacted, it will apply to all those persons within
that jurisdiction
Can be used to create laws to...
o Cover new activities or matters not covered by the Common Law
o Change or abolish a Common Law rule or right
Can summarize in one written law the Common Law rules or principles
relating to a specific matter
Advantage: the ease by which the law may be changed

Common Law is a slow process in responding to changing societal

needs
Disadvantage: strictly interpreted by the courts
o Can lead to loopholes if not carefully crafted
o

Component: Quebecs Civil Code

Civil Code a body of written law that sets out the private rights of the
citizens of a state
Quebec codified much of the law that is normally founded in the Common
Law of other provinces
Intended to govern issues relating to...
o Persons, family, inheritances, property, obligations (forms of
contracts), prior claims and hypothecs (mortgages), evidence,
prescription, publication of rights, private international law
Because it has such a wide scope, it serves as a starting point or framework
to build upon for provincial legislation when constructing more specific laws
or creating exceptions

Codification of Common Law

Advantages of codification: Certainty

o However, the advantage of codification can be lost if judges interpret
the codes differently
To overcome this, judges in jurisdictions with codes refer to past
similar cases

Administrative Law

Administrative Law a body of rules governing the application of statutes to

activities regulated by administrative tribunals or boards
Regulations Procedural rules made under a statute
Administrative Tribunals agencies created by legislation to regulate
activities or do specific things
o Activities of these tribunals and agencies are considered administrative
acts
o Administrative law is the body of law that relates to their activities
Parliament does not directly supervise certain activities, but merely
authorizes it and sets out guidelines for the officials to follow in the
performance of their duties
Ex: broadcasting, employment standards, labour relations... etc

The Constitutional Foundations of Canadian Law

As we shift towards a democratic society, we needed some means by which

the powers of the government could be limited, in order to prevent the
government from abusing their power
Constitution the basis upon which a state is organized, and the powers of
its government defined
o Outlines the rights and freedoms of their citizens and the law-making
powers of the various legislative bodies of the state

The Canadian Constitution

A formal written document that sets out (1) the rights and freedoms of
Canadians and (2) the powers of the federal government and the provinces
Divided into two major parts
o Canadian Charter of Rights and Freedoms
o An amending formula
Outlines who has jurisdiction over what areas
o Sec 91 Federal jurisdiction
Also outlines that whatever is not explicitly stated as provincial
jurisdiction is automatically directed to federal
Ex: new technology is monitored by federal government
o Sec 92 Provincial Gov
Sometimes, due to wording and varying interpretations, federal and
provincial jurisdiction overlap

The Canadian Charter of Rights and Freedoms

Sets out the basic rights and freedoms of all Canadians

The Charter is entrenched in the constitution
Can only be repealed or amended by an Act of Parliament consented by at
least 2/3 of the provinces that together contain at least 50% of the countrys
population
The Charter states that the rights and freedoms are subject only to such
reasonable limits
o Legislation can be enforced to limit or restrict the right or freedom
where Parliament or provincial legislature can justify
o Ex: Freedom of speech vs. Defamation
The Charter specifically permits Parliament or provincial legislatures to pass
legislation that conflicts with the rights or freedoms by way of a
notwithstanding clause
o Permits statutes to be enacted to meet special situations without the
necessity of a constitutional amendment
o Legislation would expire at the end of a five year period unless
specifically renewed

Fundamental Freedoms

Freedom of conscience and religion

Freedom of thought, belief, opinion and expression, including freedom of the
press and other media of communication
Freedom of peaceful assembly
Freedom of association

Mobility and Personal Liberty

Mobility
o Canadian citizens are free to remain in, enter or leave Canada
o Canadian citizens can live wherever they want in Canada
Personal Liberty
o Right to enjoy life without interference by the state

Right to Due Process

Right to be informed, on arrest or detention, of the reasons for the arrest, and
the right to retain and instruct a lawyer promptly after the arrest or detention
has been made
Entitled to be brought to trial within a reasonable time
Presumed innocent until proven guilty
Pending trial, a person should not be denied reasonable bail unless the denial
can be justified
Evidence provided in court cannot incriminate a person in any other
proceeding
Allowed an interpreter for those who do not speak English and those that are
deaf
Because it is part of the constitution, the state and its law enforcement
agencies must respect them

Equality Rights

Every individual is equal before the law

Equal protection and benefit without discrimination on the basis of race,
creed, colour, religion, sex, age, national or ethnic origin, or any mental or
physical disability
Permits affirmative action programs or laws
o Programs or laws that improve the conditions of disadvantaged
individuals or groups

Enforcement of Rights

People who believe their rights have been infringed upon may bring their
case to the courts for a remedy that would be appropriate in the
circumstances
The Charter applies only to governments and not individuals

So that they may not interfere an individuals rights and freedoms

Individual can carry on business without government interference or
restriction
If a legislation is passed that encroaches on the individual rights or freedoms,
then the affected individual needs to appeal to the courts
o This is because all statues passed are presumed to be valid until
determined otherwise
o Then up to the government to show that the statue in question is not
invalid, but a reasonable limitation on the right or freedom, which can
be demonstrably justified in a free and democratic society
Occasionally, the government may bring proposed legislations before the
Supreme Court of Canada to determine whether it abides by The Constitution
o
o

Protection of Other Special and General Rights and Freedoms

The Charter sets out basic (minimum) rights and freedoms, and
acknowledges that there are other rights and freedoms that everyone, or
special groups, are entitled to enjoy
Groups
o Aboriginals
Other rights
o Before the Charter, there were many rights that the public has enjoyed
which are not included in the Charter
o The Charter simply outlines basic rights and freedoms, they do not
prevent the public from enjoying the other rights and freedoms
o However, because they are not protected in the Charter, the
government can at any time infringe on these rights
Remainder of the Charter deals with governments and their powers
o Also states that it does not change the legislative jurisdictions of the
various legal bodies and authorities
o The Charter simply states the rights and freedoms that both levels of
government must respect in their legislative jurisdiction

Classification of Laws

Statute Law and Common Law can be classified into two categories
o Substantive Law all laws that set out the rights and duties of
individuals
Substantive right an individual right enforceable at law
o Procedural Law the law or procedures that a plaintiff must follow to
enforce a substantive law right
o Ex: if you hit your friend, this is an infringement on the substantive
right; the actions he takes to take you to court is part of the procedural
law
Substantive law can be divided into two parts

Public law the law relating to the relationship between the individual
and the government
Ex: Income Tax, Highway Traffic Act... etc
If an individual failed to comply with the duties imposed, it is up
to the Crown the institute proceedings to enforce the law
Private law aka civil law the law relating to the relationship between
individuals
If private law has been infringed, it is up to the injured party to
bring it to court