COMM 315 – BUSINESS LAW AND ETHICSNOTES FOR FINAL EXAMINATION

Civil Code of QuebecMandate

Article 2130This is the definition of a mandate; a contract by which a person, the mandator, empowers another person, the mandatary, to represent him in the performance of a juridical act with a third person, and the mandatary, by his acceptance, binds himself to exercise the power.

- E.g. Paying a real estate agent to sell your house (mandate)- The principle = person who wishes to sell the house- The agent = the person responsible for selling the house- Third party = the house buyer

Article 2132Acceptance of a mandate may be express or tacit. Tacit acceptance may be inferred from the acts and even from the silence of the mandatary.

- A mandate may be written or verbal

Article 2133A mandate is either by gratuitous title or by onerous title.

- A professional mandate is assumed to have a price (price for service)- A mandate entered by two natural persons is presumed to be by gratuitous

Article 2134Remuneration, if any, is determined by the contract, usage or law or on the basis of the value of the services rendered.

- Remuneration is a synonym of payment

Article 2135There are two types of mandates; special and general. A special mandate implies a specific service (e.g. selling my house). Once the mandate completed, it is over. A general mandate implies a broad-spectrum service (e.g. taking over my business for a period of time).

Article 2136The powers of a mandatary (or agent) extend not only to what is expressed in the mandate, but also to anything that may be inferred therefrom. In other words, all actions that are necessary to the fulfillment of the mandate are expected.

Article 2137Powers granted to persons to perform an act which is an ordinary part of their profession need not to be mentioned expressly.

***Article 2138***A mandatary (or agent) is bound to fulfill the mandate he has accepted, and shall act with prudence and diligence in performing it. He shall also act honestly and faithfully in the best interests of the mandator (or principle), and avoid placing himself in a position that puts his own interest in conflict with that of his mandator (or principle).

- The agent has a fiduciary duty and obligation; a duty of trust (all the trust is placed in the agent)

Article 2139During the mandate, the mandatory is bound to inform the mandator (the principle), at his request or where circumstances warrant it, of the stage reached in the performance of the mandate. The mandatary shall inform the mandator without delay that he has fulfilled his mandate.

- In other words, as soon as the mandate is completed, the agent must inform the principle.

***Article 2140***The mandatary is bound to fulfill the mandate in person unless he is authorized by the mandator to appoint another person to perform all or part of it in his place. If the interests of the mandatory so require, however, the mandatary shall appoint a third person to replace him where unforeseen circumstances prevent him from fulfilling the mandate and is unable to inform the mandatory thereof in due time.

- E.g. If I specifically choose a certain real estate agent and he/she appoints the mandate to another person that he/she chooses without informing me, he/she is at fault.

- The chosen agent has to complete the mandate himself unless he/she is authorized by the mandator to do so or unless there is a special circumstance.

- E.g. I ask you to return a book to the library for me, and you break your leg while running to the library. You ask your best friend to return it for you. This is acceptable because it is due to rare circumstances.

***Article 2141 (Very Important)***The mandatory is accountable for the acts of the person he has appointed without authorization as his substitute as if he had performed them in person; where he was authorized to make such an appointment, he is accountable only for the care with which he selected his substitute and gave him instructions. In any case, the mandator has a direct action against the person appointed by the mandatary as his substitute.

- In all cases, the agent is liable.- However, if the agent was authorized to appoint the mandate to another person, if he gave

the substitute clear instructions, the agent has direct action against the person he appointed.

- Le mandataire répond, comme s'il les avait personnellement accomplis, des actes de la personne qu'il s'est substituée, lorsqu'il n'était pas autorisé à le faire; s'il était autorisé à se substituer quelqu'un, il ne répond que du soin avec lequel il a choisi son substitut et lui a donné ses instructions.

Article 2142In the performance of the mandate, the mandatary (or agent), unless prohibited by the mandatory (or principle), may require the assistance of another person (assistance in the sense of help). The mandatary remains liable towards the mandatory for the acts of the person helping him.

Article 2143A mandatary who agrees to represent, in the same act, persons whose interests conflict or could conflict shall so inform each of the mandators, unless he is exempted by usage or the fact that the mandators are already aware of the double mandate; he shall act neutrally towards each of them. Where a mandator was not in a position to know of the double mandate, he may have the act of the mandatary declared null if he suffers injury as a result.

Article 2144Where several mandataries are appointed in respect of the same business, the mandate has effect only if it is accepted by all of them. The mandataries shall act jointly for all acts contemplated in the mandate, unless otherwise stipulated or implied by the mandate. They are solidarily liable for the performance of their obligations.

- Lorsque plusieurs mandataires sont nommés ensemble pour la même affaire, le mandat n'a d'effet que s'il est accepté par tous. Ils doivent agir de concert quant à tous les actes visés par le mandat, à moins d'une stipulation contraire ou que cela ne découle implicitement du mandat. Ils sont tenus solidairement à l'exécution de leurs obligations.

Article 2145A mandatary who exercises alone powers that his mandate requires him to exercise with another person exceeds his powers, unless he exercises them more advantageously for the mandator than agreed.

***Article 2146 (Remedy Section)***The mandatary may not use for his benefit any information he obtains or any property he is charged with receiving or administering in carrying out his mandate, unless the mandator consents to such use or such use arises from the law or the mandate.

If the mandatory uses the property or information without authorization, he shall, in addition to the compensation for which he may be liable for injury suffered, compensate the mandator by paying, in the case of information, an amount equal to the enrichment he obtain, or in the case of property, an appropriate rent or the interest on the sums used.

What a principle can give an agent:- Confidential information- Property: E.g. The new company for which you work relocated in Australia. You ask your

father to sell your house. Your father sells his own house to move into yours, but pretends that he is currently unable to sell your house due to low demand. Because you are away, you have no idea of what is going on. When you return, you find out everything. Your father has to reimburse you for rent that would have otherwise been collected.

- Money: If the agent uses your money to earn interests, you are entitled to those interests.

***Article 2147***The mandatory may not, even through an intermediary, become a party to an act which he has agreed to perform for his mandator, unless the mandator authorizes it or is aware of his quality as a contracting party. Only the mandator may avail himself of the nullity resulting from the violation of this rule.

- E.g. You ask your father to sell your house. He states that the market is low, and that you can only obtain $200,000 (regular price was $350,000). He did that in order to sell the

house to your mother at a better price (he will also benefit from it since they would both be living in it). Such behaviour from the mandatary is unacceptable and prohibited. The agent cannot become the third party.

Article 2148Where the mandate is by gratuitous title, the court may, after assessing the extent of the mandatary’s liability, reduce the amount of damages for which he is liable.

Article 2149The mandator is bound to cooperate with the mandatary to facilitate the fulfillment of the mandate.

***Article 2150***Where required, the mandator advances to the mandatary the necessary sums for the performance of the mandate. He reimburses the mandatary for any reasonable expense he has incurred and pays him the remuneration to which he is entitled.

- The principle (or mandator) must always reimburse the agent for his/her expenses, as long as they are reasonable and necessary for the fulfillment of the mandate.

Article 2151The mandator owes interest on expense incurred by the mandatary in the performance of his mandate from the day they are disbursed.

- E.g. From the moment that the agent puts gas in his/her car to fulfill the mandate, you pay interests.

- Interest rate must always be expressed per year, not per month.

***Article 2152***The mandator is bound to discharge the mandatary from the obligations he has contracted towards third persons within the limits of the mandate. The mandator is not liable to the mandatary for any act which exceeds the limits of the mandate. He is fully liable, however, if he ratifies such act or if the mandatary, at the time he acted, was unaware that the mandate was terminated.

- If the agent completes the mandate right, the principal must discharge his/her obligations. The principle cannot sue the agent.

- If the agent has not completed what the principle required him to do, the principal is not required to discharge him. The agent is, in such a case, liable.

Article 2153The mandator is presumed to have ratified an act which exceeds the limits of the mandate where the act has been performed more advantageously for him that he had indicated.

***Article 2154***Where the mandatary is not at fault, the mandator is bound to compensate him for any injury he has suffered by reason of the performance of the mandate.

- E.g. if someone sexually harasses the agent while he is doing an open house for your house, you must compensate him.

***Article 2155***If no fault is imputable to the mandatary, the sums owed to him are payable even though the business has not been successfully concluded.

- Best effort = the agent does everything he is supposed to- E.g. If your father does his best effort to sell your house but cannot due to poor market

demand, you must still pay him for his duties.

Article 2156If a mandate is given by several persons, their obligations towards the mandatary are solidary.

- This applies to several people with a single agent- E.g. your parents die and leave a house to you and your brothers, and you decide to sell it.

In this circumstance, a mandate (selling the house) is given by several persons (you and your brothers).

***Article 2157***Where a mandatary binds himself, within the limits of his mandate, in the name and on behalf of the mandator, he is not personally liable to the third person with whom he contracts. The mandatary is liable to the third person if he acts in his own name, subject to any rights the third person may have against the mandator.

- E.g. You wish to sell your house for $250,000. The agent wants to make a quick sale, and sells your house for $200,000. Before signing everything, you find out that the agent was selling the house at a price for which you did not agree. You cancel the sale. The third party is now extremely upset because he/she was told that he/she was getting the house for $200,000. In such a case, you must compensate the third party yourself.

- The mandatary is acting on your behalf with the third party, which signifies that you are responsible to the third party for any action that the mandatary does wrong.

***Article 2159***Where the mandatary agrees with a third person to disclose the identity of his mandator within a fixed period and fails to do so, he is personally liable. The mandatary is also personally liable if he is bound to conceal the name of the mandator or if he knows that the person whose identity he discloses is insolvent, is a minor or is under protective supervision and he fails to mention this fact.

- If your house is sold to a third party, and the third party finds a huge crack in the foundation, if the principle’s identity cannot be revealed, the third party can sue the agent. The principle would then pay back the agent for all lawsuit expenses and compensation to the third party.

- However, if the agent is aware that the principle is insolvent (has no money), he must disclose it to the third party if he doesn’t want to get sued.

Article 2160A mandator is liable to third persons for the acts performed by the mandatary in the performance and within the limits of his mandate unless, under the agreement or by virtue or usage, the mandatary alone is liable. The mandator is also liable for any acts which exceed the limits of the mandate, if he has ratified them.

Article 2161The mandator may repudiate the acts of the person appointed by the mandatary as his substitute if he suffers any injury thereby, where the appointment was made without his authorization or where his interest or the circumstances did not warrant the appointment.

***Article 2163 (Guaranteed in Test)***A person who has allowed it to be believed that a person was his mandatary is liable, as if he were his mandatary, to the third person who has contracted in good faith with the latter, unless, in circumstances in which the error was foreseeable, he has taken appropriate measures to prevent it.

- E.g. Georges is your agent. You are a company seeking raw materials. Georges is in charge of picking up raw materials for you. You decide to fire him. Georges goes for one last trip to the supplier (after being fired) and gets materials for himself. You receive a bill 30 days later. You are liable for this expense because you did not inform your suppliers that Georges was no longer with your company.

Article 2164A mandator is liable for any injury caused by the fault of the mandatary in the performance of his mandate unless he proves, where the mandatary was not his servant, that he could not have prevented the injury.

Civil Code of QuebecCorporations

Corporation = Incorporated at the federal levelCompany = Incorporated at the provincial levelLegal person = Corporation, company, partnership…Patrimony = Assets, liabilities; basically a legal person’s overall package

Article 301Legal persons have full enjoyment of civil rights.

Article 302Every legal person has a patrimony.

Article 303Legal persons have capacity to exercise all their rights. They have no incapacities other than those which may result from their nature or from an express provision of law.

Article 305Every legal person has a name which is assigned to it when it is constituted, and under which it exercises its rights and obligations.

Article 307The domicile of a legal person is at the place and address of its head office.

Article 309Legal persons are distinct from their members. Their acts bind none but themselves, except as provided by law.

Quebec Companies ActLiability of Directors

Article 1891- The directors of the company should be solidarily liable to its employees for all debts not

exceeding six months’ wages due for services rendered to the company whilst they are such directors respectively.

2- No director shall be liable to an action therefore, unlessa) the company is sued within one year after the debt became due and the writ of

execution is returned unsatisfied, wholly or in part; orb) during such period, the winding-up order is made against the company or it

becomes bankrupt within the meaning of Bankruptcy and Insolvency Act and a claim for such debt is filed.

In other words:- The director’s patrimony may be at risk if the director does something wrong.- For example, if your company has not been paying taxes, you (the director) will be

personally held liable. They may seize your house, car, and more. Even if another employee was in charge of finances, you are held liable.

- If you, the director, omit to pay employees for more than 6 months due to a financial crisis, employees can go against you.

- If a company declared more dividends and can no longer pay its bills (insolvent), financial institutions or shareholders go after directors.

- If a company is unfairly trading shares, its director will be held liable.- All in all, a company’s director has more responsibilities than most people would think.

They are liable for nearly everything.

Civil Code of QuebecContracts

Articles 1378, 1379, 1380, 1381, 1382, 1383, 1384Contracts may be divided into specific types of contracts as follows:

- Contracts of adhesion (not negotiable)- Mutual agreement (the parties negotiate and come to an agreement)- Synallagmatic or bilateral contract (when obligations arise on both sides of the equation;

for example, when selling my car, I have the obligation to deliver the car and the buyer has the obligation to pay me)

- Unilateral contract (when obligations only arise on one side; for example, making your will or making a donation)

- Onerous contract (by paying)- Gratuitous contract (for free)- Commutative contract (knowing in advance what your obligation will be on a specified

date; for example, paying $100 per bushels ordered in September)- Aleatory contract (when the extent of the obligations are not known in advance; for

example, ordering 100 bushels in September at an uncertain price – the price will be determined once the season over, depending on how much was produced)

- Instantaneous contract (once our obligations executed, the contract is done and over with)- Successive contract (obligations are performed at several different times; for example, a

car lease)- Consumer contract (a merchant selling a product or service to a consumer)

Article 1385A contract is formed by the sole exchange of consents between persons having capacity to contract, unless, in addition, the law requires a particular form to be respected as a necessary condition of its formation, or unless the parties require the contract to take the form of a solemn agreement.

- A contract does not necessarily have to be written. Two people can enter a verbal agreement, and still be valid.

Article 1387A contract if formed when and where acceptance is received by the offeror, regardless of the method of communication used, and even though the parties have agreed to reserve agreement as to secondary terms.

Components of a contract that make it valid (Guaranteed in Exam)1. Consent

i) Error (there are two types of errors – excusable versus inexcusable, such as not reading a contract properly; e.g. of an excusable error = marrying a man that you thought to be a woman)

ii) Fraud (e.g. misrepresentation of a product; a beautiful house that is said to be beach- front is in fact in front of a polluted canal)

iii) Fear (must conduct an objective and subjective test)iv) Lesion (when one party has more power over the other and imposes the contract – if

you are over 18 years old, you cannot use lesion as means of getting out of a contract)2. Capacity

i) Age (Everyone is allowed to contract for things of minor value for necessities of life. Minors of 14 years old or more are entitled to contract for employment. You acquire your full right to contract at 18 years old.)

ii) Person under regime of protective supervision (e.g. if grandmother has Alzheimer, she has a restriction stating that when wishing to spend a sum of $5,000 or more, she needs a supervisor. Protective supervision requires a court order to open up. At this point, she loses her right to contract)

3. Cause (When the reason for contract is against public order – such as prostitution, drug selling, gambling, or death crimes – the contract is deemed as invalid in court. You cannot go to court and ask for annulment of contract because the contract is deemed as void.)4. Object (the traditional nature of a contract – when selling a car, the object is a car; when leasing a car, the object is the lease)5. Form (Some other requirement for a contract to be effective. Every type of contract has a different form. For example, when mortgages are done, a notary must be present. A holograph will is the simplest form of will and is hand-written. The latest one eliminates all other. Article 1400Error vitiates consent of the parties or of one of them where it relates to the nature of the contract, the object of the presentation or anything that was essential in determining that consent. An inexcusable error (such as not properly reading the contract) does not constitute a defect of consent.

Article 1401Error on the part of one party induced by fraud committed by the other party or with his knowledge vitiates consent whenever, but for that error, the party would not have contracted, or would have contracted on different terms. Fraud may result from silence or concealment.

- E.g. If you are aware of a crack in the foundation of a house you are selling, remaining silent about it is a form of fraud. You have the obligation to inform buyers of the problem.

***Article 1407 (Guaranteed in Exam)***A person whose consent is vitiated has the right to apply for annulment of the contract; in the case of error occasioned by fraud, of fear or of lesion, he may, in addition to annulment, also claim damages or, where he prefers that the contract be maintained, apply for a reduction of his obligation equivalent to the damages he would be justified in claiming.

- Example: a man claims to be selling a beautiful beach-front cottage in Florida. Because you live in Canada, you trust his claim and purchase the cottage for $325,000. Once the contract concluded, you purchase plane tickets to go visit your new house. Upon arrival, you realize that the house is overlooking a polluted canal full of alligators (fraud – misrepresentation of product).

- In this case, you do not want to annul the contract, as you are passionate about alligators. You want to keep the house, but want a reduction in your obligations ($$$).

- Due to the fact that the contract was based on fraud, you can ask for the contract to be maintained, while obtaining a reduction in the obligation (i.e. price of house). The house was not beach-front, and thus has a lower value.

- Consent based on error allows for cancellation but not damages, at it was your fault.

There are two types of nullity:- Relative nullity (cancelling a contract or changing it)- Absolute nullity (no possibility of changing the contract because the contract was never

formed or valid in the first place – e.g. invalid cause, such as prostitution contract)

Article 1411A contract whose cause is prohibited by law or contrary to public order is null.

Article 1413A contract whose object is prohibited by law or contrary to public order is null.

Article 1421Unless the nature of the nullity is clearly indicated by the law, a contract which does not meet the necessary conditions of its formation is presumed to be relatively null.

Article 1422A contract that is null is deemed never to have existed. In such a case, each party is bound to restore to the other the prestations he has received.

Civil Code of QuebecCivil Liability

Article 1457This article pertains to the basis of civil liability.

Equation of civil liability:Endowed with Reason + Fault + Cause + Damages = Civil Liability (Duty to Repair) (rules of (direct and (moodily, conduct: immediate) moral, and laws) material)

Example:A pyrotechnician gives a firework show. At the end of the show, he finds a firework on the ground and decides to leave it there instead of picking it up. A child finds it and brings it home to his father. His father lights up the firework and blows up his son’s arm. In this case, the father is responsible for the accident because he was the direct and immediate cause of the damage (i.e. arm loss).

Article 1458This article pertains to contractual liability. Every person has a duty to honour his contractual undertakings. Where he fails in this duty, he is liable for any bodily, moral, or material injury he causes to the other contracting party and is liable to reparation for the injury.

- Example: The balcony of an apartment building falls while my friend and I are sitting on it. I am a guest at my friend’s apartment. I can sue for 1457 and my friend can sue for 1458.

- In other words, the building owner failed to provide proper maintenance of the apartment building and is ultimately responsible for my injuries (he is faulty, and the direct/immediate cause of my pain). On the other hand, my friend can sue for 1458 because he entered in a contractual agreement with the building owner. In exchange for rent, the building owner must provide a safe apartment to my friend, but failed to do so.

Article 1459A person having parental authority is liable to reparation for injury cause to another by the act or fault of the minor under his authority, unless he proves that he himself did not commit any fault with regard to the custody, supervision, or education of the minor.

- A simple fault or accident still counts as a fault and you must pay for damages.

***Article 1460***A person who, without having parental authority, is entrusted, by delegation or otherwise, with the custody, supervision, or education of a minor is liable, in the same manner as the person having parental authority, to reparation for injury caused by the act or fault of the minor. Where he is acting gratuitously or for reward, however, he is not liable unless it is proved that he has committed a fault.

Article 1461Any person who, as tutor or curator or in any other quality, has custody of a person of full age who is not endowed with reason, is not liable to reparation for injury caused by any act of the person of full age, except where he is himself guilty of a deliberate or gross fault in exercising custody.

- Example: You are in charge of caring for a mentally disabled person. Your job is to bring him/her for a stroll down the street every day (volunteer work). One day, a car pulls over asking for directions. You take two brief seconds to help him. While you turned around to help the car driver, the disabled person walked to a man and randomly hit him in the face. In such a case, you are not faulty because you were helping someone.

- However, if you start talking to your best friend on your cell phone and omit to supervise the disabled person, you will be held liable. You did not perform your duty properly and carelessly left him/her alone.

Article 1464An agent or servant of the State or of a legal person established in the public interest does not cease to act in the performance of his duties by the mere fact that he performs an act that is illegal, unauthorized or outside his competence, or by the fact that he is acting as a peace officer.

- In other words, if a cop abuses you, the state or government will be held liable.

Article 1465A person entrusted with the custody of a thing (or object) is liable to reparation for injury resulting from the autonomous act of the thing, unless he proves that he is not at fault.

- For example, you driveway is very steep. You park your manual car and omit to put the handbrake. The car rolls back down the street and hurts a passer-by. In such a case, you are responsible for injuries caused by the car.

- For example, you have a dead tree on your lawn. Your neighbour tells you to cut it because it is dead, but you refuse to do so. During the night, the dead tree falls on your neighbour’s pool and breaks it. You are held liable for the damages caused by the dead tree.

Article 1466The owner of an animal is liable to reparation for injury it has caused, whether the animal was under his custody or that a third person, or had strayed or escaped. A person making use (e.g. riding a horse) of the animal is, together with the owner, also liable during that time.

Article 1467The owner of an immovable, without prejudice to his liability as custodian, is liable to reparation for injury caused by its ruin, even partial, where this has resulted from lack of repair or from a defect of construction.

- The owner of an apartment building is liable if snow falls off the roof and harms a passer-by.

- The owner of an apartment building is liable if a balcony falls or any other type of damages caused by lack of maintenance.

Article 1468The manufacturer is liable for any safety defect associated with its products. You are also liable when importing products or selling them (i.e. retailers).

Article 1469A thing (or product) has a safety defect where, having regard to all the circumstances, it does not afford the safety which a person is normally entitled to expect.

- E.g. I purchase a toaster, and it ends up catching on fire. As a result, my entire kitchen caught on fire. A person does not normally expect a toaster to catch on fire.

- I can ultimately sue everyone in the chain (manufacturer, importer, and retailer).- All liable bodies should have known about the defect (that is how the court perceives it).- If a product does not have the safety precaution pictograms on it, it is deemed as a safety

defect. - Sufficient warning = warning of all attendant dangers (related to dangers known to all).- E.g. we all know that smoking around gas is dangerous. We all know that coffee is hot.

Article 1470A person may free himself from his liability for injury caused to another by proving that the injury results from superior force, unless he has undertaken to make reparation for it. A superior force is an unforeseeable and irresistible event, including external causes with the same characteristics.

- E.g. hurricane in Miami = foreseeable- E.g. hurricane in Montreal = unforeseeable (very unlikely)

Article 1471Where a person comes to the assistance of another person or, for an unselfish motive, disposes, free of charge, of property for the benefit of another person, he is exempt from all liability for injury that may result from it, unless the injury is due to his intentional or gross fault.

- Good Samaritan – you save a man from a heart attach but break one of his ribs while doing CPR; you will not be held liable

- When giving away property to charity (e.g. donating a toaster to the Salvage Army or to a friend and it blows up – you are not liable)

Article 1472A person may free himself from his liability for injury caused to another as a result of the disclosure of a trade secret by proving that considerations of general interest prevailed over keeping the secret and, particularly, that its disclosure was justified for reasons of public health and safety.

- Whistle blowing – knowing that your employer dumps toxic wastes in the river and you inform public security.

***Article 1473***The manufacturer, distributor, or supplier of a movable property is not liable to reparation for injury caused by a safety defect in the property if he proves that the victim knew and could have known of the defect, or could have foreseen the injury.

- Victim knew- Victim could have known – there was sufficient indication on the product, but the victim

didn’t read it (e.g. someone is a chemical engineer but didn’t foresee that mixing two dangerous chemicals could be harmful)

- Victim could have perceived the injury (e.g. when using a shot gun, you should not place your eye against the telescopic lens – you will get a major black eye)

***Article 1474 (Guaranteed in the Test)***A person may not exclude or limit his liability for material injury caused to another through an intentional or gross fault; a gross fault is a fault which shows gross recklessness, gross carelessness or gross negligence. He may not in any way exclude or limit his liability for bodily or moral injury caused to another.

- E.g. You go bunji jumping. However, the employee forgot to weigh you and put a rigid cord that broke your legs. He says that he is not responsible because you signed some papers before jumping. In this case, you can definitely sue. They are liable.

- Because this is an example of a simple fault (unintentional fault), they are liable for moral and bodily damages, but not material, such as ripped jeans)

- However if the fault is intentional, they would be liable for everything including material damages.

Article 1475A notice, whether posted or not, stipulating the exclusion or limitation of the obligation to make reparation for injury resulting from the non-performance of a contractual obligation has effect, in respect to the creditor, only if the party who invokes the notice proves that the other party was aware of its existence at the time the contract was formed.

- E.g. Putting you jacket in coat check. When picking it up, it is destroyed. Even though there is a sign indicating that the club is not liable, they are liable. They would have to prove that you knew about the sign, which is too hard to prove.

Article 1476A person may not by way of a notice exclude or limit his obligation to make reparation in respect of third persons; such a notice may, however, constitute a warning of danger.

- E.g. If you post a warning about the fact that you have a dog (Beware of Dogs), and someone gets bit on your property, you are still held liable.

Article 1478Where an injury has been caused by several persons, liability is shared by them in proportion to the seriousness of the fault of each. The victim is included in the apportionment when the injury is partly the effect of his own fault.

- This article pertains to contributory negligence – when the injury has been caused by many people.

- E.g. When your own dog bites a passer-by who was on your private property, both of you are at fault (you are 50% faulty, while the victim is 50% faulty).

- E.g. When your own dog bites a passer-by, but a “beware of dog” sign is posted on the door and the victim is on your private property, you are approximately 30% at fault while the victim is 70% at fault.

- E.g. When your dog bites an intruder who entered your house, you are 1% faulty, while the victim who broke-in is 99% faulty (in such a case, most victims wouldn’t sue).

Article 1479A person who is liable to reparation for an injury is not liable in respect of any aggravation of the injury that the victim could have avoided.

- E.g. Someone accidentally throws an elastic in your eye. You wait 4 weeks before going to the doctor when your eye is now a total mess. The person who threw the elastic is not liable for worst injuries because it could have been avoided. He/she would be liable for the immediate damages.

Article 1480Where several persons have jointly taken part in a wrongful act which has resulted in injury or have committed separate faults each of which may have caused the injury, and where it is impossible to determine, in either case, which of them actually caused it, they are solidarily liable for reparation thereof.

- E.g. The capsules of a shot gun are the same no matter the type of shot gun used. You and your friends are hunting, and are strategically placed on a hunting line. A bird moves, and all shoot outside their hunting zone. One of your friends shoots you in the leg. Because the bullet capsule cannot be identified, everyone is liable for going outside their hunting zone. It was so impulsive that it was impossible to identify the person who did it.

COMM 315 – NOTES FOR FINAL EXAMINATIONCASE ANALYSIS

CASE 1 – PIEC ESTATE V. CAISSE D’ÉCONOMIE POLONAISE

Facts:- 3 separate mandates:

1. The niece was the liquidator of the aunt’s estate upon death2. The nephew was in charge of managing the aunt’s money and dealing

with the bank3. The bank was in charge of protecting the aunt’s money

- The aunt went for a strip to her native Poland. During her trip, she passed away.- When the niece learned about the death of her aunt, she began liquidating her estate. At

her great surprise, she realized that her aunt’s term deposit certificates of $27,000 were withdrawn.

- The nephew, who learned about his aunt’s death before everyone else, created a forged letter from his aunt instructing the “Caisse D’Économie Polonaise du Québec” to pay her nephew the sum of $27,000.

- The bank accessed the aunt’s term deposit certificates, turned them into cash, and gave them to the nephew.

- The plaintiff (the niece) is excessively upset, and wishes to properly liquidate her aunt’s estate (the way she was asked to by her aunt).

- The bank should have asked itself questions because the redemption of the term deposit certificates involved the renunciation of an important amount of accrued interest. Further investigation should have been conducted.

- The court is of the opinion that a number of factors should have alerted the bank to the possibility that the nephew was exceeding the mandate that the aunt had given him.

- For these reasons, the Court condemns the bank to pay the niece a sum of $27,000 wit interest from the date of service.

- Article 2138 applies to this case – a mandatary (the bank) is bound to fulfill the mandate he has accepted, and shall act with prudence and diligence in performing it.

CASE 2 – DR. ANTHONY DOWELL AND NOTARY EDGAR HAY-ELLIS

Facts:- Joseph had money, but a lot of debt.- Joseph wishes to go bankrupt, but cannot do so because he has money to his name.- Joseph decides to purchase an apartment building under the name of Dr. Anthony Dowell,

a person with whom he had previously undertaken transactions such as this one. - By purchasing the apartment building, Joseph no longer has money.- Joseph decides to mortgage the building under Dr. Anthony Dowell’s name, but takes the

cash proceeds from the mortgage of the building. - Dr. Anthony Dowell is increasingly concerned by his participation in the scheme.

- Dr. Anthony Dowell became suspicious when he found that an amount held in trust for the maintenance of the property was taken by Joseph.

- After the papers signed, Dr. Dowell became the owner of the property incurred, and had substantially large obligations toward innumerable third parties, such as the mortgage creditor, tenants, and municipal/school authorities.

- During the initial period, Joseph became the mandatary, and was in charge of all day-to-day administration of the property.

- Dr. Dowell hired a notary (the defendant) to manage the property’s trust account, and make sure that all cheques were properly justified. The defendant was in charge of ensuring that all amounts taken by Joseph were put towards the maintenance of the property.

- In other words, Dr. Dowell (the mandator) hired Notary Edgar Hay-Ellis (mandatary) to take care of the property’s trust account.

- In this case, there are 2 mandates; one between Dr. Dowell and Joseph (administration of the property), and one between Dr. Dowell and the notary (administration of the trust account aimed at covering expenses associated with the maintenance of the property).

- The mandate of interest in this case is the one between Dr. Dowell and the notary.- Many cheques were used for purposes in no way related to the property. Some cheques

had even disappeared. - Article 1458 (from the Civil Code of Quebec, Civil Liability) – Every person has a duty

to honour his contractual undertakings. Where he fails in his duty, he is liable for any bodily, moral, or material injury he causes to the other contracting party and is liable for reparation of the injury.

- Article 2130 (from the Civil Code of Quebec, Mandates) – A mandatary is bound to fulfill the mandate he has accepted, and he shall act with prudence and diligence in performing it. He shall also act honestly and faithfully in the best interests of the mandator.

- As a result, Dr. Dowell won the case.

CASE 3 – 146400 CANADA INC. VERSUS NETWORK TRANSPORT LTD.

Facts:- Plaintiff = 146400 Canada Inc.- Defendant = Network Transport Ltd.- The plaintiff took over the lease that Network Canada Ltd. had for a certain industrial

property owned by Claridge Properties Ltd. - The offer to lease was signed by the president of Network Transport Limited, not on

behalf of Network Transport Limited, but rather on behalf of its wholly owned subsidiary in Quebec.

- Prior to the expiry of the lease term, Network Transport Limited abandoned the leased premises without leaving the remaining amount due in rent.

- When 146400 Canada Inc. moved in, there was a substantial amount still due in rent. The owner of Claridge Properties Limited was now asking 146400 Canada Inc. to cover for the unpaid rent.

- Network Transport Limited refuses to pay the amounts claimed by 146400 Canada Inc.- Network Transport Limited claims not being responsible for the unpaid rent because the

plaintiff was actually dealing with the wholly owned subsidiary that is now closed.

- However, the plaintiff claims to have believed that, at all times, it was dealing with Network Transport Limited as a lessee. There was no evidence of the contrary.

- The president of Network Transport Limited induced the lessor to believe that it was dealing with the parent company rather than its subsidiary.

- By doing so, the president committed a fraud, under Article 317.- Article 317: In no case may a legal person (or company) set up juridical personality

against a person in good faith if it is set up to dissemble fraud, abuse of right or contravention of a rule of public order.

- Although Network Transport Limited and its subsidiary are two legal entities, the Court retains the fact that their activities are united.

- 146400 Canada Inc. seeks a condemnation against the defendant for the total rent due, with interest, as well as additional indemnity contemplated by Article 1619.

- Article 1619: An indemnity may be added to the amount of damages awarded for any reason.

CASE 4 – GIROUX VERSUS MALIK

Facts:- Mr. Malik sold his land to the plaintiff, Mr. Giroux.- Mr. Giroux purchased the land in the hopes of building a property.- However, when attempting to obtain construction permits, Mr. Giroux realised that the

soil on the land did not allow for a septic system and dwelling. - Mr. Giroux now claims that Mr. Malik knew about this problem since 1988, but did not

say anything when the transaction took place. - The plaintiff is seeking his money back and $10,000 in damages. - According to Article 1401, error induced by fraud (i.e. misrepresentation of property)

vitiates consent. - Also, as stated in Article 1401, fraud may result from silence or concealment. - In this case, Mr. Malik remained silent and did not inform the purchaser of this major

problem.- However, in his defence, Mr. Malik claimed having told his real estate agent to inform

buyers of the problem. The agent did not say anything to Mr. Giroux. Mr. Malik claims not being responsible for this occurrence as he did inform his agent.

- According to Article 2160, a mandatory is also liable to third persons for the acts performed by the mandatary in the performance and within the limits of his mandate.

- The Court maintains that, given the importance of the problem when purchasing land, Mr. Malik had the obligation to ensure that the message was sent across from the mandatary to the third party.

- He had the responsibility to ensure that the buyer was fully aware of the problem.- Now, when the consent is vitiated through fraud resulting from silence, the plaintiff can

use Article 1407 (the plaintiff can either cancel the overall contract or change it).- In this case, the plaintiff cancelled the contract because he really needed a septic system

to build a property.- Malik got his land back, and the plaintiff got his money back plus damages.

- Article 1419 (relative nullity) also applied to this case. A contract is relatively null where the condition of formation sanctioned by its nullity is necessary for the protection of an individual interest, such as where the consent of the parties or of one of them is vitiated.

CASE 5 – PETER VERSUS FIASCHE

Facts:- Mr. Fiasche is the owner of a restaurant called “Chez Gino”.- Mr. Fiasche is a family friend of Mr. Gucciardo, husband of Mrs. Agnes Peter Gucciardo.- Mr. Gucciardo had lost his employment, and was seeking a new job.- Mr. Fiasche proposed to sell his restaurant, and assured Mr. Gucciardo that it would be a

gold mine. - Mr. Fiasche created false income statements depicting high net sales and profits. - Mr. Fiasche also told Mr. Gucciardo that he had a “special way” of reporting income (i.e.

tax evasion). - However, at that time, Mr. Gucciardo did not understand what Mr. Fiasche meant by

“special way of reporting income”.- Mr. Fiasche did not want to explain any further until Mr. Gucciardo gave a $100,000

deposit. Mr. Fiasche urged Mr. Gucciardo to re-mortgage his house because numerous buyers were interested in the restaurant.

- Mr. Fiasche told Mr. Gucciardo that if sales were low, he would reimburse him the total deposit.

- Once the deposit given, Mr. Gucciardo began running the business. However, sales were terrible and excessively low.

- There was also a frequent presence of a tax auditor, which Mr. Fiasche claimed to be simply verifying if the cash registers were working properly.

- Mr. Gucciardo began to understand what was going on. He had been tricked into purchasing the restaurant, and was running a business that was against public order (tax evasion).

- Mr. Gucciardo asked Mr. Fiasche to reimburse him the deposit. However, Mr. Fiasche refuses, and claims never to have said such a thing.

- Because the contract’s cause is fraud to government, the contract is deemed as null (Article 1411 – A contract whose cause is prohibited by law or contrary to public order is null).

- According to the Court, it has never existed and will not be recognized (Article 1422 – A contract that is null is deemed never to have existed).

- At this very point, the judge can either dismiss the case or judge in equity (this is to the judge’s discretion).

- This case is clearly unfair. While the seller now has $100,000 in his pocket along with the restaurant, the buyer has re-mortgaged his house and has lost his money.

- When not taking into consideration the unlawful cause of the contract, Mr. Fiasche committed fraud by misrepresenting the value of the restaurant (i.e. false income statements). Under Article 1401, error induced by fraud vitiates consent.

- The judge ordered Mr. Fiasche to give back $100,000 to Mr. Gucciardo. However, because of the contract’s unlawful cause, no damages were awarded.

- One must remember that when entering a contract with an unlawful cause, you are taking a great risk because the judge may not want to partake in the case.

- Article 1418 also applies to this case (absolute nullity).

CASE 6 – CARREFOUR LANGELIER VERSUS CINEPLEX ODEON

Facts:- 2 contracts are present in this case; one between Carrefour Langelier and Cineplex Odeon,

and one between Cineplex Odeon and Guzzo.- Carrefour Langelier built and leased a cinema complex to Cineplex Odeon. - However, before Cineplex Odeon moved in, it decided to sublease the complex to Guzzo.- The landlord is upset, and does not want a Guzzo movie theatre in Carrefour Langelier.- The landlord states to have promised all the stores and customers that a Cineplex Odeon

would be built.- Cineplex Odeon promises that Guzzo will be operating under the appearance of a

Cineplex Odeon. - The landlord makes them sign contracts stating that Guzzo shall operate under Cineplex’s

banners, and that Cineplex Odeon would book all movies shown at the cinema for Guzzo.- After a year of operation, Guzzo removes all Cineplex banners, and installs Guzzo signs

everywhere. - The landlord is upset and sues.- In its defence, Guzzo appears for Articles 1401, 1402, 1403, and 1404. - Guzzo states that Carrefour Langelier made it sign agreements by telling Guzzo that it had

already promised other tenants and customers that a Cineplex Odeon would be built. According to Guzzo, such assertions were false and consisted of a misrepresentation (Article 1401).

- Guzzo also states that it signed the agreements by fear of losing business (Article 1402). Guzzo stated that Cineplex Odeon is a large competitor, and that refusing to sign could start a conflict (Article 1403).

- Guzzo also appeared for Article 1404, stating that it was a victim of lesion.- Now, according to the Court, none of the articles pertain to this case. For example, lesion

solely applies to cases involving minors or people under a regime of protection. As stated in Article 1405, lesion vitiates consent only in respect of minors and persons of full age under protective supervision.

- The Court also maintained that Guzzo’s fear of losing business is not a fear large enough to apply to Article 1402. The judge claims that Guzzo had a subjective fear that all other entrepreneurs have. He rejected the use of Article 1402.

- Also, the landlord’s claim to have promised tenants and customers that a Cineplex Odeon would be build does not constitute misrepresentation under Article 1401.

- Regarding Carrefour Langelier, the landlord wants the agreement contract to be in effect under a specific performance obligation. He wants Guzzo to operate under a Cineplex Odeon.

- The judge orders Guzzo to operate under a Cineplex Odeon (under a specific performance obligation).

4 cases which do not allow for a specific performance obligation:- When the obligation has become impossible to perform (you can get your money back

plus damages, but not a specific performance obligation)- When the time in which to perform the obligation has elapsed (E.g. you pay Celine Dion

to sing at the Bell Center on January 1st 2009, at 7pm. However, the time has elapsed because she missed a plane and didn’t show up. You can get your money back plus damages, but cannot obtain a specific performance obligation)

- When property has perished (e.g. an import/export ship sinks)- When property has left the patrimony (e.g. you send the description and price of a car you

are trying to sell to Person B. By the time Person B replies, you sold the car to Person C. The car is no longer in your patrimony. Therefore, Person B can obtain damages, but not a specific performance)

***In this case, the lease under Cineplex Odeon is not impossible to perform, the time in which to perform the lease has not elapsed, the property has not perished, and the property has not left the patrimony. Therefore, the landlord can force Guzzo to operate under Cineplex Odeon (under a specific performance obligation).

CASE 7 – COPISCOPE INC. AND TRM COPY CENTERS

Facts:- TMR Copy (plaintiff) is in the business of offering photocopy services to the public by

means of photocopy machines which are placed in stores carrying on business operations of another nature, such as convenience stores and pharmacies.

- TMR Copy installed its photocopy machines in approximately 700 business locations.- Before installing its photocopy machine in a store, a contract was to be signed by the

business operator. A non-competition covenant was present and stated that the business operator may not deal directly or indirectly with anyone or any company connected with the business of making photocopy equipment available for use by the public for a period of 1 year, within a 25-mile radius from the business location.

- Copiscope (defendant) is also in the photocopy business. In 1997, it embarked on a program aimed at persuading business operators to terminate their contract with TMC Copy and enter into an agreement with Copiscope.

- TMR Copy sues Copiscope for an interlocutory injunction in order to stop Copiscope from taking over its business.

- TMR Copy insisted that the non-competition covenant was used to protect the company’s trade secrets.

- The Court concluded that the non-competition covenant was manifestly unreasonable and therefore invalid. It follows that the respondent has not established an apparent right (or clear right), which is necessary for the granting of an interlocutory injunction.

- There is also no evidence that the business operator has knowledge of any trade secrets. Its sole role is that of ascertaining that the machine has a supply of paper and ink and collecting the fee for its use.

- Also, the contract signed by business operators to TMR Copy was a contract of adhesion (Article 1379 – a fixed contract with no negotiation).

CASE 8 – HARRIS VERSUS OSTROMOGILSKI

Facts:- Plaintiff = Mr. Harris- Defendant = Mr. Ostromogilski- The plaintiff had been leasing a taxi cab from the defendant’s wife. - Every week, the plaintiff would go to the defendant’s house to settle his accounts and give

royalties.- One day, the plaintiff went to the defendant’s house to settle his accounts. However, the

past week had been relatively quiet and Mr. Harris did not collect much money. - The defendant got very upset, and severely harmed the plaintiff. He beat him up.- In his defence, the defendant stated that Mr. Harris simply fell hard on the way out. - On the other hand, Mr. Harris stated that the defendant beat him up severely.- Which scenario is more plausible? According to the judges, the plaintiff’s story is more

likely to have occurred. - A test was conducted to assess the defendant’s civil liability. The defendant is at fault, he

is the direct/immediate cause of the damages, and the damages he inflicted on the plaintiff are moral, bodily, and material. Hence, there is a civil liability under Article 1457.

- Under Article 1621, where the awarding of punitive damages is provided by law, the amount of such damages may not exceed what is sufficient to fulfill their preventive purposes.

- The defendant had two trials; a civil trial and a criminal trial. - In the criminal trial, the defendant was found guilty, and had to do jail time. - In the civil case, the defendant had to provide compensatory damages (moral, bodily,

material) to the victim. - There was a request for punitive damages. However, these damages were refused as one

cannot be punished twice for the same assault (i.e. jail time).

CASE 9 – WALKER VERSUS SINGER

Facts:- This case pertains to the story of a brief relationship between a man, Mr. Walker, and a

woman, Mrs. Singer. - They fell in love, and moved in the same building. Each had a separate apartment. - Mrs. Singer got pregnant, and went to a clinic to get an abortion. Their relationship was

still very recent.- Mrs. Singer got immensely frustrated by this unfortunate occurrence, and entered Mr.

Walker’s apartment to destroy his clothes.- Mr. Walker also saw her leaving that day with a large suitcase. She was kicked out of the

apartment building by the owner. When Mr. Walker entered his apartment, he realized that numerous pieces of his wardrobe and personal belongings were missing.

- He reported the incident to the nearest police station. - Soon after, Mrs. Singer learned about the complaint filed by Mr. Walker, and decided to

file a complaint of her own on sexual assault against Mr. Walker. - In Court, the judge did not believe a single word from Mrs. Singer. Her interpretation of

events was extremely conflicting and confusing.

- Mrs. Singer’s attorney urged her to drop the charges against Mr. Walker. - The Court concluded that she fabricated the sexual assault story in order to get even with

Mr. Walker. - Now, to say that a person has committed sexual assault when it is not true is a serious

attach to his reputation and sense of dignity. - Mr. Walker sues for damages to reputation, dignity, stress, and inconvenience, under

Article 1457. - Article 1457 – Every person has a duty to abide by the rules of conduct which lie upon

him so as not to cause injury to another. Where he is endowed with reason and fails in his duty, he is responsible for any injury, whether it be bodily, moral or material in nature.

- Mr. Walker is awarded compensation for moral damages.- Now, Mr. Walker requests punitive damages, which he is awarded.

CASE 10 – FARMAKIS VERSUS CANADIAN TIRE CORPORATION

Facts:- Plaintiff = Mr. Farmakis- Mr. Farmakis is 54 years old, and purchased a step ladder to work on his retirement home

in Greece.- He purchased the ladder at Canadian Tire in Ontario, and got it shipped to Greece. - According to the plaintiff, the ladder was safely packaged in rubber, plastic, and

cardboard. - When the ladder arrived in Greece, Mr. Farmakis began working on his retirement home.- While he was standing on the third step of the ladder (out of five steps in total), he lost his

balance, and the ladder collapsed. - The plaintiff broke his ankle and hill.- The plaintiff decides to sue based on the fact that he was not adequately warned

concerning the use and risks associated with the ladder. - Mr. Farmakis came back to Canada in order to receive medical attention.- 1 year ½ later, he asked his wife to ship back the ladder.- The plaintiff got the ladder tested by a professional engineer, who concluded that the

ladder must have had a pre-purchase defect. - However, another skilled engineering doctor was brought to Court. He testified that the

ladder in issue met all industry standards and, under normal use, could not have failed in the manner suggested by the plaintiff.

- The Court found that it is nearly impossible to determine whether damage to the ladder was done before the purchase or after, say during the transportation to Greece.

- Also, Mr. Farmakis did not see the ladder for 1 ½ years after his return to Canada. The ladder has made two cross-Atlantic trips before it was seen by an expert.

- Mr. Farmakis’s expert finally agrees with the Court, but now argues that there was insufficient signage on the ladder itself.

- However, it was found that the ladder did contain proper signage, but that Mr. Farmakis removed them before using it.

- The Court ultimately concluded that Mr. Farmakis knew or could have known of the potential defect (Article 1473 – the manufacturer of a movable property is not liable to

reparation for injury caused by a safety defect if he proves that the victim knew or could have known of the defect).

- Hence, Mr. Farmakis lost the case.

CASE 11 – WALFORD VERSUS JACUZZI

Facts:- Walford purchased a 4-foot pool (very shallow).- Walford also purchased a 10-foot slide (possible danger).- Mrs. Walford told her daughter not to slide head first (warned her daughter of possible

dangers).- The daughter was 16 years old at the time, and decided not to listen to her mother and slid

down head first. She broke her neck.- Mrs. Walford sues Jacuzzi for improper signage on the slide. She argues that there were

insufficient warnings. - However, the Court found that Jacuzzi was not the immediate and direct cause of her

daughter’s injury. - The actual cause of the accident was Walford’s failure to heed her mother’s warnings. - Also, the Court concluded that the daughter and mother should have known or foreseen

the injury (Article 1473 – a manufacturer is not liable to reparation for injury caused by a safety defect if he proves that the victim knew or could have foreseen the injury).

- The Court concluded that Jacuzzi should build more prominent, durable, and detailed warnings pertaining to the use of water slides. However, there was no causal connection between an illustration on the cover of the pool or slide and the injuries sustained by the plaintiff.

CASE 12 – MORSE VERSUS COTT BEVERAGES WEST LTD

Facts:- Cott Beverages Inc. produces sodas.- Tami Morse (plaintiff) purchases a two litre bottle of pop. She is unable to turn the metal

twist-off cap, and decides to use a nutcracker to get a better grip. As she started the turning motion, she heard a popping noise and the cap hit her straight in the eye.

- She suffered numerous injuries to her right eye.- She sues Cott Beverages Inc.- She hires a lawyer, and he goes to look at the machine used to cap the bottles. The

machine is said to cap at different pound levels.- The manufacturer of the capping machine, Aluminum Company of America, provided

Cott Beverages Ltd. with a manual on how to properly use the machine.- In the manual, it is stated that soda manufacturers should not cap passed a 15-pound

pressure. The manual clearly states that “any improperly adjusted or maintained capper can cause improper closure application, resulting in sudden closure ejection and serious injury, often to the eye”.

- The manual also stated that “high torque may lead the consumer to use a tool or device to aid in removing the closure”.

- Cott Beverages Inc. ultimately decided to cap at a 13-pound pressure (within limits).- However, the company realized that this pressure was insufficient because numerous caps

were coming off during transportation to retailers.- Cott Beverages Inc. decided to cap at a 20-pound pressure (highly above suggested limit). - As a result, Cott Beverages Inc. is the immediate and direct cause of the injury.- Under Article 1469, a thing has a safety defect where it does not afford the safety which a

person is normally entitled to expect (you do not expect a bottle cap to pop like it did). - Also, under Article 1468, the manufacturer is liable to reparation for injury caused to a

third person by reason of a safety defect in the thing (it is the immediate cause of the injury).

- Under Article 1457, every person (including companies) has a duty to abide by the rules of conduct so as not to cause injury to another. Where he is endowed with reason and fails in his duty, he is responsible for any injury he causes to another person by such fault and is liable to reparation for the injury, whether it be bodily, moral or material in nature.

- Therefore, Cott Beverages Inc. must provide the plaintiff with compensatory damages. - Also, because Cott Beverages Inc.’s fault was intentional (i.e. the company was aware of

the possible injuries resulting from increasing the capping pressure), the plaintiff is entitled to punitive damages.