Intellectual Property is intangible property that covers a variety of creations.

Intellectual property law is a set of rules that aims to

balance the rights of a creator against the public interest. They provide time-limited monopolies to certain types of innovations,
goods, and services in exchange for sharing them with the public. Different laws apply to different creations and provide
different protections• Intellectual Property includes Copyrights– Trademarks– Patents– Industrial design. The Copyright Act is
intended to strike “a balance between promoting the public interest in the encouragement and dissemination of works of the arts
and intellect and obtaining a just reward for the creator” h copyrights can be registered; copyright protection arises automatically
upon the creation of an original work in a fixed medium. To protect the creative process, the law prohibits others from copying
an author’s work for a specified period of time to allow the author to benefit from the work, whether or not the author registers
the copyright

Constitution Act, 1867, 30 & 31 Vict, c. 3.– s. 91(23) grants the Parliament of Canada the exclusive right to legislate in respect of
copyrights. • Copyright Act, R.S.C. 1985, c. C-42

PROTECTED WORKS- Literary works– Books, pamphlets, computer programs• Dramatic works– Choreographic and
cinematographic works• Musical works– Any work of musical composition, with or without words• Artistic works– Paintings,
maps, sculptures, photographs, architectural works.

COPYRIGHT TERMS- General rule: Life of the author (year-end) + 70years• Joint authorship: Author who dies last (year-end)
+ 70 years.

Copyright in performer’s performance (s. 15) • Copyright in sound recordings (s. 18) • Broadcasters’ copyright in communication
signals (s. 21)

MORAL RIGHTS- Authors have a right to the integrity of the work and to be associated with the work (s.14.1) • Protection
against distortion, mutilation and modification to the prejudice of the author’s honor or reputation. (s. 28.2) • Same term of
copyright. • May be waived, but not assigned. e (i) the right of attribution, (ii) the right of integrity over a work, and (iii) the right
to be associated (or not associated) with a work. The right of attribution allows authors to ensure that their names are attached to
the work. It also allows an author to remain anonymous or to work under a pseudonym. In either case, the attribution right
prevents others, even if they own the copyright, from using the work and claiming it as their own. The right of integrity provides
an author with a further degree of control over the work after it is sold.

Remedies for Copyright Violations•

Civil law remedies: monetary damages for actual lost profits, aggravated & punitive damages and non-monetary remedies such
as an Anton Piller order, deliver up order an accounting of profits and an injunction•

The Copyright Act also allows the plaintiff to seek Statutory Damages instead of actual damages• Statutory damages in
commercial copying cases range from $500-$20,000 per illegal copy•

Statutory damages for private use copying range from$100 to $5,000 for all the infringements alleged in the lawsuit.

Fines up to $1 million and jail sentences of up to 5 years are also possible

Trademarks apply to names, symbols, logos and sounds that distinguish goods. Trademarks must be distinctive, so if one
trademark is confusing with another it is illegal• Test is: Would “ordinary hurried customer” be confused? Trademarks do not
have to be registered but it does extend protection across Canada• Trademark registration lasts 10 years but can be renewed every
10 years forever• If not registered you can still sue a Copier under the tort of passing off• Ownership is based on the first person
to use the trademark.

If a trademark is not used it can be lost due to abandonment and others can have the registration expunged• If you do not prevent
others from using your trademark you can lose your rights if the term becomes the generic term for similar products. zipper,
escalator, bubble wrap, aspirin, thermos, trampoline, scotch tape.

Trademark infringement occurs when other uses a trademark identical or confusingly similar to another• The trademark owner
can sue under the Trade-mark Act or in tort for passing off• Civil law Remedies: damages for actual loss, the profits earned by
the copier, aggravated & punitive damages and non-monetary remedies of an Anton Piller, a deliver up order, an Accounting and
an injunction.

Suing for trademark infringement and passing off is how companies protect against illegal counterfeiters.
PASSING OFF occurs when a company represents its business, goods, or services as someone else’s through a confusingly
similar mark or name

Three basic categories of marks can be registered by businesses: ordinary marks, certification marks, and distinguishing guises. ■
Ordinary marks are words, symbols, or designs that distinguish the goods or services of a business. Sometimes, the words are
names (for example, Tom’s House of Pizza® in Figure 17.5), and other times they are slogans (for example, “Pizza Made to
Perfection” ™). ■ Certification marks identify goods or services that meet a standard set by a governing organization (for
example, “Recognized by the Canadian Dental Association”). ■ Distinguishing guises identify the unique three-dimensional
shape of a products or its package

PATENTS grant a time-limited monopoly to inventors, allowing them to exclude others from making, using, or selling their
inventions or improved versions of their inventions for a period of up to 20 years from the date of filing the applications
PATENT law grants the inventor an exclusive right for 20 years• The creator must reveal the entire invention process so others
can copy it when the patent expires. Patent Act, RSC 1985, c P-4 (Can)

AN INDUSTRIAL DESIGN is a unique pattern, shape or ornament that appeals to the eye and is commercially reproduced• e.g.
a uniquely designed chair, handle, spoon, wallpaper or dish pattern, T shirt design, perfume bottle, computer icon• You must
register within one year of the design becoming known to the public to get protection and only the owner can register•
Registration gives a 10 year exclusive right but after the first 5 years a fee must be paid or the registration expires.

Civil law remedies are available if the industrial design is infringed – damages for lost profits and punitive damages and non-
monetary remedies of Anton Piller order, an accounting, a deliver up order and an injunction• Product should be marked with an
encircled D and the owner’s name, and if not, then damages can't be awarded, only an injunction.
ROYALTIES are monetary compensation given to an author in exchange for the use of their intellectual property an advance on
royalties is an interest-free incentive that is paid to the author before the completion of a work and is later deducted from the sum
of royalties. TRADEMARK DEPRECIATION occurs when one person uses the mark of another to depreciate the value of its
goodwill.
A TRADE SECRET is a special type of confidential information, such as a formula, pattern, device, or compilation of
information, that is used to obtain a business advantage over competitors

COPYRIGHT – statutory, not mandatory but beneficial, protects original forms of expression (e.g., dramatic, literary, software,
musical), generally life of the author plus 50 years

TRADEMARKS- statutory and common law (passing off), not mandatory but beneficial, marks used in association with
businesses, wares, and services, renewable in perpetuity, unless mark is not used and then it is expunged.

PATENTS- statutory, mandatory, useful, non-obvious, and novel inventions that are patentable subject matter, maximum of 20
years from the date of filing application.

INDUSTRIAL DESIGNS- statutory, mandatory, features, such as shape and pattern, that appeal to the eye as applied to a
finished article, maximum of 10 years from the date of registration

______________________________________________________________________________________________

Real property includes– Land, things attached to land (e.g. fences and buildings), and things attached to them (fixtures).

History of Real Property• Law relating to real property in Canada is based on concepts that evolved in Norman England1,000
years ago– Notion in countries where the British Crown remains the formal head of state that the Crown owns all the land and
that all other landowners are “tenants” who hold a lesser interest in the land•

“Interest”: Any right, claim, or privilege with respect to real or personal property. Copyright © 2018 Pearson Canada Inc. 14 -
5Interests in Land•

Enforceable rights related to piece of land, including– Estates– Non-possessory interests

Estate interest: exclusive right to possession of real property for a period

Fee simple: largest bundle of rights one can own– E.g. may choose who gets it on your death– Generally unlimited use and
abuse of property• Limitations on rights of ownership– Tort obligations associated with land (chapter 5)– Government regulation,
e.g. environmental and zoning laws– Expropriation: forced sale to government for public purpose.
Leasehold– Right to exclusively possess for specified period. Period must be stated with certainty at outset. Compare life estate:
uncertain duration of life.

Shared ownership– Several parties own single piece of land– Each party has undivided interest No party can exclude others
from property. Each party is entitled to share in general profits.

Forms of shared ownership– Joint ownership (joint tenancy)– Co-ownership (co-tenancy, tenancy-in-common)– Condominium
(hybrid)

Joint ownership can change to co-ownership if– severance or– partition occurs

IN JOINT-Right of survivorship– No right to dispose of interest on death– Interest automatically passes to remaining tenants.
Ultimate survivor acquires entire property

IN CO-OWNERSHIP- No right of survivorship– general right to dispose of interest on death– often preferred in business to
allow family to receive business property on death

Condominium: joint control– Combination of individual and shared ownership Individual ownership of single unit (e.g.
apartment) Co-ownership of common areas (e.g. pool, gym)

EXPROPRIATION occurs when the government takes property for a public purpose

a REVERSION occurs when the property returns to the person who holds the fee simple

a REMAINDER automatically entitles the chosen person to possess the property when a life estate ends

A LEASEHOLD ESTATE occurs when a person has exclusive rights to a property for a specific period. A lease is like a fee
simple or a life interest because it carries the right of exclusive possession. But a lease is also different because it is not defined
by a life. It is defined instead by a block of time

An easement is a right to use a Neighbour's land. Most easements are positive. You may, for instance, let me drive across your
property to reach a road, or periodically drain my water reservoir onto your land.

A dominant tenement is a property that benefits from an easement and a servient tenement is a property that accommodates an
easement. An easement can run with the land, meaning that it can apply even if different people acquire possession of the
affected properties. an easement by prescription is created if land is used in a particular way, for a long time, without secrecy,
without objection, and without permission

A RESTRICTIVE COVENANT is a promise to use a piece of land in a way that benefits one property and burdens another

A building scheme covenant is a collection of restrictive covenants that are used to control the development of an entire area. The
first is that minerals consist of virtually every substance in the ground, including gold and aluminum, oil and gas, and sand and
gravel. The second point is that a mineral lease is different from other types of leases. That difference reflects the fact that a
mineral lease is almost always acquired from the government, even if some person has the fee simple to the affected land.

A profit à prendre is a right to take something valuable away from another person’s property.24 That sort of right can apply to
minerals, but it can also deal with other natural substances, such as blueberries and moose.

a fixed-term tenancy exists when it is possible at the outset to determine when the tenancy relationship will end

a periodic tenancy is for a fixed period and is automatically renewed at the end of each term unless one of the parties provides
notice of termination

a TENANCY AT WILL exists if there is no set term and either party can terminate the lease at any time

a TENANCY AT SUFFERANCE occurs when a tenant continues to possess the premises at the end of a lease without the
landlord’s permission

AN ASSIGNMENT occurs when a contractual party transfers its rights to a third party.

REAL COVENANTS are promises that are directly related to the land, but not promises that are merely personal obligations

An assignment would not necessarily protect you from liability. If your assignee did not fulfill the lease, the landlord could
normally demand relief from you.
A sublease occurs when a tenant grants a lease to a third party.38 In that case, the third party would not step into your shoes. You
would continue to be the tenant under the original lease, but you would also be a landlord under the sublease.

COMMERCIAL LEASE occurs when premises are rented for business purposes.

• Express or Implied: The parties will normally set the rent in advance. But even if they do not expressly agree on a price,
the law will normally require the payment of a “reasonable” amount.
• Calculation of Rent: In residential leases, the rent is usually set at a flat rate that reflects the type of tenancy
• A gross lease requires the tenant to pay a single sum, which is intended to cover both rent and costs (such as utilities,
taxes, and operating expenses)
• A net lease therefore requires the tenant to separately pay rent and a proportion of costs. If costs rise, then the burden is
shared proportionately by the landlord and the tenant.
• Occupation: The obligation may be breached if the lease is practically ineffective. That may be true if the landlord cannot
provide exclusive possession because a prior tenant still occupies the premises.
• Physical Interference: A breach may occur if the landlord is responsible for the tenant’s lack of physical enjoyment. That
may be true if the landlord allows carbon monoxide to seep up from a parking lot, or frequently uses a jackhammer that
causes an intolerable amount of noise and vibration

REMEDIES- EVICTION or right of re-entry allows a landlord to resume possession of the premises. FORFEITURE occurs
when a tenant loses its interest in a property. Distress occurs when the landlord seizes the tenant’s belongings and sells them to
pay the rent. Once again, each jurisdiction has detailed legislation on this point.

DIFFERENCES BETWEEN RESIDENTIAL AND COMMERCIAL LEASES:

■ Termination: In the commercial context, it is usually possible to terminate a periodic tenancy by giving notice equal to the
length of one term. Residential notice periods, however, tend to be much longer—60 or 90 days may be required for a monthly
lease. Likewise, in the residential context, a periodic tenancy may automatically arise at the end of a fixed-term lease unless
notice is given.

■ Rental Rates: Commercial parties are generally free to agree upon any price. Residential leases, in contrast, are governed by
rent control mechanisms that prevent landlords from gouging tenants.

■ Distress: A commercial landlord may be entitled to seize and sell a tenant's belongings if rent is not paid. That right usually is
not available against a residential tenant.

■ Repair and Maintenance: Unlike a commercial landlord, a residential landlord has a statutory obligation to repair and maintain
the property

■ Mitigation: Although a commercial landlord may be relieved of the need to mitigate when a tenant wrongfully vacates a
property, a residential landlord is generally required to take reasonable steps to minimize the losses that result from a breach.

Real Property: Sales and Mortgages

REGISTRATION SYSTEM documents the existence of interests in land. A registry system provides an opportunity to inspect
and evaluate documents that may affect real property. That model traditionally operated east of Saskatchewan. A chain of titles is
a series of transactions in which ownership was validly passed from one person to the next. Theoretically, it is possible to trace
that chain all the way back to the time when the government held the land. As a result of legislation, however, it is only necessary
to go back a much shorter period— usually 40 years.

A LAND TITLES SYSTEM generates certificates of title that virtually guarantee the validity of the interests that are listed.
INDEFEASIBILITY means that, with very few exceptions, the interests that are included in a certificate of title cannot be
defeated. The Mirror Principle states that all the interests listed in a certificate of title generally are valid. The curtains principle
states that the only valid interests in a property generally are the ones listed in the certificate of title he curtains principle states
that the only valid interests in a property generally are the ones listed in the certificate of title.

The insurance principle states that a person who suffers a loss because of an error in the system generally is entitled to
compensation. An assurance fund exists for that purpose.
 • Intermediate Owners: These are individuals or entities who hold ownership rights to a property for a period, but not
necessarily the ultimate or final ownership. In real estate, for example, this could refer to someone who holds a leasehold
interest in a property rather than outright ownership. Intermediate owners typically have certain rights and
responsibilities associated with their ownership, such as the right to use the property for a specified duration or purpose.
• Deferred Owners: This term is a bit less common but could refer to owners who have a delayed or postponed
entitlement to ownership rights. For instance, in the context of trusts or estates, a deferred owner might be designated to
inherit or gain ownership of property later, such as when certain conditions are met or upon the occurrence of a specific
event. The ownership rights are deferred until a certain point in the future.
• Short-term Leases: A short-term (say, three-year) lease may be enforceable against a purchaser even if it is not
registered. For that reason, you should inspect the premises for any signs of tenants.
• Prescription and Adverse Possession: it is sometimes possible for a person to acquire an interest in land because of a long
period of use or occupation. That is true under registry systems and even under some land titles systems. Consider that
fact when you inspect the premises. Look for signs of “squatters.”
• WRIT OF Execution is a document that allows a court’s judgment to be enforced.
• A SALE occurs when ownership is transferred in exchange for consideration.
• A REAL ESTATE agent can search the market for alternatives and help you find the right property in the
first place. An agent can also put you in contact with the other people you will need to safely purchase
property.
• Lawyer: It is important that you hire a lawyer. Perform a large number of other tasks, including: ■ communicating with
the seller or the seller’s lawyer ■ verifying which secondary pieces of property are included in the sale (such as machines
in the factory) ■ ensuring that local by-laws will allow you to use the land for your intended purpose ■ obtaining
insurance coverage for the property ■ checking mortgage arrangements (if any) ■ preparing, filing, and registering the
documents needed for the transfer It is also very common for the lawyer to secure the services of other professionals on
this list.
• Environmental Auditor: Depending upon the nature of my business, you might be concerned by the possibility that my
factory has leaked toxic substances into the environment.
• An Agreement of Purchase and sale is a contract for the sale of land. The vendor is the person who sells the
land. The purchaser is the person who buys the land
• A CONDITION OR CONDITION PRECEDENT is a requirement that must be satisfied before the transaction can
be completed
• a PURCHASER’S LIEN allows the purchaser to have the land sold to satisfy the outstanding debt
• a Vendor’s Lien allows the vendor to have the property sold to satisfy the outstanding debt

Mortgage is an interest in land that provides security for the repayment of a debt. The mortgagor is the person who borrows the
money and provides the interest in land. The mortgagee is the person who lends the money and acquires the interest in land.

• Registry System:
o In the registry system, land ownership and any encumbrances (such as mortgages or easements) are recorded in a centralized
registry or database maintained by a government authority, typically the Registrar of Deeds or a similar office.
o The registry system relies on a chain of title, which is a sequential list of all transactions pertaining to a particular property.
Each time a property changes hands or an interest is created, modified, or extinguished, a new entry is made in the registry.
o This system is prevalent in many common law countries, including the United States, Canada, Australia, and England.
• Torrens System:
o The Torrens system, also known as the "land titles" system, was developed by Sir Robert Torrens in the 19th century. It is
designed to simplify and speed up transferring land ownership and provide a more secure system of land registration.
o In the Torrens system, instead of relying on a chain of title, ownership of land is determined by the state-sponsored issuance of
a certificate of title, which serves as conclusive evidence of ownership.
o The certificate of title is maintained by a central land titles office, and it contains detailed information about the property,
including the current owner, any encumbrances, and a delineated description of the land.
o One of the key features of the Torrens system is the principle of "indefeasibility," which means that once a person is registered
as the owner of land, their title is generally immune from challenge except in limited circumstances, such as fraud.
THE EQUITY OF REDEMPTION entitles the mortgagor to recover legal title to the land by repaying the loan even after the
due date.
VULNERABILITY OF MORTGAGORS Although subsequent mortgages can help you raise additional funds, they also carry an
obvious danger. If you have two mortgages, you also have two outstanding loans. And if you fail to repay either one of them, you
may lose your land.
An acceleration clause requires the mortgagor to immediately repay the full amount of the loan if they miss a single payment.
A PREPAYMENT PRIVILEGE allows early or additional payments to be made without penalty.
REMEDIES- ■ suing on the covenant ■ possession of the property ■ foreclosure ■ sale
THE REMEDY OF JUDICIAL SALE occurs when the mortgaged property is sold under a judge’s order.
 sue on the covenant mortgagee sues mortgagor for payment of debt • personal action not available in some jurisdictions
 Possession- mortgagee takes possession of property • mortgagee usually “wants money, not mud”, severely restricted in
Western Canada, mortgagee required to maintain land and generate income from land • mortgagor may later exercise
equity of redemption
 Foreclosure-mortgagee extinguishes mortgagor’s equity of redemption • lengthy and complicated procedure • limited
availability in some jurisdictions • mortgagee usually “wants mud, not money” • potential unfairness to mortgagor and
subsequent mortgagee if value of land exceeds amount of debt
PERSONAL PROPERTY, RISK MANAGEMENT, AND INSURANCE
■ Found Property: If you lose property, you can recover it from me even though, as a finder, I acquired rights against everyone
else in the world.
■ Stolen Property: If a thief steals your goods and sells them to me, I may be liable for the tort of conversion. That is true even if
I reasonably believed that the thief was the real owner.30 As a general rule, people cannot give more than they actually have.31
The thief could not sell to me something that still belonged to you.
Lost Property: Even if I found or stole your goods, you cannot sue me unless you know that I have them. Personal property,
however, is easily moved from one place to another. And while there are registration systems for keeping track of some chattels
(such as vehicles), it is often impossible to locate goods that have gone missing.
Non-compensable Loss: Personal property may be damaged innocently or in a way that does not support a valuable cause of
action. Your iPhone may be ruined because your dog knocked it to the ground. The courier company that lost your painting may
be fully protected by an exclusion clause that you signed
PROPERTY INSURANCE is a contract in which an insurance company, in exchange for a premium, promises to pay money if
property is lost, damaged, or destroyed.
Third-Party Coverage Liability insurance is said to provide third-party coverage because, in one sense, it is aimed at providing
compensation to someone outside of the insurance contract.34 If the insurance policy is triggered, the insurance company pays
damages to the person that was wrongfully injured by the insured policyholder.
First-Party Coverage Property insurance is said to provide first-party coverage because it does not require the involvement of an
outsider. If the insurance policy is triggered by loss or damage to the insured’s property, the insurance company pays money to
the insured party itself
INSURANCE IS A COMPLICATED AREA OF LAW.
1. Scope of Coverage As a matter of risk management, it is critical to understand the scope of coverage that is provided by
an insurance policy. You get only what you pay for. 35 Most insurance contracts are based on standard form agreements
that cover common events, such as fires, storms, and thefts.36 That basic coverage, however, is subject to restrictions.
Standard fire insurance, for instance, may not cover accidents that arise from the storage of explosives or from riots.
Generally, you can obtain extra protection for those events, but you will have to pay higher premiums.
2. INDEMNIFICATION, which is reimbursement for a loss that has occurred. And it seldom offers even that much relief.
Depreciated Value: There are different ways of calculating the loss that occurs when property is lost, damaged, or
destroyed. A deductible occurs when the insurer is not required to provide indemnification for the initial part of a loss.
3. An insurable interest exists if a person benefits from the existence of the property and would be worse off if it were
damaged.
4. "Excessive insurance" refers to having more insurance coverage than necessary for a particular risk or asset. For
example, insuring a car for an amount greater than its market value would be considered excessive insurance. While it
might seem like comprehensive coverage is always beneficial, paying for more coverage than you need can lead to
unnecessarily high premiums.
On the other hand, "insufficient insurance" occurs when the coverage you have is inadequate to fully protect against potential
losses. This can leave you vulnerable in the event of a claim, as you may have to pay out-of-pocket expenses beyond what your
insurance policy covers.
5. SUBROGATION allows an insurance company to stand in the insured party’s place and acquire any rights that it may
have against a third party
6. Cyber-attack insurance provides protection from the economic consequences of computer saboteurs. key-person
insurance provides protection against the loss of important members of a business. Life, health, and disability insurance
provide protection for employees in the event of health problems.
7. A FIDELITY BOND provides coverage when an employee steals money, equipment, or other assets from a business or
one of its clients
8. SURETY BOND is used to assure a client that they will be financially protected if a job is not performed as promised
9. A BAILMENT occurs when one person temporarily gives up possession of property with the expectation of getting it
back. The person who delivers the property is the bailor, and the person who receives it is the bailee. Bailments arise in
many circumstances, including leases for personal property
10. A SUB-BAILMENT occurs when property that is already held under a bailment is transferred into a further bailment. In
that situation, the sub-bailee may be held liable if the property is lost or damaged.
11. Duty of Utmost Good Faith• When a person applies for insurance there is a duty of utmost good faith• Applicant must
disclose any important information relevant to the assessment of their insurance risk whether the insurer asks or not•
Failure to disclose a material fact may mean the policy is void• Do NOT LIE to an insurance company or you may have
no coverage.

BASIC FORMS OF BUSINESS ORGANIZATION

A manufacturer, for example, faces the risk that no one will buy its products, or that it will have to compensate someone hurt by
its products. But who bears those risks? In part, the answer depends upon the type of organization that is carrying on the
business. We will focus on four possibilities: ■ sole proprietorship ■ general partnership ■ limited partnership ■ corporation

The sole proprietorship is the simplest form of business organization. A sole proprietorship comes into existence when a person
starts to carry on business on their own, without adopting any other form of business organization, such as a corporation. If you
agree to cut your neighbor's grass for money each week, you are carrying on business as a sole proprietor

■ The sole proprietor is exclusively responsible for ■ performing all contracts entered into in the course of the business,
including contracts with customers, suppliers, employees, and lenders; and ■ all torts committed personally in connection with
the business and all torts committed by employees in the course of their employment.3 ■ For income tax purposes, the income or
loss from the sole proprietorship is taxed in the hands of the sole proprietor.

Advantages of Sole Proprietorships• Simple, cheap and easy to form• You are your “own boss” • Don’t have to share profits• Can
hire employees

Disadvantages of Sole Proprietorships• Unlimited Personal Liability – owner’s personal assets can be taken to pay the debts of
the business• Pay tax at personal tax rates, higher than small business corporate tax rate• One person does not have all the skills
needed to run a business• Difficult to raise money• Difficult to transfer ownership

UNLIMITED PERSONAL LIABILITY of a sole proprietor means that third parties may take all the sole proprietor’s personal
assets to satisfy the business’s obligation

A second requirement, which applies to all forms of b

usiness organization including sole proprietorships, is that a business license is necessary for some types of activities. A
business license is government permission to operate a certain kind of business. For example, most municipalities require taxi-
driving businesses and restaurants to obtain licenses. Provincial governments have enacted licensing requirements for many types
of businesses, including real estate agents, car dealers, and securities brokers.

GENERAL PARTNERSHIP is a form of business organization that comes into existence when two or more people carry on
business together with a view to a profit. ■ A partner cannot be employed by the partnership. ■ All benefits of the partnership
business accrue directly to the partners. ■ All partners, even those who did not consent to a particular obligation, are personally
liable for all the obligations of the business, including torts committed by a partner or an employee of the partnership during the
partnership’s business

A partnership a A partnership does not necessarily exist simply because the parties share profits, however. People may share
profits without carrying on business together, such as in the following situations: ■ A loan is to be repaid out of the profits of the
borrower’s business. ■ An employee’s remuneration varies with the employer’s profits, such as in a profit-sharing arrangement.
■ The purchaser of a business agrees to pay some of the business’s profits to the seller as a way of paying the purchase price. An
agreement is a contract between partners regarding the operation of the partnership.

Disadvantages of Partnerships• Unlimited personal liability: Partners personal assets can be taken to pay off partnership debts,
you can lose all your personal assets if your partner is careless or dishonest and you did nothing wrong - Joint Liability• Disputes
often arise in partnership• Pay taxes at higher personal not corporate income tax rates

If there is no written partnership agreement The Partnerships Act, RSO 1990, c P.5, will impose terms, some may not be the
ones that you want (section 24)– All partners share equally in capital and profits– Every partner may take part in management–
No partner is entitled to remuneration for acting in the partnership business– No change in the nature of the partnership business
without unanimous consent– No new partners without unanimous consent

The fiduciary duty requires a partner to act honestly and in good faith with a view to the best interests of the partnership.
Compliance with the duty reduces the risk of unwanted liability. Partners must never put their personal interests ahead of those of
the partnership.

Second, a partnership agreement can be used to manage the risk of liability. Each partner’s authority can be limited and subject to
control and monitoring mechanisms. For instance, restrictions can be placed on who can write cheques or sign contracts. Note
that when a partner fails to follow the rules and creates a liability to a third party, the firm may still be liable.

Third, partners can take practical steps to reduce the risk of partnership liability. Many partnerships involve only a small number
of people who know each other well. A natural relationship of trust and confidence reduces the risk of unwanted liability. Where
each partner is involved in the business daily, opportunities exist to informally monitor each other.

A LIMITED LIABILITY partnership, individual partners are not personally liable for the professional negligence of their
partners and some other obligations if certain requirements are met. HOLDING YOURSELF out as a partner occurs when you
hold yourself out as a partner or allow someone else to do so.

DEFAULT RULES in partnership statutes are a kind of standard form agreement for the internal organization of a partnership
that applies unless the partners agree to some other arrangement.

Dissolution is the termination of a partnership relationship. Partnerships can be dissolved easily. Unless the partners agree
otherwise, a partnership terminates when: ■ one partner gives notice of termination to the others ■ a partner dies or becomes
insolvent23 ■ the partnership is set up for a specific purpose or for a limited time, such as to operate a gardening business for one
summer, and that purpose has been achieved or that time expires.

A LIMITED PARTNERSHIP is a partnership in which the personal liability of at least one partner is limited to the amount of the
partner’s investment in the business.

The directors also usually adopt arrangements for carrying on the formal legal business of the corporation in a general bylaw.
The directors decide, among other things: ■ the notice to be given for meetings of directors and shareholders ■ what constitutes a
quorum for meetings ■ who can sign contracts on behalf of the corporation ■ what officers (such as a President) the corporation
will have

A SHAREHOLDERS’ AGREEMENT is a contract between shareholders that customizes their governance arrangements. A
MINUTE BOOK IS a book in which corporate records are kept.

Separate legal existence of corporations has three important implications: ■ A shareholder can be an employee or a creditor of
the corporation. The shareholder and the corporation are two distinct entities that can contract with each other. ■ The corporation
is
 unaffected if a shareholder dies or withdraws from the business. ■ The corporation is treated as a separate taxpayer for income
tax purposes. Income or losses from the corporation’s business are attributed to the corporation, and it is liable for the applicable
tax. Shareholders are taxed only when they personally receive something from the corporation, such as a dividend. A dividend is
a payment of cash or property by the corporation to shareholders that is authorized by the directors.

A COURT MAY PIERCE the corporate veil by disregarding the separate legal existence of the corporation to impose personal
liability on a shareholder for a corporation’s obligation

Corporations are financed in two basic ways: ■ equity—the shareholders’ investment in the corporation in return for shares ■
debt—loans that have been made to the corporation by shareholders, commercial lenders, or other creditors

COMMON SHARES usually carry the rights to vote, to receive dividends, and to receive the remaining property of the
corporation upon dissolution. PREFERRED SHARES usually are entitled to receive fixed dividends on a regular basis and a
return of the amount invested before any payment of dividends or on dissolution is made to common shares.

Franchise: Franchising involves licensing the rights to use a business's name, brand, and operational model to
independent operators (franchisees). Franchisees benefit from operating under a recognized brand with established
processes and support from the franchisor, but they must adhere to franchise agreements and pay royalties.

Franchisor’s Duties• Some provinces require the franchisor to give a detailed disclosure document to prospective franchisees
including material facts such as:• Financial statements, officers & directors history, cost projections, rules on supplies,
advertising fees, renewal & termination terms, names of all franchisees• Failure to give disclosure can result in the franchise
agreement being rescinded• Statutory duty on the franchisor to act in good faith.

• Agency: An agency relationship occurs when one party (the principal) authorizes another party (the agent) to
act on its behalf. This can involve selling products, negotiating contracts, or providing services. The agent
owes certain duties to the principal, such as loyalty, obedience, and reasonable care.
• E-commerce and Online Business: With the rise of the internet, many businesses operate solely or primarily
online. This can involve selling products through e-commerce platforms, offering digital services, or
generating revenue through online advertising and affiliate marketing.

Legal Rules for Corporate Governance

Management and Control of the Corporation In Canadian corporate statutes, power and responsibility in the corporation are
allocated amongst shareholders, directors and officers. ■ Shareholders are entitled to the assets of the corporation that remain
after all the creditors are paid on its dissolution. Their only governance powers are to vote for the election of directors, on
proposals made to them, and on the appointment of the auditor. In most cases, each share has one vote. As shareholders, they do
not participate in managing the business of the corporation.2 ■ Directors are responsible for managing or supervising the
management of the business of the corporation and its internal affairs, including issuing shares, declaring dividends, and calling
shareholder meetings. ■ Officers are appointed by directors and usually exercise substantial management powers delegated to
them by the directors.

A Corporation is a separate legal entity whose actions and liabilities are separate from its owners, the shareholders• Incorporation
done under the federal or provincial laws• Articles of Incorporation are often the forms used• The corporation’s name must end
with: Corpin., or Ltd. or the full word

PRIVATE CORPORATIONS have few shareholders, and the same people may be the shareholders, directors, and officers
PUBLIC CORPORATIONS are corporations that have distributed their shares to the public with only a few shareholders
involved in the corporation as directors and officers.

CORPORATE SOCIAL RESPONSIBILITY (CSR) means pursuing a commitment to environmental protection and
sustainability as well as going beyond what the law requires to ensure that a corporation takes responsibility for the impact of its
actions on the environment, consumers, employees, the local community, and other affected stakeholders.

Corporate governance encompasses a set of rules, practices, and processes by which companies are directed and controlled.
Here are some key legal rules and principles commonly associated with corporate governance:
 • Corporate Laws and Regulations: Every country has its own set of laws and regulations governing corporate
governance. These laws typically cover aspects such as the formation, operation, and dissolution of corporations, as well
as the rights and responsibilities of shareholders, directors, and officers.
• Corporate Charters and Bylaws: Corporations typically have charters (also known as articles of incorporation) and
bylaws that outline the company's structure, purpose, and operating procedures. These documents often include
provisions related to the election and removal of directors, shareholder voting rights, and other governance matters.
• Board of Directors: The board of directors is responsible for overseeing the company's management and affairs on
behalf of shareholders. Legal rules dictate the composition of the board, the election of directors, their duties and
responsibilities, and the procedures for board meetings and decision-making.
• Shareholder Rights: Shareholders have certain legal rights, including the right to vote on significant corporate matters
such as the election of directors, mergers and acquisitions, and changes to the company's charter or bylaws. Shareholder
rights are typically protected by corporate laws and regulations.
• Disclosure and Transparency: Companies are usually required to disclose certain information to shareholders and the
public, such as financial statements, executive compensation, related-party transactions, and other material information.
These disclosure requirements promote transparency and help shareholders make informed decisions.
• Ethical Standards and Codes of Conduct: Corporate governance often involves adherence to ethical standards and
codes of conduct that govern the behavior of directors, officers, and employees. These standards may address conflicts of
interest, insider trading, bribery, corruption, and other ethical issues.
• Risk Management and Compliance: Companies are expected to have processes in place for identifying, assessing, and
managing risks related to their operations. This includes compliance with relevant laws and regulations, as well as
industry standards and best practices.
• Stakeholder Consideration: While shareholders are typically the primary focus of corporate governance, companies
may also be required to consider the interests of other stakeholders, such as employees, customers, suppliers, and the
broader community. This may be mandated by law or encouraged through voluntary initiatives.
• Enforcement Mechanisms: Legal rules for corporate governance often include enforcement mechanisms to ensure
compliance and address violations. This may involve regulatory agencies, such as the Securities and Exchange
Commission (SEC) in the United States, as well as civil litigation and criminal prosecution for serious offenses.

HOW VICARIOUS LIABILITY WORKS IN RESPECT OF AN EMPLOYER'S RESPONSIBILITY OVER THE

ACTIONS OF EMPLOYEES.

• Vicarious liability is a legal concept where one party is held responsible for the actions or omissions of another party.
Employer-Employee Relationship: Vicarious liability hinges on the existence of an employer-employee relationship.
This relationship implies that the employer has control or authority over the actions of the employee in the course of their
employment.
• Scope of Employment: The wrongful act or negligence must occur within the scope of employment. This means it
happens while the employee is performing tasks assigned by the employer or acting on behalf of the employer's interests.
However, it's essential to note that not all actions taken by an employee during work hours are necessarily within the
scope of employment.
• Connection to Employment: There must be a sufficiently close connection between the employees' actions and their
employment duties. If the act is entirely personal and unrelated to work, the employer may not be vicariously liable.
• Third Party Harm: Vicarious liability usually arises when the wrongful act or negligence of the employee results in
harm to a third party, such as a customer, client, or another individual.
• Exceptions and Defenses: There may be exceptions or defenses available to the employer in certain circumstances. For
example, if the employee's actions were entirely outside the scope of employment or were explicitly prohibited by the
employer, the employer's liability may be limited or mitigated.