The Law and Business Administration in Canada, 14e Smyth, Soberman, Easson, & McGill

CHAPTER 1

Law, Society, and

Business

1-1 Copyright 2016 Pearson Canada Inc.

Smyth, Soberman, Easson, & McGill The Law and Business Administration in Canada, 14e

Objectives

To examine such questions as:

Why have laws?
What is the relationship between law and
business ethics?
How do businesses manage legal risks?
How do courts interpret laws, like the Charter
of Rights and Freedoms?

1-2 Copyright 2016 Pearson Canada Inc.

Smyth, Soberman, Easson, & McGill The Law and Business Administration in Canada, 14e

The Role of Law:

Influencing Behaviour

Protects persons and property

Empowers and restricts government
Facilitates freedom of choice private
ordering

1-3 Copyright 2016 Pearson Canada Inc.

Smyth, Soberman, Easson, & McGill The Law and Business Administration in Canada, 14e

Legal Liability:
Consequences Influence Behaviour

What types of legal liability do lawmakers use

to control behaviour?
Criminal liability
Regulatory or quasi-criminal liability
Civil liability

1-4 Copyright 2016 Pearson Canada Inc.

Smyth, Soberman, Easson, & McGill The Law and Business Administration in Canada, 14e

Why Obey Laws?

Natural law like religious principles or

fundamental moral principles U.S.
Declaration of Independence reflects both
Legal positivism - authority

1-5 Copyright 2016 Pearson Canada Inc.

Smyth, Soberman, Easson, & McGill The Law and Business Administration in Canada, 14e

Legal Risk Management Plan

Identify potential legal risks

Assess and prioritize each legal risk based
on likelihood and magnitude
Develop a strategy to address each risk from
both proactive and reactive perspectives
Implement the plan
Regularly review and update the plan

1-6 Copyright 2016 Pearson Canada Inc.

Smyth, Soberman, Easson, & McGill The Law and Business Administration in Canada, 14e

Legal Risk Management Strategies

Avoid the risk: discontinue the activity or find another

way to achieve the result
Reduce the risk: decrease the likelihood of the risk
or minimize its damage
Transfer the risk: transfer risk to an insurance
company or to the customer through contracts with
exemption clause
Absorb the risk: budget for the expenses with remote
risks or small valued risks (self-insuring)

1-7 Copyright 2016 Pearson Canada Inc.

Smyth, Soberman, Easson, & McGill The Law and Business Administration in Canada, 14e

Law and Business Ethics

Law and justice do not always coincide

Why may business adopt a higher standard
than that imposed by law?
Social responsibility

1-8 Copyright 2016 Pearson Canada Inc.

Smyth, Soberman, Easson, & McGill The Law and Business Administration in Canada, 14e

Who Makes Law?

The Canadian Constitution

Statutes or legislation, including regulations
and administrative rulings
Court decisions (case law)

1-9 Copyright 2016 Pearson Canada Inc.

Smyth, Soberman, Easson, & McGill The Law and Business Administration in Canada, 14e

The Role of the Courts

What judges do:

Determine the validity of legislation
Interpret legislation
Protect human rights
Develop case law applied to resolve disputes
without court intervention
Determine disputes between private parties
before the court
1-10 Copyright 2016 Pearson Canada Inc.
Smyth, Soberman, Easson, & McGill The Law and Business Administration in Canada, 14e

Challenging the Validity of a Statute

Argue the subject matter of the legislation is

not within the jurisdiction of the relevant
government (ultra vires)
Argue that the legislation violates the Charter
of Rights and Freedoms
Argue that the interpretation of the legislation
is wrong

1-11 Copyright 2016 Pearson Canada Inc.

Smyth, Soberman, Easson, & McGill The Law and Business Administration in Canada, 14e

Charter of Rights and Freedoms 1 of 3

Restricts government interference with

certain rights and freedoms
Entrenched in the Constitution
Infringing statutes will be invalid (not
enforced)
S. 33 (notwithstanding clause) permits
legislation to override parts of the Charter but
expires after 5 years if not re-enacted

1-12 Copyright 2016 Pearson Canada Inc.

Smyth, Soberman, Easson, & McGill The Law and Business Administration in Canada, 14e

Charter of Rights and Freedoms 2 of 3

Section 1 states that rights are subject to

such reasonable limits prescribed by law
as can be demonstrably justified in a free
and democratic society
Infringement shifts onus on government to
justify reasonableness of breach
Charter protects individuals from government
interference with Charter rights and freedoms

1-13 Copyright 2016 Pearson Canada Inc.

Smyth, Soberman, Easson, & McGill The Law and Business Administration in Canada, 14e

Charter of Rights and Freedoms 3 of 3

Fundamental freedoms
Legal rights
Equality rights
Democratic rights
Mobility rights

1-14 Copyright 2016 Pearson Canada Inc.

Smyth, Soberman, Easson, & McGill The Law and Business Administration in Canada, 14e

Courts Resolve Private Disputes

Private disputes are usually not governed by

legislation
Dispute resolution using principles of law
developed by the courts

1-15 Copyright 2016 Pearson Canada Inc.