NOTES ON BUSINESS LAW

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CHAPTER 1
Risk Management and Sources of Law
WHY STUDY LAW?
• It governs important issues: the freedom to choose a lifestyle, the right to
marry, the ability to create and raise children, the obligation to pay taxes, etc.
• As a business, each business choice you make has legal consequences; some
of which are profitable, and others that are financially disastrous
• The difference between winning and losing in the business world depends on
the ability to make good choices from a legal perspective
 Contract: a legal concept that allows people to create enforceable promises

RISK MANAGEMENT *avoiding losses/liability/bad publicity*

• A business cannot exist without taking chances; the goal therefore is not
necessarily to eliminate risks, it is to manage them
1. Identification: recognition of legal risks
o “Can we be held liable for doing something wrong?”
2. Evaluation: assessment of legal risks
o “What are the chances of something going wrong?” “How much can
we be liable for?”
3. Response: reaction to legal risks
o “What are we going to do about it?”
o Apply risk management strategies
o Need to consider Reputational Risk

Risk Environment-Banking Example

-Credit Risk: customer defaulting on loan
-Legal Risk: Customers sue in class action for improper interest charges
-Reputational Risk: Class action by customers is reported in the media
-Operational Risk: teller inputs $1000 for a $100 deposit
-IT Risk: ATM machine network crashes
-Political Risk: federal gov’t decides to tighten requirements for home mortgages
-Market Risk: value of loan collateral changes

Risk Management Strategies

 Risk Avoidance: risks that are too serious should be entirely avoided
i.e. not making a loan to a risky business client at all
 Risk Reduction: reducing risks to an acceptable level through precautions
i.e. making a loan to a risky client with mortgage security on the client’s real estate
 Risk Shifting: shifting the risk onto another party (insurance/exclusion
clauses)
i.e. purchasing mortgage insurance OR having work done by an independent
contractor, rather than an employee
 Risk Acceptance: simply accepting a risk usually because its low likelihood of
occurring
i.e. making unsecured loan at high interest rate
* whatever the strategy, always consider ethical/moral concerns and reputational
risk!
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Common Risk Management Strategies (to be discussed later)

 In-House Counsel: instead of hiring lawyers when needed, a company may
create its own permanent legal department. While this option creates
additional expenses, it provides more efficient risk protection
o Insurance: contract in which one party agrees, in exchange for a price, to
pay a certain amount of money if another party suffers a loss. In any case,
insurance shifts the risk
-Liability Insurance: provides a benefit if the purchaser is held liable for doing
something wrong
-Property Insurance: provides a benefit if the purchaser’s property is
damaged, lost, or destroyed
o Exclusion and Limitation Clauses: contractual term that changes the usual
rules of liability. The clause may attempt to exclude all risk of liability, or
it may exclude liability for certain types of acts or certain types of losses,
or it many limit the amount of compensation that is available
i.e. courier contract may say that it cannot be held liable at all, or for more than $100
lost or damaged packages OR “park at your own risk” signs
o Incorporation: to avoid personal debts/liabilities, many businesses are
set up as corporations or companies with limited liability
-it is usually only the company itself, and not the directors/shareholders that
may be liable for debts
-the company may be lost, but the people behind it will be safe

INTRO TO THE LEGAL SYSTEM

THE NATURE OF LAW
• All laws are rules but not all rules are laws
• It is occasionally difficult to distinguish between moral and legal obligations
i.e. rule against handling soccer ball is not law
- A moral rule that is also a law: murder
-A moral rule that is not a law: adultery, abortion
• Morality/ethics vs. law
o moral wrongs are informally sanctioned
i.e. loss of friendships or damaged reputation
o legal wrongs are formally sanctioned
i.e. imprisonment or payment of damages
 Law: a rule that can be enforced by the courts

A MAP OF THE LAW

 Civil Law (past experience): systems trace their history to ancient Rome
-Based on “code” of legal principles
-Quebec is only Canadian civil law jurisdiction
 Jurisdiction: a geographical area that uses the same set of laws
 Common Law: systems trace their history to England
-All provinces in Canada (except Quebec) are common law jurisdictions
-Based on judge-made case law and doctrine of precedent
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Public Law
 Concerned with governments and the ways in which they deal with their
citizens
• It includes:
o Constitutional Law: provides the basic rules of our political and legal
systems
-determines who is entitled to create and enforce laws, and establishes
the fundamental rights and freedoms that Canadians enjoy
o Administrative Law: concerned with the creation and operation of
administrative agencies, boards, commissions, and tribunals
i.e. , broadcasting, international trade, energy development, competition, labour relations,
municipal zoning
o Criminal Law: deal with offences against the state and concerned with
people who break rules that are designed to protect society as a whole
EXAMPLE: If you punch me, you have committed a tort (private) because you have done
something wrong to me personally. However, you have also committed a crime (public)
because you have done something wrong to the entire community. Even if I am not upset,
society may want to discourage and punish your behaviour
→White-Collar Crime: committed by people in suits. A manager who
steals money from the cash drawer is a white-collar criminal.
→ Corporate Crime: crime committed by the company itself.
i.e. if car dealership rolls back odometers, the company is guilty of fraud.
o Tax Law: concerned with the rules that are used to collect money for
public spending

Private Law
 Concerned with the rules that apply in private matters
• Both parties in a private dispute are usually private persons, either
individuals, or organizations such as corporations
i.e. theatre company might sue me if I failed to perform the play as promised
• Private law can also apply to the government
• It is possible for a private person to sue a public body
• Private law is usually divided into three main parts:
o The Law of Torts: a private wrong, an offence against a particular person
(i) Intentional Torts: such as assault and false imprisonment
(ii) Business Torts: such as deceit and conspiracy
(iii) Negligence: covers most situations in which one person carelessly
hurts another
o The Law of Contracts: concerned with the creation and enforcement of
agreements. They are involved in:
(i) the sale of goods (i.e. cows and computers)
(ii) the use of negotiable instruments (such as cheques)
(iii) real estate transactions (such as the purchase of land)
(iv) the operation of corporations
(v) the employment relationship that exists between a business and its
workers
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o The Law of Property: concerned with the acquisition, use, and disposition
of property. The three main parts are:
(i) real property (involves land and things attached to land)
(ii) personal property (things that can be moved from one place to another)
(iii) intellectual property (involves things that consist of original ideas,
such as patents and copyrights)
→ Law of Succession: deals with the distribution of a person’s property
after death
→ Law of Trusts: deals with a situation in which one person holds
property on behalf of another

• Overlap –different areas of law can overlap

A single event can trigger more than one set of rules
o Example1: If you punch me, you may commit both crime and tort
o Example2: If you hire lawyers who provide poor work and bad advice,
you may have the option to sue for both tort of negligence and breach
of contract
Some situations involve various types of law
o Example: An employment relationship is based on a contract between
employer and the employee

SOURCES OF LAW
• Broadly speaking, there are three sources of law:
-The Constitution
-Legislation
-The Court *not all laws are created equal, some are more important than others!

1) The Constitution
 The document that creates the basic rules for Canadian society, including its
political and legal systems
• The fact that it provides the foundation for everything else has two
significant consequences:
o Highest source of law
-Law inconsistent with Constitution is of no force or effect
o Very difficult and rare to change
-Amending formula requires consent of both
(a) Parliament
(b) Two-thirds of all provinces with at least 50% of population

Division of Powers
 States the areas in which each level of government can act
• Federal: Canada is a federal country because it has two levels of gov’t
-represents entire country
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-Parliament
(i) Senate (appointed)
(ii) House of Commons (elected)
(iii)Prime Minister (leader with most members in House of Commons)
The Parliament of Canada that governs the country as a whole is composed of
two parts. The House of Commons consists of Member of Parliaments who are
elected from each province + territory. The Senate consists of senators, who are
appointed to their jobs. The Queen of England remains our head of state. In
reality however, the political party that has the most MPs runs the country and
the leader of that party is the prime minister.
• Provincial/Territorial: Canadians also elect politicians to represent them
within their own provinces + territories
-Represents each province
(i) no senate
(ii) legislature (elected)
(iii) Premier (leader of party forming government)
The elected body, or the legislature, is usually called the Legislative Assembly.
Even though the head of state is the Queen, power really is held by the party
with the most elected members, whose leader is the premier.
• Wherever you live in Canada, you are subject to two sets of laws: federal and
provincial
• With respect to any issue, there is generally only one law
i.e. our system would not work well if Parliament required you to drive on the
right side of the road whereas provincial legislature required you to drive on
the left
• The federal government has residual power: gives the federal government
authority over everything that is not specifically mentioned
• A government sometimes tries to create a law outside of its own area
-When it does so, it acts ultra vires, which literally means “beyond the power”
-As a result of section 52 of the Constitution, such laws have no force or effect
(in other words, they are not really laws at all) example: bottom of page 13
-when both levels of government create conflicting legislation, a problem
arises
-if courts find that the issue in a particular case really has more to do with an
area of provincial power (i.e. working conditions/labour relations), then the
provincial legislation will be effective
-if there is a conflict between a federal statute and a provincial statute/law,
then the dispute will be decided by the doctrine of federal paramountcy:
determines which law is superior based on the Constitution’s division of
powers; the federal law wins

o Charter of Rights and Freedoms – written into constitution in 1982.

Charter was introduces to protect basic rights and freedom
▪ Fundamental Freedoms
• Freedom of conscience and religion
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• Freedom of though, belief, opinion and expression,

including freedom of the press and other media of
communications
• Freedom of peaceful assembly; and
• Freedom of association
▪ Mobility Rights
• Every citizen of Canada has the right to enter, remain in
and leave Canada
• Every citizen of Canada and every person who has the
status of a permanent resident has the right
o to move to and take up residence in any
province; and
o to pursue the gaining of a livelihood in any
province
▪ Equality Rights
• Every individual is equal before and under the law and
has the right to equal protection and equal benefit
without discrimination
• Does not preclude any law, program or activity that has
as its object of conditions of disadvantages

▪ Restrictions

Charter of Rights and Freedoms

• Traditionally, as long as a government acted within the scope of its power
(intra vires), its laws were generally valid
• Canadian Charter of Rights and Freedoms was introduced to protect basic
rights and freedoms
• Had a profound impact on every aspect of life in Canada
-i.e. led to recognition of same-sex marriages
• The charter does not contain property rights (to own and enjoy assets) or
economic rights (to carry on business activities)
• Government’s ability to make law under Division of Powers is constrained by
the Charter of Rights and Freedoms
• Charter applies to any government law or action
• Charter does not protect against human rights violations by businesses,
individuals, or other non-government organizations. Human rights codes
apply (eg. Ontario Human Rights Code)
• Charter rights and freedoms are not absolute, but are limited by societal
interests.
• Balancing Charter and the Law:
-Individual Interests: Charter rights + freedoms
-Societal Interests: as expressed by government law or action (i.e.
Notwithstanding clause)
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Classic Example where we aren’t allowed to say things: if you’re sitting in a crowded theatre, it
is against the law to yell “fire”
-you are expressing yourself but we as a society have agreed that it is not a good thing
• Other restrictions (pg.17)
-Property rights: rights to own and enjoy assets
-Economic rights: rights to carry on business activities
-Government Action: governs the relationship between the individual and the
state; it does not directly apply to disputes involving private parties
-Corporations: generally does not apply against private corporations
-Reasonable Limits: it is occasionally acceptable to violate a person’s rights
-Notwithstanding Clause: A government can override the Charter by
declaring a law to be valid “notwithstanding” the Charter
- Notwithstanding clause is very rarely used in Canada. They are only valid
for 5 yrs. They have to re-pass the law after it expires.

Charter Analysis
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Section 1 Analysis

Charter Remedies
“What happens if a court finds that a law is contrary to the Charter?”
• DECLARATION – Court simply declares that the law violates the Charter. It is
then up to Parliament or Legislature to solve the problem.
• INJUNCTION – Court orders the government to address the problem in a
certain way; choice therefore lies with the judge rather than legislature.
(Keep the law or get rid of it)
• STRIKING DOWN – Courts strikes down or eliminates the violating statute
either immediately or with a temporary suspension if immediate elimination
would create substantial problems.
• SEVERANCE, READING DOWN and READING IN – Court may save offending
statute by re-writing part of it. If only one part of a statute/law is offensive, it
may be severed/cut out. If a statute is written too broadly, it may be read
down so that it applies only where it can be justified. If a statute is written too
narrowly, the court may read in a broader interpretation, so that certain
people are not excluded from its benefits.
• DAMAGES – Court orders payment of compensation to plaintiff for injuries or
losses suffered, vindicate the plaintiff’s rights, and deter/discourage further
wrongdoing.

• Judges have a great deal of power under the Charter

• However, the Charter was not intended to destroy the doctrine of
parliamentary supremacy; which means that while judges are required to
interpret constitutional and statutory documents, they must also obey them.
-Therefore, Canadian judges present their decisions as part of an ongoing
dialogue; even when they strike down a law, they are merely indicating that
the legislature failed to follow the rules
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2) Legislation
 Law that is created by Parliament or a legislature
• Using powers given by the Constitution, federal Parliament and provincial
legislatures can pass laws called “statutes”
• “Act” is a statute – e.g. Bank Act *most imp. Legislations are statutes/acts
i.e. every jurisdiction in Canada has an act that allows companies to be created
-the Criminal Code (federal statute) that applies across the country, determines
when a crime has been committed

The Legislative Process

• Very detailed process that uses risk management as a strategy to prevent the
creation of a law or to make sure that it is written in a way that causes little
trouble as possible
▪ Bill is introduced
▪ First reading, not very hard to pass
▪ Second reading, bill re-appears when it’s the subject of debate
way of MPs
▪ Third reading, bill re-appears and final voting of MPs
▪ Final vote, royal assent which is Her Majesty’s approval
• Pass, then it is in, not pass then it is not
▪ Signature then it is real
Subordinate Legislation and Municipalities
• It is impossible for Parliament and the legislatures to constantly monitor all
of their legislation to make sure that it is effective and up to date
-Therefore, statutes often set up a basic structure but allow someone else
(such as a gov’t minister, a commission, or a tribunal) to create specific rules
without the need to go through the entire legislative process
 Subordinate Legislation: the term given to regulations that are created with
the authority of Parliament or the legislature
i.e. Parliament created the CRTC and gave it the power to regulate
broadcasting in Canada--- it is the CRTC that decides which channels appear on
your TV
• One of the most important types of subordinate legislation involves
municipalities that are created by the provinces
-When a province creates a municipality, it gives that new body the authority
to pass by-laws, which are a type of subordinate legislation
• By-laws can be used to license businesses, impose some sorts of taxes, plan
commercial developments, and regulate parking

3) The Courts
• Functions of courts:
o interpret and apply Constitution
o interpret and apply legislation
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o create and apply “common law” (judge-made law)

• e.g. rules of contract law

Common Law
o Systems: refers to legal systems that can be traced to England; operates
throughout most of Canada
o Sources: rules can be created by judges rather than by legislators or the
drafters of the Constitution
-i.e. Most of the rules in contract law are common law rules b/c they were
developed by the courts
o Courts: England traditionally had two sets of courts:
-the courts of law
-the courts of equity

Law and Equity-

Old England only had court of law. Very rigid and harsh.
o Decisions of law were made by the king/queen
o People who were unhappy could ask king for relief
▪ King was too busy to deal with all petitions, so he asked
chancellor to act on his behalf
▪ Chancellor soon began to be swamped, so he also asked people
to help him.
o This became the court of equity
▪ Less concerned with rules and more concerned with justice
• Therefore, decisions were based on equity (fairness)
▪ Two specific changes from what it was before
• Nature of equity: concept of equity no longer allows
judges to decide cases on the basis of fairness. There is a
consistent set of rules.
• One set of courts: before it was two separate courts.
Now it is mostly both the same court.
o Trust: Exists anytime that one person owns property for the benefit of
another
▪ Express trust
• Settler (one person) transfers property to trustee
(another person) to hold on behalf of the beneficiary
• Trustee legally owns property, and beneficiary is the
equitable owner.
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CHAPTER 2
Introduction to Torts

INTRODUCTION TO TORT LAW

 Tort: generally consists of a failure to fulfill a private obligation that was
imposed by law

TORTS AND CRIMES (Comparison)

• ‘Tort’ refers to the breach of a private obligation
-An obligation in tort law is owed to a person
i.e. I owe you an obligation to you personally to not make defamatory statements about your
past. That obligation will be broken if I falsely tell your employer that you were once convicted
of murder. I am then a tortfeasor, and you will be entitled to sue me. If you win the lawsuit, the
court will hold me liable and it will probably order me to pay damages to you.
 Tortfeasor: A person who has committed a tort.
• A tort occurs when a person breaks a private obligation
• Torts and crimes often arise from the same facts
i.e. If I hit you, I will commit the tort of battery and the crime of assault; if I take your car
without permission, I will commit the tort of conversion and the crime of theft; if I sneak into
your house, I commit the tort of trespass and the crime of break and enters
 Battery: Crime or tort of unconsented physical contact with another person,
even where the contact is not violent but merely menacing or offensive

Tort + Criminal Law

Type of Parties Involved in Obligation Parties to Take Action if Usual Remedy
Law Obligation Broken
Tort Law Private -Breach of private obligation -The injured plaintiff sues -Compensatory damages
owed to another person the defendant/tortfeasor
Criminal Law Public -Breach of public obligation -The government prosecutes -Punishment (i.e.
owed to society the accused fine/imprisonment)
• Elements of Torts:
-Wrongful act committed by a person
-Causing injury or loss to another person
-Leading to civil liability
• Injured person or person who suffered loss may sue the person who
committed the wrongful act

TORTS AND CONTRACTS (Comparison)

• Structure
-Both tort and contract involve primary and secondary obligations
-Primary Obligation: tell people how they ought to act
i.e. Tort of Battery says “Do not touch people in an offensive way”
-Law of contract says, “Keep your promises”
-Secondary Obligation: remedial; they tell people how they must act after
primary obligations have been broken
i.e. Most cases, defendant is told, “Pay money to the plaintiff as
compensation for the losses that you caused”
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• Source of Primary Obligations

-Obligations in tort are simply imposed by law
i.e. even though you never promised to behave yourself, even though we are complete
strangers, and even if you never heard of such a law, you must not commit a battery against me
-Obligations in contract, are created by parties
i.e. if you have an obligation to deliver a car to me, it is only because you
voluntarily agreed to do so
• Privity
-When two people enter into a contract, they create a special relationship for
themselves. The doctrine of privity states that the only people who can sue, or
be sued, on a contract are the parties themselves.
-Because obligations in tort are simply imposed by law, there is no need for
parties to create a special relationship for themselves
i.e. I can sue you for battery, even if you never promised to not hit me
• Compensation
-Available in both tort and contract; calculated differently in each
-If you have breached your primary obligation in tort, you will have a
secondary obligation to put the plaintiff back into the position that they
enjoyed at the outset
i.e. paying for plaintiff’s $5000 medical treatment for hurting them
-The purpose of creating obligations in contract is usually to provide benefits
i.e. paying $10,000 because I wanted your car
-In contract, if you breach your primary obligation, then you will be required
to compensate the plaintiff to put them in the position that they expected to
enjoy once you fulfill your promise
i.e. if the car was worth $13000, then you will have to pay that amount to me
*While tort looks backward, contract looks forward
• Risk Management
-Because tort obligations are imposed by law, they are more likely to take a
person by surprise, and they may require more than a person is actually
capable of providing
-Because obligations in contracts are created voluntarily, they should never
take the parties by surprise, and they should never require more than the
parties believe they can actually provide

TYPES OF TORTS
• Tort law has to strike a balance between competing interests; while it wants
to respect freedom of choice, it also wants to discourage dangerous
behaviour
• One of the most important strategies of tort law focuses on mental culpability
(blameworthiness). Because tort law needs to strike a different balance in
different circumstances, some torts require proof that the defendant acted
with a guilty mind, while others do not.

• Types of torts:
 Intentional Torts: Intentional act that causes harm
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-some torts require proof that the defendant intended to hurt the plaintiff
while others are satisfied by proof that the defendant merely intended to act
a certain way, even if they didn’t realize the plaintiff would be hurt
-assault -false imprisonment -interference with chattels
-battery -trespass to land -conspiracy
-intimidation -interference with contractual relations -deceit
-unlawful interference with economic relations
 Negligence Torts: Careless or accidental act that causes harm
-occupier’s liability -professional negligence
-nuisance -product liability
-negligence
 Strict Liability: No intentional or careless act, but still liable
-Only in special situations
-animals -Rylands v. Fletcher African Lion Safari Case

Strict Liability Torts (rare)

• Defendant is liable even if there was no intentional or careless wrongdoing
-Does not matter if the defendant acted as carefully as possible
• Create problems for risk management—they do not require proof or any sort
of intentional or careless wrongdoing; simply imposes liability on defendant
• Special precautions may reduce the danger of liability, but effective risk
management may require the defendant to simply avoid the relative activity
together
• Limited to situations where defendant is involved in some extraordinarily
dangerous activity
• In the African Lion Safari example: ALS employee had created the accident by
driving through the area with a young tiger cub in the truck
• Rule in Rylands v. Fletcher – the requirements for strict liability:
1. Non-natural use of land
2. Which creates a special and unusual danger
3. Something escapes from the defendant’s land
4. That causes the plaintiff to suffer a loss

GENERAL PRINCIPLES OF TORT LAW

LIABILITY INSURANCE *does not cover all torts
 A contract in which an insurance company agrees, in exchange for a price, to
pay damages on behalf of a person who incurs liability
• Because torts can occur unexpectedly, risk management is important
• Many businesses and professionals purchase liability insurance to manage
tort risk liability
- “risk shifting”
• How it works:
- insured (defendant) pays price (premium) to insurer
- insurer protects insured against harm
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o duty to defend: requires the insurance company to pay the expenses

that are associated with lawsuits brought against the insured party;
Claims against insured
o duty to indemnify insured for loss if liable
• Liability insurance is consistent with compensatory function of torts
o Compensatory Function: aims to fully compensate people who are
wrongfully injured
-If a tortfeasor cannot personally afford to pay damages, the plaintiff
will not receive full compensation unless the defendant is insured
• Liability insurance is not consistent with tort law’s deterrence function
o Deterrence Function: discourages people from committing torts by
threatening to hold them liable for the losses they cause
-People have little reason to be afraid, however, if they know that their
insurance companies will pay if something goes wrong—that is one
reason why tort law has little deterrent effect
• Insured defendant is a “deep pocket” that plaintiffs will go after
How it Works
(a) Defendant enters into a contract with the insurance company for the purchase of liability insurance
(b) The defendant commits a tort against the plaintiff that falls within the scope of the insurance policy
(c) The insurance company pays damages to the plaintiff on the defendant’s behalf.

VICARIOUS LIABILITY
 Occurs when one person is held liable for a tort that was committed
by another person
i.e. there is a law that generally holds the owner of a vehicle liable if an accident is caused by
either a family member or a person who borrowed the car with permission
• The doctrine of vicarious liability can be justified on a number of grounds:
-It serves tort law’s compensatory function by allowing the plaintiff to claim
damages from both an employee (who may not have any money) and an
employer (who is more likely to have money/liability insurance)
-It serves tort law’s deterrence function by encouraging employers to avoid
unusually hazardous activities and to hire the best people available
-As a matter of fairness, it may be appropriate to require a business to bear
responsibility for the losses that its activities create, even if those losses are
caused by misbehaving employees
• A business may be:
(a) Personally liable for its own wrongful acts, and
(b) Vicariously liable for the wrongful acts of its employees committed in
the course of employment
o Employers aren’t liable every time an employee does something
wrong—they aren’t vicariously liable if an employee’s tort occurred
completely outside of the employment relationship
o No vicarious liability for independent contractors (workers who are
not closely connected to the employer’s business as is an employee)
-Better for risk management
o Employee or independent contractor? Courts look at:
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i. If the employer controls the work (what, how, when and where)
ii. Who provides the equipment and premises
iii. How is the person paid (eg. weekly salary vs. lump sum at end of
project)
iv. Level of integration into the employer’s business and does not own
the business
• Note several other points about vicarious liability:
1. An employer is not liable every time an employee does
something wrong.
An employer is not vicariously liable if an employee’s tort occurred completely
outside of the employment relationship
2. An employer may be held vicariously liable for employees, but
not for independent contractors
 Independent Contractor: A worker who is not as closely
connected to the employer’s business, as is an employee
3. Vicarious liability does not relieve the employee of
responsibility
4. An employer may be both vicariously liable and personally
liable in the same situation
Vicarious liability if employer is responsible for an employee’s tort; Personal
liability if employer is responsible for their own tort

• Vicarious liability allows the plaintiff to sue both the employer and the
employee, and to recover all or some of its damagers from either defendant
• If the employer actually pays damages to the plaintiff, they are usually
entitled to claim that amount from the employee
-In reality, employers seldom do so. Aside from the fact that many employees
might not have enough money, employers realize that morale would drop if
employees were worried about being held liable

REMEDIES: If you sue a tort and win, court may give you:
Compensatory Damages (standard remedy)
• Defendant is required to pay for the losses that they cause the plaintiff to
suffer
• Compensation in tort is designed to put the plaintiff back into the position
that the party enjoyed before the tort occurred
• Compensation in contract is designed to put the plaintiff forward into the
position that the party expected to enjoy after the contract was performed
• Distinction between two is important because it is possible to sue someone
in both tort and contract--- they will choose option that provides most money
1. Doctrine of Remoteness *does not apply to intentional torts!
• The defendant is only responsible for losses that they in fact caused.
Even if the defendant’s tort caused the plaintiff to suffer a loss, the
court will not award damages if the connection between the tort and
the loss is too remote
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• Loss is remote if it would be unfair to hold defendant responsible for it

• Loss must be a reasonably foreseeable consequence of the tort
• Reasonable person test- judge asks whether a reasonable person in
the defendant’s position would have realized that a particular activity
might cause the sort of harm that the plaintiff has suffered
i.e. Suppose one of your employees develops a rare disease after coming into contact
with rat urine. You might not be liable even if you carelessly allowed rats to run loose
in your warehouse. A judge once held that a reasonable person would recognize the
danger of rate bites, but not rat urine.

2. Doctrine of Mitigation
• Plaintiff has a duty to take reasonable steps to minimize losses that
result from the defendant’s tort
• Compensatory damages are limited by this principle—compensation
is not available for a loss that the plaintiff unreasonable failed to
mitigate
i.e. Suppose a customer was bitten by a rat that you negligently allowed to run around
your warehouse. You advised the customer to get a tetanus shot, but they refused. As a
result, the customer developed lockjaw and was unable to work for 8 months. If the
person had received a tetanus shot, they would have missed only 3 days of work.
• Four aspects of mitigation:
1) The plaintiff is responsible for only taking reasonable steps to
mitigate a loss.
i.e. a court would not expect the customer to receive a tetanus shot if they would be
at risk of developing serious side effects.
2) Although lawyers sometime refer to a duty to mitigate, there is not
really a duty. The plaintiff is not required to mitigate. The plaintiff
will however, be denied compensation for losses that could have
been reasonably avoided. Mitigation is therefore a question of risk
management.
3) Damages are denied only to the extent that the plaintiff
unreasonably failed to mitigate.
i.e. even if the plaintiff received a shot, they still would have missed
work for 3 days. The plaintiff consequently is entitled to
compensation for that loss.
4) The plaintiff can recover the costs associated with mitigation.
i.e. if the plaintiff received a shot, and if it cost them $100, they would be entitled to
compensation for that amount.

Punitive Damages (unusual; available only in exceptional circumstances)

 Intended to punish the defendant for “harsh, vindictive, reprehensible
or malicious” behaviour
• If defendant has done something horrible, the court may impose both
compensatory damages & punitive damages
i.e. punitive damages have been awarded against an elderly doctor who committed the tort of
battery by demanding that a young woman provide him with sex in exchange for drugs
-A land developer who committed the tort of trespass of land by cutting down trees on a
neighboring lot in order to enhance the view from their own property
-Leading case – Whiten v. Pilot Insurance (Supreme Court of Canada)
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o Insurance company created false allegation of arson after family home burned down

Nominal Damages
 Symbolically recognize that the defendant committed a tort even
though the plaintiff did not suffer any loss
• Since they’re merely symbolic, some are awarded in small amounts (i.e. $10)
• They are usually awarded only if the plaintiff did not suffer any loss,
therefore, they are generally restricted to torts that are actionable per se in
themselves, rather than being actionable upon proof of a loss

Injunctions
 A court order that requires the defendant to do something or refrain
from doing something
• Sometimes, damages are inadequate because they cannot truly replace what
the plaintiff has lost
i.e. Sriracha hot sauce factory ordered to partially shut down because of foul smells in
residential area OR if the defendant carelessly kills the plantiff’s horse, the court cannot bring
the animal back to life.

Summary of Tort Law Remedies

Remedy Purpose
Compensatory Monetarily repair plaintiff’s loss
-not required if loss is too remote
-not required if plaintiff failed to mitigate loss
Punitive Punish defendant’s outrageous and reprehensible conduct
Nominal Symbolically recognize that defendant committed tort even if plaintiff did not suffer any loss
Injunction Prevent commission/continuation of tort

ALTERNATIVE COMPENSATION SCHEMES

 System that allows a person who has suffered an injury to receive
compensation without bringing an action in tort
• Two important systems:
o Worker’s Compensation
-Exist because job-related injuries are common
-Workers generally lose the right to sue in tort for workplace injuries,
but in exchange, they gain the right to claim compensation from a fund
without having to prove that anyone was at fault for their injuries
-The loss of tort law is the price that workers pay to enjoy access to a
far simpler and much quicker system of compensation
-While employers are required to contribute to the compensation
fund, they escape the risk of being held liable in tort for workplace
injuries
o No-Fault Insurance (applies to car accident injuries)
-Victims of traffic accidents cannot sue in tort, but they are entitled to
receive compensation without having to prove that another driver
was at fault
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-No-fault system prevents an action in tort unless the victim’s losses

are especially serious
-Two main reasons for the risk of alternative compensation schemes:
i) Tort law proves compensation only if a person is injured as a result
of a wrongful act. From the victim’s perspective, the physical &
financial consequences of being injured are the same, even if an
injury occurs innocently. Therefore, it is sometimes desirable to
allow that person to collect compensation regardless of fault.
ii) Tort law is inefficient—requires a great deal of time and money.
Money involved in the tort system is used for compensating
injuries. With alternative compensation schemes(ACS), there is far
less need for costly investigations and length disputes because of
their no-fault basis.

-Disadvantage of ACSs: they provide compensation more often, but less of it. Unlike tort law where
plaintiff is usually entitled to recover the full value of a loss, the level of compensation in ACSs is capped
because the schemes would go broke if they compensated every loss.
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CHAPTER 3
Intentional Torts
 Intentional Torts: involve intentional, rather than merely careless, conduct
i.e. assault, battery, invasion of privacy, false imprisonment, trespass to land, interference with
chattels
- defendant held liable for battery if they deliberately punched the plaintiff
 “Intention”: If the defendant knew that a particular act would have
consequences
- Plaintiff does not have to prove that the defendant intended to either cause
harm OR commit a tort
i.e. if you build a fence on my property, you commit the intentional tort of trespass to land,
EVEN if you think that the land belongs to you. It is enough to know that your actions will result
in a fence being constructed on that piece of ground.
• From a risk management perspective, before acting in a particular way, you
should know as much as possible about the consequences of doing so

ASSAULT AND BATTERY *easy to confuse!

 Assault: tort that occurs when the defendant intentionally causes the
plaintiff to reasonably believe that offensive bodily contact is imminent
(about to happen)
Requirements
1) NO actual physical contact, rather it is based on a reasonable belief that such
contact will occur
• This tort is designed to keep the peace by discouraging people from alarming
others
i.e. you may commit an assault by swinging your fist at me, even if you do not actually make
contact. But if you punch me from behind, you do commit the tort of assault if I did not know that
the blow was coming (although you did commit the tort of battery)
2) It is enough if the plaintiff reasonably believed that bodily contact would occur.
i.e. you may commit an assault by pointing a gun in my direction, even if the gun is not really
loaded. It is enough that a reasonable person would have though that a gunshot was possible.
3) The plaintiff must have believed that bodily contact was imminent
i.e. although that requirement is vague, you probably would not commit an assault if you
threatened to kick me two weeks from today. The threat must be more immediate.
4) An assault can occur even if the plaintiff was not frightened.
• It is enough that the defendant threatened some form of offensive contact
i.e. you therefore may commit an assault by swinging your fist at me, even if I know that you
are far too small to do any harm.
Defences
• Consent: explicit or implied; Must be free and informed; Consent is revocable
• Self-defence: reasonable force in response to an immediate risk
• Legal authority
• Necessity: justified by an emergency

❖ People seldom sue for assault alone—it is normally not worth the trouble
and expense of litigation.
❖ A claim for assault is usually joined with a claim for battery
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 Battery: a tort that consists of offensive, unwanted, bodily contact

Requirements
1) The requirement of “bodily contact” is not strictly applied.
i.e. it is enough if the defendant causes something, such as a knife or a bullet, to touch the
plaintiff. It is also enough if the defendant makes contact with the plaintiff’s clothing or with
something that the plaintiff is holding.
2) Not every form of contact is offensive.
• Normal social interaction is allowed
i.e. you do not commit a battery if you gently brush past me in a crowded elevator or if you tap
my shoulder to get my attention.
• Contact may be offensive even if it isn’t harmful
i.e. you will commit a battery if you kiss me despite my objections
you may even commit a tort if your actions are highly beneficial (as when a physician performs
a life-saving blood transfusion against a patient’s wishes)

Defenses
• Consent: implied or explicit; Must be free and informed; Consent is revocable
• Self-defence: reasonable force in response to an immediate risk
i.e. while you may be entitled to make a citizen’s arrest, or remove a trespasser from your
property, or recover your goods from a thief, you can never use anything more than reasonable
force. You cannot, for instance, set a deadly trap to catch a burglar or viciously beat a bike
thief. If you go overboard, you may be sued in tort or prosecuted for a crime.
• Legal Authority
• Necessity: justified by an emergency

❖ Understanding the tort of battery is especially important for businesses that

control crowds or remove rowdy customers
-bouncers and security personnel often injure patrons whom they eject from
taverns, concerts, and sporting events
❖ Given the doctrine of vicarious liability and the need for risk management,
such employees should be carefully trained

INVASION OF PRIVACY
• As new technologies continue to emerge, people are becoming more
concerned with their privacy interests
• Tort law has not yet caught up with these technological advances; there is no
general tort of invasion of privacy
• Courts have been reluctant to recognize a tort of invasion of privacy because:
-they want to support freedom of expression and freedom of information
-they are concerned about defining the concept of privacy in a way that
strikes a fair balance between the parties
-they are reluctant to award damages in favour of celebrities who seek out
publicity but then complain when they are shown in a bad light
-they find it difficult to calculate compensatory damages for the kinds of
harm, such as embarrassment, that an invasion of privacy usually causes
• However, privacy is indirectly protected by several torts:
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-A photographer who sneaks onto someone’s property to obtain candid

pictures commits the tort of trespass to land
-Employees who publish embarrassing details about their employer’s private
life may be liable for breach of confidence
-Despite rejecting a tort of invasion of privacy, English courts have
recognized a tort of abuse of private information.
i.e. Naomi Campell was able to sue a newspaper that published a photo of her coming out of a
Narcotics Anonymous meeting
-A company that makes unauthorized use of a celebrity’s image to sell its own
products may commit the tort of misappropriation of personality
-A newspaper that ignores a judge’s instructions and publishes the name of a
police officer that had been sexually assaulted during an undercover
investigation may commit the tort of negligence
 Voyeurism: crime committed by secretly observing or recording a person “in
circumstances that give rise to a reasonable expectation of privacy”, if that
person is engaged in sexual activity or is partially/fully nude
• A crime is also committed by anyone who prints, copies, publishes,
distributes, circulates, sells, advertises, or makes available a prohibited
recording
i.e. paparazzi taking private shots of celebrities
• Many provinces have created statutory causes of action to protect privacy
interests
-they generally impose liability if a person “willfully” (intentional) violates
another’s privacy by doing something that they know to be wrong
• Courts in US and England have recognized a common law tort of invasion of
privacy.
• Legislation in Newfoundland, Manitoba, Saskatchewan and B.C. have created
a statutory tort of invasion of privacy.
o Example: Hollinsworth v. BCTV (1999) (B.C. C.A.) applied the B.C.
Privacy Act (see p. 87)
• Recently, Ontario Court of Appeal has recognized the common law tort of
“intrusion upon seclusion”
o Jones v. Tsige (2012)(Ont. C.A.)
Jones and Tsige both worked at different branches of BMO. Over 4 four years and on
174 occasions, Tsige accessed Jones’ private banking records to check on Tsige’s
boyfriend who was Jones’ ex-husband. The tort is aimed at preventing distress,
humiliation, or anguish. The Court of Appeal awarded $10,000 to Jones.
• Elements of tort of intrusion upon seclusion:
o Defendant’s actions were intentional or reckless.
o Defendant invaded plaintiff’s private affairs without lawful
justification.
o Reasonable person would regard the invasion as highly offensive,
causing distress, humiliation or anguish.
o Remedy: No need to show any harm was suffered, but damages
capped at $20,000
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4 types of privacy torts:

(i) Intrusion into the plaintiff’s seclusion or private affairs
(ii) Public disclosure of embarrassing information
(iii) Publicity that places the plaintiff in a bad light
(iv)Unauthorized use of the plaintiff’s likeness or image

The new tort of intrusion upon seclusion requires the plaintiff to prove that the defendant:
(i) Intentionally
(ii) Invaded the plaintiff’s private affairs without legal justification
(iii) In a way that a reasonable person would consider highly offensive

FALSE IMPRISONMENT (not in ppt)

 The tort that occurs when a person is confined in a fixed area without
justification
Requirements
1) An actual prison is not necessary.
• The confinement must be practically complete; another reasonable path is
not open and the plaintiff cannot easily escape
i.e. if a person is trapped in a car, locked in a room, or set adrift in a boat
2) Physical force is not necessary
• The detention may be psychological
i.e. a tort may be committed if a shopper accompanies a security guard to a backroom in order
to avoid public embarrassment
3) Because a police officer has a wider power of arrest than a private citizen, a
business person may reduce the risk of liability by calling a cop, instead of
directly arresting a suspect
• The business may still be held liable if it directed the officer to make the
arrest, rather than merely stating the facts and allowing the officer to draw a
conclusion
4) Even if the business did not direct a police officer to make an arrest (and
therefore cannot be held liable for false imprisonment), it may be liable for the tort
of malicious prosecution: occurs when the defendant improperly causes the plaintiff
to be prosecuted
i.e. if a business invented a story about shoplifting and persuaded the gov’t to lay charges
against the plaintiff
• Malicious prosecution is difficult to prove; The court has to be satisfied that:
I. The defendant started the proceedings
II. Out of malice, or for some improper purpose
III. Without honestly believing on reasonable grounds that a crime had
been committed
IV. The plaintiff was eventually acquitted of the alleged crime
• The defendant will not be held liable if the plaintiff agreed to be confined
• Consent is a complete defense to all intentional torts
i.e. bus passengers can’t complain if the driver refuses to make an unscheduled stop… mining
companies are generally entitled to leave a worker underground until the end of a shift…
travellers at airport can be detained for a search
• An imprisonment is false only if it is done without authority
When Is There Authority to Make An Arrest?
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• The basic rules found in the criminal code:

o A police officer may arrest anyone who is reasonably suspected of (i)
being in the act of committing a crime, or (ii) having committed a
serious crime in the past. If this test is satisfied, the police officer
cannot be held liable, even if the person who was arrested was
actually innocent.
o A private citizen (i.e. security guard) is entitled to make an arrest only
if the suspect is actually committing a crime. They would otherwise be
held liable.
• Rules that apply to private citizens often create difficulties for businesses
• Even if a business is authorized to make an arrest, it should not use more
force than necessary
i.e. a person who doesn’t pay their restaurant bill commits a breach of contract, not a crime.
Allowing the business to detain the customer/their property until they receive payment would
violate the customer’s freedom of movement. The business could also sue the customer; but the cost
wouldn’t be justifiable for such a small meal.
TRESPASS TO LAND
 Tort that occurs when the defendant improperly interferes with the
plaintiff’s land
• Intentional act BUT do not need intent to cause damage
• Tort can also arise quite innocently
i.e. kicking a ball into your yard (even if I do not walk onto your property to retrieve it)
if a lawn care company accidently cuts your grass instead of your neighbour’s
• It is enough if I intended to do the act, even if I did not intend to do
wrong/cause damage
• The law wants to protect property interests
• The person who has the right to a particular piece of property also has rights
to the air above it and the ground beneath it
o Giant Carrot Theory of Ownership: suggests that the landholder’s
rights extend from the center of the Earth and up through the skies –
modern courts say rights are valid to a reasonable extent
i.e. you cannot simply sue because a jet flies overhead BUT you can sue a construction
company if it allows its building crane to swing over your land
Defenses
• Consent (Expressed or implied)
- If consent revoked, must give person opportunity to leave
- If refusal, may eject using reasonable force
• Legal Authority
(Firefighters, ambulance, police with search warrant; Building inspectors, meter readers)
• Necessity- Trespass justified by an emergency; i.e. immediate action was needed to
avoid some disaster
Business Premises
• A trespass does not occur merely because a customer walks into a place of
business during regular hours
- Under normal circumstances, it is assumed that the business consented to
the intrusion; it implicitly invited the customer onto the property
- Consent can be revoked, as long as it does not violate human rights
 lOMoARcPSD|10357521

legislation (i.e. excluding someone on racial grounds)

i.e. owner of a racetrack may exclude a highly successful gambler
-Once a business has revoked its consent, a customer who remains on its
property becomes a trespasser
- Can use reasonable force to remove person from premises
-Legislation that allows an occupier to arrest a trespasser who refuses a
request to leave the premises → can only use reasonable force
Remedies
• Compensatory damages for harm/loss
• Nominal damages for no loss
• Punitive damages if defendant’s conduct was shockingly bad
• Injunction to stop trespass if defendant’s wrong is ongoing

SUMMARY OF INTENTIONAL TORTS

Tort Protected Interest Elements of Proof
Freedom from fear of offensive bodily -Intentional act
Assault contact -Causing a reasonable belief that offensive bodily contact is imminent
Freedom from offensive bodily contact -Intentional act
Battery -Causing offensive bodily contact
Freedom of movement -Intentional act
False -Involving physical/psychological forces
Imprisonment -Causing person to be confined within a fixed area without justification
Freedom from improper prosecution -Criminal proceedings commenced for malicious/improper purpose, without
Malicious honest belief on reasonable grounds that crime was committed
Prosecution -Resulting in release of accused
Trespass to Right to exclude trespasses from land -Intentional act
Land -Causing person/object to interfere with land

INTERFERENCE WITH CHATTELS

 Chattels: moveable forms of property; anything that isn’t real estate
(i.e. horses, books, cars, etc.)

Intentional Interference with Chattels

Tort Basis of Tort General Remedy
Trespass Defendant’s interference with chattels in plaintiff’s possession Compensation for loss
to Chattels
Defendant’s interference with chattels in plaintiff’s possession— Forced sale of chattel from plaintiff to
Conversion
serious enough to justify forced sale defendant
Defendant’s failure to return chattels that plaintiff has right to Compensation for loss/return of chattels
Detinue
possess

Trespass to Chattels
Requirements
 Occurs when the defendant interferes with chattels in the plaintiff’s
possession
• The element of interference is satisfied if the defendant damages, destroys,
takes, or uses the plaintiff’s goods
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• There may even be a trespass if the defendant merely touches the plaintiff’s
property (or if that property is, for example, a priceless painting that requires protection)
Defenses
• Consent (Express or implied)
• Legal Authority
• Necessity
-Justified by an emergency; i.e.. Immediate action was needed to avoid some disaster

Remedy
• Compensatory Damages i.e. if you destroyed my car, you would have to pay for its market
value--if you damaged my car, you would pay for lower of lost value or repairs

Tort of Conversion
 Occurs when the defendant interferes with the plaintiff’s chattels in a way
that is serious enough to justify a forced sale
• Defendant takes, detains, uses, buys, sells, damages, or destroys the plaintiff’s
property
• If so, the defendant will be required to buy the item by paying the market
value that the chattel had at the time of the tort
• In exchange for that payment, the defendant acquires the property
• Courts look at:
- Extent to which defendant exercised ownership or control over the chattel
- Extent to which defendant intended to assert a right that was inconsistent
with plaintiff’s right to the property
- Duration of defendant’s interference
- Expense and inconvenience caused to the plaintiff
Conversion is clearly committed if a thief steals my property or if a vandal destroys it. The tort
may also occur if you habitually use my umbrella without my permission, but not if you use it
only once because you were caught in a downpour BUT you do commit the tort of trespass to
goods.
**Trespass is usually used for less serious ones. Conversion is used for serous matters ONLY.

• The tort may be committed even if the defendant did not intend to do
anything wrong
-It is enough that you intended to exercise control over a particular piece of
property, even if you thought that you were entitled to do so
-As a matter of risk management, it means that you should use every
reasonable effort to ensure that you buy goods from people who are actually
entitled to sell them
While an innocent purchaser of goods (such as cattle, cars, or jewellery) may be held liable, an
innocent purchaser of money has nothing to fear. For example, if a thief steals my watch and
sells it to you for $100, you have committed a tort against me. But if a thief steals my $100 bill
and sells it to you in exchange for your own watch, you are not liable for conversion.
• Law treats money differently from other assets
-It does so to ensure that money flows freely through our economy
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-The business world would quickly grind to a halt if every shopkeeper felt
compelled to ensure that every customer actually owns the money being
offered as payment
Defenses
• Consent (Express or implied)
• Legal Authority
• Necessity: Justified by emergency; i.e. immediate action to avoid some calamity
Remedy Defendant must buy the item at market value as of the time the tort was
committed.
Tort of Detinue (Right of Recaption: allows person to take their property back)
 Occurs when the defendant fails to return a chattel that the plaintiff is
entitled to possess
• Based on wrongful detention, so the plaintiff is normally required to demand
possession of the property before bringing an action and compensation
• If property is not returned, court can compel defendant to do so
DEFENSES TO INTENTIONAL TORTS
Note: damages for battery may be reduced if the victim provoked the attack; false imprisonment does not occur if the plaintiff
consented to being confined; public authority does not commit a trespass by entering onto a property with legal authority. It is
NEVER a defense to plead mistake. A trespass to land occurs even if the defendants thought that they owned the property,
conversion is committed even if the defendants honestly though they were buying goods from the true owners, etc.

For more information, refer to pages 97-100

Defenses in Intentional Torts
Complete Defenses: protects the tortfeasor from all liability
Voluntary choice to allow acts that would otherwise be tortious; expressed or implied; valid if it is free and
informed; and consent is also revocable
i.e. allows a person to borrow a friend’s car without committing tort of conversion
Consent
- bus company is not liable for false imprisonment when I refuses to let passengers out between schedules
stops
- by participating in a hockey game, a person agrees to being hit is a normal course of the play
Statutory/common law right to perform acts that otherwise would be tortious; lawful right to act in a
certain way
Legal Authority
i.e. police officers can exercise a power of arrest
- legal authorities are entitled to to enter onto land to perform their jobs
Right to protect oneself, or a third party, or perhaps property, from an attack by a person by using
REASONABLE force; the right to protect oneself from violence and the threat of violence
i.e. Defence of a third party: Case of Gambriell v Caparelli, a mother, honestly believed that her son was being
choke, was not liable for hitting the attacker on the head with a garden rake
Self-Defense -During a heated argument, a woman grabbed her husbands diploma and smashed it to the ground. The
man became enraged and in an affort to protect his property, he pushed his wife hard against the staircase.
Man was convicted of criminal assault by using excessive force.
- naturally tied to battery or assault

Right to protect oneself, or a third party, or perhaps a property, from a natural disaster or a general
threat/emergency; justified by an emergency
Necessity
i.e. physician who provides urgent medical care to an unconscious patient, or a person who tore down a
neighbour’s house in order to prevent the disastrous spread of a fire
Partial Defenses: allows a court to reduce the damages on the basis of a plaintiff’s own responsibility for loss/injury
Words/actions that cause a reasonable person to lose self-control (closely tied to torts of assault or
Provocation battery)
i.e. defendant “snaps” after being taunted/insulted by the plaintiff, as would any other ‘reasonable’ person
Contributory Negligence Plaintiff is partially responsible for the injury that the defendant tortuously caused