BU231 Midterm Review

Business Law (BU231)

Outline of Important Topics – Prior to Midterm (BU-231 – Fall 2021)

1. Strict Liability Torts

a. Public Nuisance – interfering with the usage of public land, i.e. cutting down
trees/setting up a private dwelling on public land
b. Private Nuisance – interfering with the usage of private land, i.e. noise complaints,
beekeeping on your balcony.
2. Intentional Torts
a. Assault – threatening to harm someone without their consent
b. Battery – physically assaulting someone
c. Trespass – Entering someone’s property unlawfully
d. Intentional Infliction of Mental Distress – intend to do something that is likely to cause
mental distress
e. False Imprisonment – imprisoning someone without their consent, i.e. “If you come out
I’ll shoot you”
f. Malicious Prosecution – reporting someone to the police when you don’t honestly
believe they committed a crime
g. Defamation – making an untrue statement about someone else.
i. Slander – spoken defamation
ii. Libel – written defamation
iii. Anti-Slapp Laws: when there is a strategic lawsuit against prosecution, such as
rich people hiring lawyers so they do not protest, you can do a one day trial to
get it dismissed.
iv. Test for Defamation: material lowers the reputation of the plaintiff, the materials
refers to the plaintiff, the material must be published to at least one other
person.
v. Defences to Defamation:
1. If the statement is true, but it is on the defendant to prove that.
2. Qualified Privilege – when you are obligated to say something, i.e. in
court.
3. Absolute Privilege – If an MP says something mean about another
political figure, they are off the hook while it remains in that context.
4. Responsible communication – if it is your job to communicate
information that is bad sometimes. It is hard to prove whether truthful,
so examining whether they did their due diligence.
3. Defences to Intentional Torts
a. Consent – the injured party consented to the act that caused the harm. Cannot consent
to severe bodily harm.
b. Self-Defence – Using force to defend yourself, cannot use unreasonable force, can assert
self-defence on behalf of another
c. Necessity – there was no other option other than to commit the tort, i.e. knocking down
a burning building.
d. Involuntariness – you were not willing to commit the tort, all torts must be voluntary.
e. Incapacity - you need the mental capacity to form intent.

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4. Unintentional Torts
a. Negligence – the careless causing of harm to the person or property.
i. Four Part Test:
1. Duty of Care – owing a duty of care to the plaintiff. If they are in close
proximity and it is reasonably foreseeable that you could cause them
harm, you owe them a duty of care. Unlimited liability, economically not
feasible to owe everyone in the world a duty of care.
2. Breach of the Standard of Care – did you act reasonably? If not then
your conduct fell below the standard of care.
3. Causation – But for your conduct, would this have happened? If no, then
the defendant is the cause of harm.
4. Damages – damages were incurred.
a. Special: quantifiable damages
b. General: pain and suffering
c. Punitive: extra penalty when the courts don’t want someone to
do the same thing twice.
b. Professional Negligence – When a professional falls below the standard of care in
performing their duties.
c. Product Liability
i. Negligence Manufacture – when the manufacturer has been negligent with
producing the product.
ii. Negligent Design – when the design has issues (the manufacturer made ti
perfectly, but the design itself was flawed)
iii. Failure to Warn – ongoing duty to warn about dangerous products, products
that are discovered to be dangerous, and to inform about any scientific and
technological advancements made to do with the product. Must take reasonable
efforts.
d. Occupier’s Liability Act – when there is a visitor on your property, you owe them a
standard of care to ensure they are reasonably safe. If someone is trespassing, you owe
them no deliberate harm. Extends to any person that is responsible for the land.
e. Defences to Negligence
i. Contributory Negligence – the plaintiff is at fault for the tort.
ii. Voluntary Assumption of Risk – the plaintiff was aware of the risk and did the
thing anyway.
f. Fiduciary Duty – two types, professional standard of care owed. You must place the
beneficiary’s interests before your own. You cannot act in a conflict of interest.
i. Established Fiduciary Duty – Doctors owe their patients a fiduciary duty, no
matter what.
ii. Ad Hoc Fiduciary Duty – When someone has some amount of power over
another. Are they able to exercise that power to affect the legal or practical
interests of another.
iii. Corporate Opportunity Doctrine – a director cannot take a corporate
opportunity for themselves.

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 1. For example, if someone offers you an idea knowing you are a director
of a company, you have a duty to offer that idea to the board and not
take the idea for your own.
g. Misrepresentation – when someone relies on your statement and suffers a loss.
i. Negligence – when you make a false statement without knowing it is false as an
expert, not doing your due diligence to make sure it is true.
ii. Fraudulent – when you make a statement you know is untrue.
iii. Innocent – when you did your due diligence and the statement turned out to be
false anyway.
5. Damages
a. Special (pecuniary) – economic losses
b. General (non-pecuniary) – pain and suffering
c. Punitive – extra punishment from the court to make sure it doesn’t happen again.
6. Other Business-Related Torts
a. Inducing Breach of Contract – when the defendant party approaches a party in a
contract and makes them breach their contract. Test for this:
i. The defendant has knowledge of the contract
ii. The conduct was intended to cause the third party to breach the contract
iii. The plaintiff suffered damages.
b. Unlawful Interference with Economic Relations – the defendant intends to injure the
plaintiff’s economic interests. The interference must have been illegal or unlawful. The
defendant actually suffers. I.e. Defaming someone to cause economic injury.
c. Product Defamation – when one party makes untrue remarks about another product
within their own product advertising.
d. Passing Off – when you brand your product as someone else’s product. Trademark
infringement. Using the goodwill of another brand to benefit your own sales.
7. Other Concepts:
a. Burden of Proof – the job of the plaintiff/defendant to show proof of the
accusation/defence.
b. Circumstantial Evidence – evidence that cannot be 100% proven, but it shows enough
proof that the odds are one party is liable.
c. Vicarious Liability – when a party is responsible for the actions of another party
(employer and employee)
8. Contracts:
a. Formation of Contracts: 7 Elements needed to form a contract (1st 3 are relevant in
court, always.)
i. Offer – a promise made by one party to do something. Must be communicated.
1. Offer vs. Invitation to Treat – invitation to create an offer. I.e.
advertisement or Ebay (allowing people to offer)
2. Standard Form Contracts – “take it or leave it” agreeing to terms and
conditions on Zoom. If there is ambiguity in the terms and conditions,
the court will adopt the conditions that benefit the consumer because
company should “die on their sword”. Unreasonable terms are
unenforceable.

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 3. Counter-Offers – if you are the recipient of an offer, you can deny it,
accept it, and count-offer.
ii. Acceptance
1. Timing of Acceptance – at any point in time, you can revoke the offer
before it is accepted. Lapsing offer – you revoke your offer at a certain
time. Unilateral contract – actual performance of the task is the
acceptance.
2. Communication of Acceptance – Trade Usage, shaking hands, whatever
is acceptable in the industry. I.e. putting groceries on a conveyor belt is
acceptance of the offer.
3. Jurisdiction of Contract – contract is formed wherever it is accepted.
Each important contract has a choice of law clause (which laws will
apply). If the contract is mailed, the contract is formed wherever the
mail is sent from. Choice of jurisdiction – where the disputes will be
brought to. Consumer Protection Act – B2C, the consumer cannot waive
the right to sue the company in Ontario Court.
iii. Consideration – the agreement that there will be an exchange of value. I.e.
Apply will receive ten million screens in exchange for millions of dollars, will pay
in March.
1. Gift/Promise vs. Contract – Promise is a one-way agreement, where
someone will do something in exchange for nothing.
2. Past Consideration – Once you enter a contract, it is solid. If you promise
something else within the contract, there is no consideration because
you are not going to receive anything for it. Past consideration does not
equal consideration. You should be paying less due to uncertainty/risk.
3. Debtor/Creditor Rule (Mercantile Law Amendment Act) – if the debtor
promises to lend the creditor 1000 for 50% interest that will be paid
back in 2 months, if the debtor accepts less money than what was owed
from the creditor to repay the debt, they cannot sue for the extra
money that was not paid back.
4. Consideration Alternative (Seals) – You can use a seal as consideration. If
one party is performing for another and there is no value from one side,
they can use a seal. Same as the peppercorn principle but more official.
Shows the existence of a contract.
iv. Intention to Create Legal Relations – you must have an objective reason to enter
into a contract, courts look from a reasonable third party perspective.
Regardless of what the parties themselves think, there must be no objective
reason the parties would think that there is no contract.
v. Capacity – in order to have the intent, you must have the capacity. Age of
minority and mentally incompetent people. Corporations are treated as people,
when they enter a contract no individual is bound to it. Partnerships, bands, etc.
are groups of people, so entering a contract is entering it with each partner.
1. Void vs. Voidable
a. Void: the contract never existed

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 b. Voidable: from this point forward, the contract does not exist.
Contracts entered into by a party without capacity is considered
voidable. Exception: employment contracts are non-voidable.
Essential goods such as food, shelter are enforceable against an
minor.
2. Ratifying Contracts when minor becomes age of majority – when
reaching the age of majority, an individual can either elect to treat the
contract as voidable or they can ratify the contract (make legally
binding).
vi. Legality – Illegal contracts are voided. Illegal contracts are ones that are violating
the Criminal Code. Violating public policies is also struck down by the courts.
Grey area.
vii. Certainty of Terms – if uncertainty, the contract is void. contract should include
the price to be paid, the description of the product or service, and the delivery
date.
b. Equitable Estoppel – only a defence. If a promise is made within the contract, and
someone alters their position, and they would suffer great hardship if the other party
chose to go back on that promise. I.e. worker told that drinking on the job is ok, if they
were to fire him for drinking on the job, it would cause him severe hardship.
c. Recission vs. Repudiation vs. Rectification
i. Rescission – to take back a contract. Could be through a mistake,
misrepresentation, duress, undue influence. Both parties are innocent.
ii. Repudiation – to repudiate. When one party fails to uphold the terms the
contract, the other party ends the contract and sues for damages. The other
party can accept the damages or continue performing.
iii. Rectification – when you fix a mistake in the contract. When both parties wanted
there to be something in a contract, but it doesn’t end up that way, the courts
can just go in and fix it.
d. Grounds under which a contract can be set aside (i.e., rescinded):
i. Mistake
1. Mistake in the terms of the contract
a. Typographical errors – you wrote something wrong in the
contract. You meant to add something, but you did not. The
party who made the contract has the option to rescind the
contract.
b. Mistake in reducing terms to writing – two parties orally agree,
but there is a mistake in the contract.
i. Mutual mistake – they thought they put it in. The court
is likely to rectify it.
ii. Unilateral mistake – one of the parties knows about the
mistake and allows the other party to sign. The party
that signed unknowingly has the rights to rescind the
contract.

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 c. Misunderstanding about the meaning of words – two or more
equally reasonable interpretations. Like to rescind if there is no
interpretation that makes sense.
2. Mistake in assumption about the subject-matter of the contract
a. Mistake about existence of the subject-matter – when you form
a contract, you are unaware that the subject of it does not exist.
I.e. farmer sells sheep internationally, returns and the sheep he
sold are dead.
b. Mistake about value of the subject-matter – both parties made a
mistake in identifying the value of the subject. I.e. selling a 2012
Honda but really it’s a 2007. Market fluctuations do not count.
3. Mistake about the identity of a party to the contract – you entered into
a contract with someone who did not reveal their identity to you. (Cases
of fraud)
a. What happens when corporation exists, but fraudster lies about
working for corporation? If the company exists, the contract is
void, meaning it never existed. The very first party to suffer
would receive its value back.
b. What happens when fraudster makes up non-existent
corporation? If the corporation does not exist, the contract is
voidable, meaning the contract is void going forward. The final
party to suffer would receive compensation.
c. Bona Fide Purchaser for Value without Notice – For a party to be
innocent, they must not be a family member, they must
purchase it for value, without notice of fraud.
4. Mistake about the nature of a signed document (Non-Est Factum) – not
the contract a party agreed to. Reliance on another person’s word that
the document contains the terms they agreed to. Blind person or
illiterate persons. Rescind that contract.
ii. Misrepresentation – a statement made during negotiation of a contract that
turns out to be false. You rely on that when entering the contract. What is said
by the other party can be treated as a term of the contract. This can be
rescinded. You can also get damages. Must be a statement of fact, not opinion.
1. Test:
a. Statement must be made
b. Statement must be false
i. Fraudulent – false statement is made knowingly or with
reckless regard to the truth.
ii. Negligent – statement is made when a duty of care is
owed and the making of the statement fell below the
standard of care.
iii. Innocent – if not a or b
c. Reliance on the statement caused the injured party to enter the
contract

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 d. Reliance on the statement caused the innocent party harm.
2. Expert Opinions are considered factual
3. Omission: If there is a defect that is not easily noticeable, the seller has
an obligation to disclose the defect to the buyer. I.e. you sell your house
in the summer, but in the winter the basement leaks.
iii. Implied Terms from the Sales of Goods Act, s. 15 – sets out 3 terms that you can
treat as if they were written in every contract, even if they don’t appear there.
1. Whereby the buyer expressly tells the seller the purpose for which they
are buying the good, the goods will match that requirement.
2. Where goods are bought through description, the goods will match the
description.
3. If it is usual in an industry that a good is of a particular quality, the
condition of your good will be of that industry standard, fit for its
purpose.
iv. Undue Influence – when one party has complete domination and control of the
other party. In this case, the contract is voidable. I.e. special relationships,
desperation, avoiding prosecution, unconscionable (unequal bargaining power)
1. Test: Plaintiff must show that
a. There is domination by the other party in the circumstances by
showing:
i. Special relationship
ii. Desperation at the time
iii. Under threat of prosecution at the time
iv. Unconscionable contract
b. The contract is unfair of disadvantageous to the weaker party.
v. Duress – Someone puts a gun to your head. Threatened violence or
imprisonment as a means of forcing a party into entering a contract. Voidable.
e. Contracts in Writing
i. Statute of Frauds – contracts only enforceable if in writing. Any contract to do
with guarantees, marriage, agreement not to be performed within one year,
land. Must be in writing. Can be written on a napkin, even. The contract is not
enforceable if it is not in writing. The contract can still exist but if it is not in
writing, the courts will not enforce it. In order for it to apply, the defendant must
plead the statute of frauds.
1. Guarantee – a conditional promise to pay the debt of another party if
the debtor is unable to pay.
2. Marriage must be in writing
3. No performance for at least a year
4. Land – leases, sales, not: repairs to a building, building contracts, room
and board arrangements.
5. Needs to be in writing: what you are buying, names of the parties, how
much you’re paying, payment details (when is it being paid), signature.
ii. Part Performance – when a contract that is not concerning land is not in writing,
and one of the parties has done stuff so inextricably tied to the land, it provides

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 undeniable evidence that the contract exists. Argument for even though the
contract is not in writing, the courts should enforce it.
iii. Sales of Goods Act – Goods over $50 require a receipt outside of Ontario.
iv. Consumer Protection Act – Direct agreements of $50 or more need to be in
writing.
f. Privity of Contract – courts interpret everything within the agreement. Then, they may
look at the surrounding circumstances if there are any ambiguities to resolve. If one of
the parties drafted the contract, and there is an ambiguity, the court will prefer the
interpretation that benefits the party that did not write the contract. (Die on your own
sword)
g. Assignment of Contracts -
9. Ethics
a. Incrementalism – someone will commit a smaller unethical act before committing a large
one. They are more likely to continue down the path of being unethical. Like the foot in
the door of unethics.
b. Overconfidence Bias – someone with a lot of experience might feel as though because
they have all this experience and seniority, they do not have to follow the rules.

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