First-year courses · Business

Canadian business law: an introduction

Canadian business law flashcards: sources of law, common law and Quebec civil law, contract elements, torts, negligence, business forms, agency and consumers.

43 cards6 topicsAbout 15 minutes a roundTypical first-year or introductory Business Law course in a Canadian business program

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About this deck

This deck introduces the legal ideas that business students in Canada meet in their first law course. It explains where law comes from, how common law provinces differ from Quebec's civil law system, what makes a contract enforceable, how tort and negligence claims work, the main ways to organize a business, the law of agency and the basics of consumer protection.

These cards are general study material for learning course concepts. They are not legal advice, and the rules for any real situation depend on the province, the facts and current law, so anyone with an actual legal issue should consult a lawyer or a licensed paralegal where permitted.

Start with the sources of law and the elements of a contract, since most later topics build on them. When you study a contract card, test yourself with a short scenario: is there an offer, an acceptance that mirrors it, consideration flowing both ways, capacity, legality and an intention to be legally bound? For negligence, walk through duty, standard of care, causation and damage in order.

Frequent mistakes include treating an advertisement or shelf display as an offer (it is usually only an invitation to treat), thinking a counteroffer keeps the original offer alive, and assuming that owners of a sole proprietorship or general partnership have limited liability. They do not; only properly formed corporations and certain limited partners or partnerships offer that shield. Also note that Quebec uses the term civil liability where other provinces speak of torts.

Before you start: None.

All 43 cards

Cover the definitions with a sheet of paper and test yourself, or use the study modes above.

Sources of law

Common law: Body of legal rules developed by judges through decided cases, used for private law in every province and territory except Quebec.Example: Most rules on contract formation in Ontario come from court decisions.
Civil law system: Legal tradition, used for private law in Quebec, in which rules are set out mainly in a comprehensive written code.Example: The Civil Code of Québec governs contracts and property in that province.
Statute: A written law passed by Parliament or a provincial or territorial legislature.Example: The federal Competition Act.
Regulation: Detailed rules made by a government body under authority delegated by a statute.Example: Rules setting technical safety standards under a provincial workplace safety law.
Stare decisis: Principle that courts follow earlier decisions of higher courts in the same jurisdiction when facts are similar.Example: A provincial trial court must follow that province's court of appeal.
Public law versus private law: The first governs relations between individuals and the state; the second governs relations between private persons and businesses.Example: Criminal and tax law (first); contract and tort law (second).
Constitutional law: The body of law that sets up government, divides powers between Ottawa and the provinces and protects rights such as those in the Charter.Example: A province cannot pass criminal laws because that power is federal.

Contracts

Contract: A legally enforceable agreement between two or more parties that creates obligations.Example: A lease for retail space.
Offer: A definite proposal showing willingness to be bound on specific terms once accepted.Example: I will sell you my used laptop for $400.
Invitation to treat: An invitation for others to make offers, rather than an offer itself.Example: Goods displayed on a store shelf with price tags.
Acceptance: Unconditional agreement to all the terms of an offer, communicated to the offeror.Example: Replying 'Yes, I'll buy it for $400.'
Counteroffer: A response that changes the terms of an offer, which rejects the original and creates a new proposal.Example: Replying 'I'll pay $350' ends the $400 offer.
Consideration: Something of value that each party gives or promises in exchange for the other's promise.Example: Money paid for a service; a promise to deliver goods.
Capacity: Legal ability to enter a binding contract; minors and people with certain mental impairments may lack it.Example: Contracts with minors are generally not enforceable against them, except for necessaries.
Legality of object: Requirement that a contract's purpose must not be illegal or against public policy.Example: An agreement to sell stolen goods cannot be enforced.
Intention to create legal relations: Requirement that parties meant their agreement to be legally binding; presumed in business deals but not in casual family arrangements.Example: A promise between friends to split a pizza is usually not enforceable.
Misrepresentation: A false statement of fact made before or during negotiations that induces the other party to enter a contract.Example: A seller says a used car was never in an accident when it was.
Breach of contract: Failure, without legal excuse, to perform a promise in a binding agreement.Example: A supplier never delivers paid-for inventory.
Damages: Money a court orders one party to pay another to compensate for loss caused by a legal wrong.Example: Covering the extra cost of buying replacement goods elsewhere.
Specific performance: Court order requiring a party to carry out its promise, used when money alone would not be adequate.Example: Ordering the sale of a unique piece of land to proceed.
Limitation period: Deadline set by statute for starting a lawsuit, after which the claim is usually barred.Example: Many provinces set a basic period of two years from discovering the claim.

Torts and negligence

Tort: A civil wrong, other than a breach of contract, for which the injured person can sue for compensation.Example: Defamation, trespass or negligence.
Negligence: Careless conduct that falls below the expected standard and causes foreseeable harm to someone owed a duty of care.Example: A store fails to clear an icy entrance and a customer is hurt.
Duty of care: A legal obligation to take reasonable care to avoid causing foreseeable harm to others closely affected by your actions.Example: Drivers owe it to other road users.
Standard of care: The level of care a reasonable person, or a reasonable professional in the field, would show in the same situation.Example: An accountant is judged against a reasonably competent accountant.
Causation: Requirement that the defendant's conduct actually caused the harm, often tested by asking whether the harm would have happened 'but for' the conduct.Example: If the fall would have happened anyway, the claim may fail.
Contributory negligence: When the injured person's own carelessness helped cause their harm, which reduces their damages in proportion to their share of fault.Example: A pedestrian texting while jaywalking may receive reduced compensation.
Occupiers' liability: Duty of those who control premises to keep visitors reasonably safe, set by statute in several provinces.Example: A ski hill operator marking hazards on its runs.
Vicarious liability: Rule making an employer responsible for torts committed by employees in the course of their employment.Example: A delivery company is liable when its driver negligently hits a cyclist on a route.
Defamation: Publishing a false statement that harms another person's or business's reputation.Example: A false online review claiming a restaurant serves spoiled food.

Business forms

Sole proprietorship: Business owned and run by one person with no separate legal identity, who is personally liable for all its debts.Example: A freelance graphic designer working under their own name.
General partnership: Two or more persons carrying on business together for profit, each usually personally liable for the firm's debts.Example: Two friends running a food truck without incorporating.
Limited partnership: Partnership with at least one general partner who has unlimited liability and limited partners whose liability is capped at their investment, provided they do not manage the business.Example: Often used for real estate investment projects.
Corporation: A separate legal entity, created by incorporating under federal or provincial law, that can own property, sue and be sued in its own name.Example: Shareholders' losses are generally limited to what they invested.
Limited liability: Protection that limits an owner's financial risk to the amount invested in a business.Example: If the corporation fails, shareholders' homes are generally not at risk.
Directors' fiduciary duty: Obligation of a corporation's directors and officers to act honestly and in good faith with a view to the best interests of the corporation.Example: A director must not secretly profit from a deal with the company.

Agency

Agency relationship: Relationship in which one person (the agent) is authorized to act on behalf of another (the principal) in dealings with third parties.Example: A real estate agent negotiating for a seller.
Actual authority: Power an agent has because the principal expressly or impliedly granted it.Example: A purchasing manager authorized in writing to buy supplies up to $10,000.
Apparent authority: Power an agent appears to have because the principal's words or conduct led a third party to reasonably believe it, even without a real grant.Example: A firm keeps letting a former employee place orders without telling suppliers.

Consumer protection

Consumer protection legislation: Mainly provincial laws that regulate dealings between businesses and consumers, such as unfair practices, disclosure and cancellation rights.Example: Alberta's Consumer Protection Act and Ontario's Consumer Protection Act, 2002.
Competition Act: Federal law that prohibits anti-competitive conduct such as price fixing and deceptive marketing, enforced by the Competition Bureau.Example: A retailer claiming a fake 'regular price' to inflate a discount.
Implied conditions in sale of goods: Terms that provincial sale of goods laws read into contracts, such as goods being of merchantable quality and fit for a stated purpose.Example: A kettle that cannot boil water breaches these terms.
Cooling-off period: A short window, set by provincial law for certain contracts such as door-to-door sales, during which a consumer can cancel without penalty.Example: The number of days and covered contracts vary by province.