Canadian Business Law
Instructions
1. The assignment must be typed as word document using Times New Roman font, size 12, with single spacing.
2. Length: The answers to each question should not exceed 1 page in length. Penalty will apply if length restriction is breached; 2 marks to be deducted. 5 marks will also be deducted for works without citations, bibliography and references.
4. Task: The assignment deal with the materials in the textbook. Question 1 deal with Chapter 23, question 2 deal with chapter 13, question 3 deal with chapter 14, and question 4 deal with chapter 16
5. Weight: This assignment is worth 15% of the final grade in this course. See marking rubric on pgs. 6 – 7.
Notes
1. Plagiarism: This is an individual assignment. All sources must be included in a bibliography. All quotations, including those from the textbook and the internet, must be set off within quotation marks and must be referenced accordingly. Duplicate and plagiarized papers will receive a grade of zero.
2. To be sure you understand the rules with respect to academic honesty, review the library’s Academic Honesty tutorial at
https://www.georgebrown.ca/library-learning-commons/research-support/cite-your-sources/avoiding-plagiarism
3. To be sure you understand how to cite works you refer to, please review this link below:
https://researchguides.georgebrown.ca/c.php?g=490485
4. Proof read carefully. Serious errors of spelling/grammar will result in loss of a grade.
Question 1
a) Ace Manufacturing Ltd agreed to manufacture and sell 5000 chairs to a convention centre. The contract contained detailed specifications for the chairs, and provided that the purchase price of $200 000 would be paid in two equal instalments: one half when the contract was signed and one half when the convention centre was notified that the chairs were ready to be picked up.
The contract said nothing about when ownership of the chairs would transfer to the buyer. The convention centre paid the first installment when the contract was signed. The chairs were manufactured by Ace and were in Ace’s warehouse when a serious fire destroyed the warehouse and all the chairs.
Ace had not yet notified the convention centre that the chairs were ready for pick up, because the person who ordinarily makes such phone calls had been away from work due to an illness. Ace has demanded payment in full for the chairs from the convention centre. The convention centre has refused to pay the balance and has asked for a refund of the first installment it paid.
Applying the relevant and correct principle(s) of law discussed in the sales of goods contract, discuss whether title to the chairs has passed from Ace to convention centre and who bears the risk in the given situation. Answers must be supported with valid principles of law and explanation. (5 marks)
Under the installment system, the purchaser that is rhe Convention pays the costs of the purchased assets in number of installments that is 2 installments here. However, under the installment system, ownership of the goods is transferred by the owner that is the Ace manufacturer on the date on which such delivery of goods would take place.
Thus, we can see in this case no delivery was made here and Ace took the payment but didn’t even notify the convention about delivery or anything related with chairs. Thus, the ownership is with Ace manufacturing only and it hasn’t been transfered. Thus, the risk would fall onto the Ace manufacturing only and they should pay the refund amount or the damages amount as per the lawsuit to the convention.
(b) Bobrisky purchased a laptop from Procomp Industries Inc.’s online store for business use. After taking delivery, he discovered that the laptop had been preloaded with an adware program called ConsumerTrack (CT), a program which intercepts the user’s secure internet connections and scans the user’s web traffic to inject unauthorized advertisements into the user’s web browser without the user’s knowledge or consent.
The adware also affects the computer’s performance by increasing power consumption, decreasing battery life, hogging bandwidth, and wasting memory.
The program also generally slows the laptop’s operations although it does not prevent Bobrisky from running the programs he installed on the laptop or from using the machine for web surfing and other functions. The purchase contract states “the parties agree that warranties or conditions contained in the Sale of Goods Act do not apply to this transaction”
Applying the relevant and correct principle(s) of law discussed in the sales of goods contract advice Bobrisky on the propriety of the purchase contract. Discuss whether any of the provisions of the Sale of Goods Act will be of help to Bobrisky. Answers must be supported with valid principles of law an explanation. (5 marks)
Note: Application means you have to identify the correct legal concept, define it, enumerate the elements (if any) and then apply it to the fact scenario before drawing conclusion.
Question 2
Sonny Chu is a university student majoring in entrepreneurship and international business. Two years ago, while on a student exchange program in China, Sonny came up with an idea for an Internet business. In China, Sonny had been able to purchase tailor-made silk suits for $250 to $400. The equivalent suits cost $1500 to $1800 in Canada. Sonny believed that he could offer the tailor-made silk suits to Canadians at close to the same price that he had paid for the suits if he could solve the difficulty of having customers take their own suit measurement.
Back in Canada, Sonny worked with a design student, and together they were able to develop a simplified method of taking suit measurements. With this problem solved, Sonny set up a website for his business called “This Suits Me.” The website featured several suit styles, a range of silk fabric swatches, and instructions for taking measurements. Customers could easily order suits by clicking on the style and fabric and sending in their measurements by following the simplified instructions provided.
To handle the Chinese end of the business, Sonny employed Dong Lee, a student he had met on exchange trip. Dong was born in China and is very familiar with the fabric industry, as both his mother and father are dressmakers. His job for Sonny involves purchasing silk fabric, engaging the services of Chinese tailors. The arrangement proved to be very profitable, and, within six months of establishing the website, Sonny was meeting all his sales targets. However, a couple of recent developments threaten the success of Sonny’s business.
Dong agreed to pay $100000 to a Chinese supplier for several bolts of silk fabric. Although the fabric is beautiful and will make wonderful suits, Sonny believes that Dong has agreed to pay too much for the fabric and, further, he does not think that his business can afford the purchase at this time. Sonny wants to cancel or renegotiate the contract. He is also very angry with Dong because Sonny had expressly told Dong he could not enter into any contracts on his behalf in excess of $25000 without getting his permission first.
Sonny has also discovered that Dong has been purchasing fabric and engaging tailors on behalf of some of Sonny’s competitors. When confronted with this information, Dong stated that he did not see any problem with his actions as he had not signed any exclusive representation contract with Sonny.
a) Applying the relevant principle of law, identify and discuss the nature of the legal relationship between Sonny and Dong. Discuss whether there has been any breach of duty. (5 marks)
b) Applying the relevant principles of law, discuss whether Sonny is bound by the expensive fabric contract Dong entered into with the Chinese supplier. (5 marks)
Question 3
Joe entered into partnership with two others in the establishment of a real estate sales agency. The other two, Sam and Harry, had considerable experience in the real estate business but no money. Joe, on the other hand, had his own home and several significant assets, and although he didn’t have any experience in the real estate business, his monetary contribution made him an equal partner with Sam and Harry.
Unfortunately, Harry misused some trust funds that had come into his care as a result of business, investing it in the business of one of his sons rather than an interest-bearing account. The business of the son went sour and the money was lost. The client sued Harry, Sam, and Joe.
a) Applying the relevant legal principles, identify and explain in details the type of partnership involved. Discuss the liabilities of Harry, Sam, and Joe based on the relevant legal principles. (5 marks)
Amanda and Florence decided to form a partnership for selling gourmet picnic baskets. To raise sufficient capital, they convinced their mothers to invest $5000 each as limited partners. Amanda’s mother was an experienced restaurateur and watched the business with great interest.
On several occasions, she advised them on the business and contacted old business associates to buy surplus stock. She even filled in taking orders in the office when needed. A customer who was made ill by contaminated food from a tin can supplied in one basket sued.
b) Applying the relevant legal principles, identify and explain in details the nature of the partnership as well as the liability, if any, of the mother(s) (5 marks)
Note: Application means you have to identify the correct legal concept, define it, enumerate the elements (if any) and then apply it to the fact scenario before drawing conclusion.
Question 4
Time-in Team management Inc. (Time-in), incorporated under the Canada business Corporations Act, has been in operation for two years. Luke Bailey owns 55% of the common shares as he had the idea for the business, while Raina El Khoury owns the remaining 45%. Roger Wiley contributed $200 000 and was issued 100 preferred shares. An angel investor loaned the company $350 000. Luke and Raina are directors and officers of the corporation, and Roger is an officer although not a director. He is the president of the corporation.
Because Time-in hired a number of employees, Luke and Raina have been able to devote all their energy to sales and business development. Under their leadership, the company has done remarkably well, with $2 million in annual sales and excellent financial projections going forward. Not only do they have customers in all the major sports, but a broad range of organizations have also bought into their system. The company continues to field inquiries from abroad and is exploring an international launch. There is, however, a major problem confronting the company.
Several weeks ago, Raina approached Luke with the idea of Time-in purchasing a junior, semi-professional sport team. She told him that she had run the numbers and had concluded that such an investment was feasible, would be an excellent marketing ploy, and would be good for the the image of the company in the community. Luke responded by telling Raina that buying a sports team was easily one of the worst ideas he had in a very long time. “Eventually, I would agree that buying a team might well make some sense. But I’m not convinced that Time-in is currently big enough and profitable enough to own sports team. I suggest giving your head a really good shake because you are loosing your grip’, he told her. Determined to have her way, Raina told Luke that if Time-in did not purchase the team, she would form her own company whose business purpose would be to buy a team and win a championship. “Then we’ll see who is the smart one around here”, she told him. Raina and Luke had been finding it increasingly difficult to get along given the pressures, tensions, and fatigue of running a rapidly expanding business.
This particular disagreement had simply brought matters to a head.
In response, Luke decided to show Raina who was the boss. He called a share holders’ meeting and, exercising his rights as a majority shareholder, voted Raina off the board of directors. For good measure, Luke also excluded her from participating in the management of Time-in. Raina is devastated because Time-in was her whole life.
Roger does not want to get involved in the dispute at all because he has much more immediate concerns. Roger believes that Time-in is plagued by lax standards in its day-to-day operations. From Roger’s perspective, this is what Luke and Raina should focus their attention on. For example, Roger has discovered that Time-in has not been deducting and remitting income tax on salary paid to certain employees. Roger not only finds this unacceptable from an accounting perspective, but also worries about Time-in’s liability and fears that he may have personal liability for this “oversight.”
a) Applying the relevant legal principles, identify and explain in details whether Raina can do anything or take any action about Luke voting her off the board and ousting her from management (5 marks)
b) Applying the relevant legal principles, identify and explain in details whether Time-in liable for the failure to deduct and remit income tax? Also, discuss Roger’s liability for the failure to deduct and remit taxes (5 marks)
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