Question 1 Explain when risk transfers to the buyer in a sale of goods transaction and explain the exceptions to the rule. Explain when title transfers to the buyer in a sale if goods transaction. Answer: When the title (the property interest in the goods) does not transfer immediately upon the sale agreement’s being concluded, it is called an agreement to sell. The Sale of Goods Act also applies to this future transfer of goods. Under the Sale of Goods Act, whoever has the title bears the risk of damage or destruction to the goods-- unless the parties have agreed otherwise. C.I.Question 1

Explain when risk transfers to the buyer in a sale of goods transaction and explain the exceptions to the rule. Explain when title transfers to the buyer in a sale if goods transaction.

Answer: 

When the title (the property interest in the goods) does not transfer immediately upon the sale agreement’s being concluded, it is called an agreement to sell. The Sale of Goods Act also applies to this future transfer of goods. Under the Sale of Goods Act, whoever has the title bears the risk of damage or destruction to the goods-- unless the parties have agreed otherwise. 

C.I.F contracts (cost, insurance, and freight). In this type of contract it doesn’t matter when title transfers, because one of the parties has been designated as being responsible for paying the costs involved in the shipping of those goods as well as arranging insurance, in the process assuming the risk if anything goes wrong.

F.O.B contracts (free on board). With F.O.B contracts, the parties have agreed that the seller will bear the risk until a specified point in the transport process. For example, if the goods are to be delivered F.O.B the loading dock at the seller’s place of business, the buyer assumes the risk at that point.

C.O.D contracts (cash on delivery). This type of contract entitles the seller to maintain the proprietary rights or title as well as control over the possession of those goods until they are delivered to the buyer’s premises and paid for. The risk stays with the seller until delivery at the specified location is complete.

Bills of lading. Bills of landing are also often used by the seller to maintain control over the goods during shipment. A bill of lading is a document given by the transporter or carrier of the goods to the shipper as a form of receipt. The seller can maintain control (and the risk) with respect to those goods by naming itself as the party entitled to receive delivery of the goods at their destination.

Who has title not only can determine who bears the risk but also may affect what remedies are available in the event of a breach. If title is transferred, the seller can use for the entire price; otherwise, only damages for breach of contract are available. The rules for determining who has title as found in the Sale of Goods Act are set out below.

Rule 1: where there is an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is made and it is immaterial whether the time of payment or the time of delivery or both are postponed.

Rule 2: where there is a contract for the sale of specific goods and the seller is bound to do something to the goods for the purpose of putting them into a deliverable state, the property does not pass until such thing is done and the buyer has notice thereof.

 Rule 3: where there is a contract for the sale of specific goods in a deliverable state but the seller is bound to weigh, measure, test, or do some other act or thing with reference to the goods for the purpose of ascertaining the price, the property does not pass until the act or thing is done and the buyer has notice thereof.

Rule 4: when goods are delivered to the buyer on approval or on “sale or return” or other similar terms, the property in them passes to the buyer. 

When the buyer signifies approval or acceptance to the seller or does any other act adopting the transaction;

 If the buyer does not signify approval or acceptance to the seller but retains the goods without giving notice of rejection, then if a time has been fixed for the return of the goods, on the expiration of that time, and, if no time has been fixed, on the expiration of a reasonable time, and what is a reasonable time is a question of fact. 

Rule 5:1) Where there is a contract for the sale of unascertained or future goods by description and goods of that description and in a deliverable state are unconditionally appropriated to the contract, either by the seller with the assent of the buyer, or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer, and such assent may be express or implied and may be given either before or after the appropriation is made.

2) Where in pursuance of the contract the seller delivers the goods to the buyer or to a carrier or other bailee (whether named by the buyer or not) for the purpose of transmission to the buyer and does not reserve the right of disposal, the seller shall be deemed to have unconditionally appropriated the goods to the contract.

Question 2

The Sale of Goods Act imposes terms relating to goods matching samples or descriptions and meeting standards of fitness, quality, and title. Explain the nature of these implied terms and their effect on the parties. Determine which conditions are and which are warranties and explain the effect of this distinction. Explain the effect of exemption clauses in the purchase agreement which states “that there are no implied terms, and that the only terms are those contained in the agreement.”

Answer: 

Samples: The Sale of Goods Act uses a similar approach for the purchase of goods after examining a sample. There is an implied condition that the bulk of the goods must match the sample provided and be free of any hidden defects. It is in these areas related to fitness and quality that manufactures and retailers usually try to override the provision of the Act. They do this in “warranties” that include exemption clauses attempting to limit their liability. If such clauses are carefully worded, they can override these provisions unless prohibited by statute.

Descriptions: Goods sold on the internet, by catalogue, by mail order, or other forms of distance shopping, usually with a picture and accompanying text, are being sold by description. Section 14 of the Ontario Sale of Goods Act provides that when goods are sold by description there will be an implied condition that the goods delivered must match that description. In fact, today the sale of any manufactured good is a sale by description, one item being indistinguishable from another of the same model.

Quality: The Sale of Goods Act requires, as a condition, that when goods are sold by description they must be of merchantable quality. This means that the goods must be free of any defect that would have persuaded the purchaser not to buy them at the agreed-upon price if the purchaser had known of the defect at the outset. If a sample has been inspected, the defect must not have been readily apparent upon examination. 

Fitness:Sometimes a purchaser with a particular need will rely on a seller’s recommendation as to what product to use. In these circumstances there is an implied condition that the goods will be reasonable fit for that purpose. The requirement of fitness applies not only when the goods are being used for some unique purchase, but also when they are being used normally.

Title: According to the SGA, the seller implies that it has the right to sell the goods; this is a condition. Since this is a major term of the contract, its breach will allow the buyer to terminate the contract. The seller also implies that the buyer will enjoy quiet possession of the goods; that third parties will not interfere with the buyer’s right to use the goods as intended; and that there are no encumbrances on the goods. These are warranties whose breach only sounds in damages. The buyer will not be able to terminate the contract but only receive financial compensation for its losses.

Conditions and Warranties:A warranty governs a minor or non-essential term of the contract while a condition is an essential term of the contract. Breach of a term which is a warranty does not give the aggrieved party the right to terminate the contract. For a breach of warranty, a party who has suffered a loss only claim damages. Because a condition goes to the root of the contract – it is the reason why the parties contracted – its breach gives the aggrieved party the right to terminate the contract and claim damages for any loss suffered.

Other Implied Terms: There are several other terms that are implied by the Sale of Goods Act unless otherwise specified by the parties. Where no price is stated, a reasonable price must be paid for goods. Delivery must take place within a reasonable time, and payment is due upon delivery. The time of payment will be treated as a warranty, unless the parties state time is of the essence. Whether the time of delivery will be treated as a condition or a warranty will be implied form the conduct of the parties. When the bulk goods, such as grains, lumber, and ore are involved, if significantly too little or too much is delivered the buyer is free to either reject the goods or keep them and pay for them at the contracted rate. The provisions affecting delivery, place, time, and quantity of the goods are usually made conditions by the parties.

Question 3

Describe, in detail and naming the statutes, the methods outlined in federal and provincial consumer protection statute to control businesses with a tendency to abusive practice. Discuss the effectiveness of these tactics.

Answer:

TheCompetition Act is meant to ensure competition in the marketplace. A competitive market prevents unfair pricing and, thus protects consumers. The Competition Act regulates mergers, and the competition tribunal will intervene when a merger unreasonably limits competition. The Act also prohibits certain anti-competitive practices which unduly restrict competition. These practices include predatory pricing, discriminatory allowances, refusal to deal, exclusive dealing, tied selling, market restriction, bid rigging, misleading advertising, double-ticketing, bait-and-switch advertising, and pyramid selling.

There are several statutes, both federal and provincial, designed to protect the consumer from dangerous products. The federal Food and Drugs Act is intended primarily to control the sale of food, drugs, and cosmetics unfit for consumption or use. The legislation also prohibits misleading or deceptive claims associated with the sale, labelling, and advertising of these products. 

Another federal act, the Hazardous Products Act, similarly controls the manufacture, import, and sale of products that are inherently dangerous. Some particularly dangerous products are prohibited from sale in Canada, while the sale of other potentially dangerous products is allowed provided that they comply with the enacted regulations. The act also contains important inspection, analysis, and enforcement provisions.

The goal of other legislation, such as the Weights and Measures Act, the Consumer Packaging Act and the Textile Labelling Act, is to provide accurate information to consumers to enable them to make enlightened decisions. 

Question 4

Discuss the remedies available to the buyer and the remedies available to the seller when there is a default in a contract to which the Sale of Goods Act applies.

Answer: 

The SGA only provides remedies for the seller. In some case, the seller will be limited to monetary damages; however, in certain cases, it will be able to retake possession of the goods and resell them to limit the losses suffered.

A lien is the seller’s right to refuse to deliver goods to the buyer until the purchase price has been paid. The goods, therefore, secure payment. However, once the seller has given up possession of the goods, it cannot retake possession to assert a right of lien. 

However, if the buyer has become insolvent and the carrier is still in possession of the goods, the seller can order the carrier not to deliver the goods to the buyer by exercising its right of stoppage in transit. Moreover, if the buyer has become bankrupt within 30 days of the delivery of the goods, the seller can under certain conditions obtainpossession of the goods for the trustee in bankruptcy.

A seller can also exercise a right of resale. If a seller does so, he or she can no longer recover the full sale price from a buyer who refused to take possession, or who took possession but did not pay for the goods. The seller will only be able to claim the difference between the price of the goods when they were sold at the original sale price. To this, the seller will be able to add any costs associated with taking back possession of the goods and reselling them. 

Once title in the goods has passed to the buyer, the unpaid seller can sue for the price of the goods if the buyer defaults on payment or if the buyer refuses to take possession of the goods.

The SGA does not provide any remedied to the buyer. However, the buyer of defective goods will have recourse to the remedies provided by the implied terms (conditions and warranties) in the SGA. These remedies are generally those already available in contract law. For a breach of a condition, the buyer has the option of treating the contract as terminated and to have returned any money paid to the seller. For a breach of a warranty, the buyer must perform the contract and may only seek damages for its losses. In the case of an unique object which cannot be easily replaced, the buyer can ask for specific performance. 

Question 5

Discuss the differences and similarities of the PPSA and the Bank Actregarding secured transactions, including types of property, methods of securing the transaction, enforceability, and priority.

Answer

The Personal Property Security Act (PPSA) is now used in all jurisdictions in Canada. It creates a unified approach toward the use of personal property as security. The PPSA is more complicated than legislation used previously, because it uses one set of rules and a common approach to cover both tangible and intangible forms of personal property and the various way that security can be taken. A secured transaction is still created by contract in the traditional forms of conditional sales, chattel mortgages, and assignments of account receivable, but other forms, such as leases, can also be used, depending on the property used as security. The PPSA allows other, less common, forms of personal property, such as licences, share, bonds, and even intellectual property, to be used as security and to be treated in a uniform way. The PPSA provides for some or all of the assets of a particular debtor to be used as security. It also provides rules to determine the ranking of various claims when several secured creditors have claims against those assets.The method of creating a secured relationship under the PPSA is unique. There are three stages. First, the parties must enter into the contractual agreement. Second, the secured interest must attach to the collateral that has been identified to provide the security. Third, the secured interest must be perfected. If more than one security interest is perfected by registering different financing statements against the same collateral, the priority of those secured parties is generally determined by the date registration takes place. 

The Bank Act is federal statute predates the passage of the PPSAs. It allows banks flexibility in what they can takes as security. Under the Bank Act, growing crops, inventories, and goods in the process of manufacture can be taken as security by the banks, despite the fact that the nature of the goods changes in the process. For this type of security, it must be possible to sell the collateral during the course of business without affecting the nature of the security. The Bank Act is still an important federal statute, but under the provincial PPSAs, other lenders now have similar flexibility. There is therefore now more potential conflict between the Bank Act and the provincial legislation. Business people must now learn two sets of rules. For example, under the Bank Act, security must be registered with the Bank of Canada, creating duplication and confusion. This confusion is compounded because the Bank Act enables the banks to continue to use the usual types of secured transactions available to other lenders, such as chattel mortgages, real property mortgages, assignment of debts guarantees, and so on.

 

Question 6

Describe bankruptcy and describe insolvency, including the roles of different parties, the steps in the process, the sale and distribution of the assets, and any wrongdoing of the debtor.

Answer: 

Insolvency simply means that a person in unable to pay his debts as they become due. Bankruptcy is the process by which a debtor’s assets are transferred to a Trustee in Bankruptcy, who then deals with them for the benefit of the creditors. An insolvent debtor will be forces into bankruptcy by one of its creditors if it can show to the court that the debtor has committed an act of bankruptcy. It will then obtain a bankruptcy order against the debtor. Or an insolvent debtor may voluntarily place itself into bankruptcy by making an assignment. 

Process: (1) In an involuntary bankruptcy, a creditor petitions the court to force the debtor into bankruptcy. In granting the petition, the court makes a bankruptcy order. (2) To obtain a bankruptcy order, the creditor must specify in the petition that the debtor owes more that $1000 in debt and has committed an act of bankruptcy during the previous six months. (3) Petitioning a debtor into bankruptcy is an involved process, normally requiring the assistance of a lawyer. Caution should be exercised before using this approach. (4) In a voluntary assignment in bankruptcy, the debtor must make an “assignment for the general benefit of his creditors,” using the prescribed form. The debtor must also prepare a “statement of affaires,” summarizing his property and listing all of his creditors, showing the amounts and nature of their claims (whether they are secured, preferred, or unsecured). (5) Not all of the debtor’s property is transferred to the Trustee in Bankruptcy. The exempt property is protected. (6) The Trustee in Bankruptcy holds the debtor’s property in trust for the creditors. 

Settlements involve the transfer of assets for nominal or no consideration. A settlement is void if it took place within one year of bankruptcy. This period can be extended to up to five years, if it can be proven that, at the time of the settlement, the bankrupt knew that he was insolvent. A payment made in preference to one creditor over the other is also void. Fraudulent transfers and preference often take place in bankruptcy situation. In a fraudulent preference, consideration justified the payment of the insolvent party to the creditor; however the intention is to give that creditor a financial advantage. In such a case, the trustee in bankruptcy can seize the property. A fraudulent preference occurs when (1) a payment or transfer of property to a creditor is made (2) within three months prior to the bankruptcy (3) by an insolvent debtor (4) in order to give that creditor a financial advantage over the other creditors (5) where the creditor was aware of the impending bankruptcy. The Trustee can force the return of those funds so that they can be fairly distributed to all of the creditors. Bankrupt has many duties, if she fails to fulfill them or commits another bankruptcy offence, she can be fined and/or imprisoned. 

Question 7

Discuss agency from the point of view of actual, implied and apparent authority, estoppels, fiduciary duty, breach of duty, ratification, and vicarious liability.

Answer

The principal empowers the agent to do certain things only in the principal’s name.The thingsthat  the agent is actually required to do are called the agent’s actual authority. The principal can create an agency agreement with actual authority either expressly, by word- orally or written- or by his contract; in the case of conduct, the actual authority will be implied.

When a principal does something by conduct or words to lead a third party to believe that an agent has authority, the principal is bound by the agent’s actions,regardless of whether there is or is not actual authority. Even when the principal has specifically prohibited the agent from doing what he did, the principal will be bound because of the agent’s apparent authority. This is an application of the principle of estoppels. 

Estoppel is an equitable remedy that stops a party from trying to establish a position or deny something that, if allowed would create an injustice. In holding out, the principal has used words or behaved in a manner that represented the other person as the principal’s agent. If that is not the fact, the principal is estopped from denying the facts and the principal will be bound by the agent’s actions. 

Fiduciary Duty, a person owing that duty must submerge personal interests in favour of the interests of the principal he or she represents. The principal and agent are in a fiduciary relationship; that is, the agent has rights and powers that it must exercise for the benefit of the principal. Agent must act in the best interests of their principal, in utmost good faith. 

Breach of duty: an agent cannot act for both a principal and a third party at the same time. It would be very difficult for an agent to extract the best possible price from a third party in behalf of a principal when the third party is also paying the agent. Another problem sometimes arises where an agent who is hired to purchase goods or property sells to the principal property actually owned by the agent as if it came from some third party. This is a violation of the agent’s fiduciary duty; even if that property fully satisfies the principal’s requirements, there must be fully disclosure. It also follows that the agent must not operate his own business in competition with the principal, especially if a service is being offered. Nor can the agent also represent another principal selling a similar product without full disclosure. Finally, the agent must not collect any profits or commissions that are hidden form the principal, but must pay over all the benefit resulting from the performance of the agency agreement. 

A way of creating the agency relationship is by ratification. A person may make a contract with a third party in the name of the principal without having the authority to do so. The principal will not be bound by the contract.The power of the principal to ratify must meet the following qualification:

The third party has the right to set a reasonable time limit within which the ratification must take place. 

The agent must have been acting for the specific principal who is now trying to ratify. 

The principal has to be fully capable of entering into the contract at the time the agent was claiming to act on his or her behalf.

The parties must still be able to perform the object of the contract at the time of the ratification. 

An employer is vicariously liable for the acts an employee commits during the course of employment. When an agent is also an employee of the principal, the principal is vicariously liable for any tortuous acts committed by the agent in the course of that employment. The difficulty arises when the agent is not an employee but acts independently. The principle of vicarious liability is restricted to those situations in which a master-servant relationship can be demonstrated. The courts have been expanding the definition of employment. Even if the relationship involves a person who is essentially an independent agent, the agent may be functioning as an employee or servant n a given situation; thus, the courts may impose vicarious liability on the principal by simply asserting that the agent is also an employee.There are some situations in which vicarious liability will apply even if the agent is acting independently. The courts appear willing to hold the principal responsible for theft or fraudulent misrepresentation by an agent, even when no employment exists. 

Question 8

Explain how the court will determine whether a person is an employee, an independent contractor, or an agent.

Answer:

Independent contractors work for themselves and act independently, providing a specific service for the person they contract with, whereas an employee is said to be in a master-servant relationship acting under the direction of the master. Agency is a third party type of business relationship, where one person acts as a go-between in relationship between others.

The traditional method of determining whether an employment relationship exists is to assess the degree of control exercised but the person paying for the service.A person who is told not only what to do but also how to do it is classed as an employee. But if the person doing the work is free to decide how the job should be done, the position is more likely that of an independent contractor. Whether the person is paid a wage or salary or is paid by the job is also taken into consideration in determining employment. Courts will also look at who owns the tools used and who profits or runs the risk of loss from the work performed. 

The courts have supplemented the control test with the organization test. Even if there is little direct control, where the individual is an integral part of the organization, working only for that company and subject to group control, that person is likely an employee. On the other hand, if that person is free to offer services to others and bears the risks of profit or loss if work is not completed in a timely manner, he may be an independent contractor. At least for the purposes of established vicarious liability, a person can be an independent contractor for most purpose but an employee or a servant in some specific instances. Agents can be independent contractors or employees. 

The principle of vicarious liability holds one person responsible for acts committed by another. In the case of the employment relationship, the employer is responsible for acts committed by its employee during the course of employment. The principle of vicarious liability has been extended to apply to the payer of an independent contractor when the independent contractor cam ne characterized as an employee. It is important that vicarious liability does not apply to the independent contractual relationship but to the employer-employee aspect of the relationship. 

Question 9

Discuss how a court will determine whether there has been a wrongful dismissal and the remedies that the court can award for wrongful dismissal.

Answer

If an employer dismisses an employee without reasonable notice, without salary in lieu or without just cause, the employer has wrongfully dismissed the employee and will have to pay damages. When an employer demotes the employee or otherwise unilaterally changes the nature of the job, this may constitute constructive dismissal, and the employee can sue for wrongful dismissal. From a contractual perspective, one party cannot simply impose a change in the terms of a contract without fist securing the consent or agreement of the other party. In essence, the employer is simply refusing to perform the original contract when it demotes an employee.

In a wrongful dismissal action, the damages awarded are usually based on what the employee would have received had proper notice been given. An employer must have the clearest evidence of the misconduct or incompetence and with the latter must demonstrate that the employee has been given a reasonable opportunity to improve. Damages are the appropriate remedy for wrongful dismissal. The employee will be able to recover the following amounts: (1) wages for the period of time that employee would have worked if the employer had given a reasonable notice; (2) lost fringe benefits; (3) pain and suffering; (4) reasonable expenses incurred in looking for work. An employee who has been wrongfully dismissed has an obligation to mitigate the loss and must seek other employment. Reinstatement is more common when collective agreements are involved, where the decision is made by an arbitrator rather than a judge.

Question 10

Explain the objectives and purpose of workers’ compensation legislation, how it is determined who is covered, and the effect if a person is or is not covered. 

Answer

Objective and Purpose: The worker’s compensation legislation which is enacted by the government provides a compulsory insurance program covering accidents that take place on the job. It sets the rate to be paid for different types of injuries and establishes a board that hears and adjudicates the claims of injured employees. The system is essentially a no-fault insurance scheme, in which benefits are paid to injured workers, or to their families in the event of death, and careless conduct on the part of the worker will not disqualify an injured employee from receiving compensation. 

Some employees, such as casual workers, farmers, and small business employees, are often excluded. A significant aspect of workers’ compensation legislation in most jurisdictions is that the worker gives up the right to any other compensation. The worker can no longer sue the employer (or the party who caused the injury, if he also contributed to the plan), being limited to the benefits bestowed by the workers’ compensation system. When the injury is caused by someone other than the employer or another employee, the plans usually give the injured worker the choice of receiving workers’ compensation benefits or pursuing a civil action. Compensation is also limited to injury or disease that arises in the course of the employment. This can sometimes be a problem where it is difficult to establish that a disease was caused by the work of the employee. Compensation is typically paid to the employee, but where an employee dies as a result of injuries sustained on the job, payments are to be made to her dependants.

Question 11

Explain the differences among mediation, conciliation, and arbitration and how these are used in labour disputes.

Answer

Mediation, also called conciliation, has been provided for in the various Canadian jurisdictions. When negotiations begin to break down, either party has the right to apply to the appropriate government agency for the appointment of a conciliator or mediator. This person then meets with the two parties and assists them in their negotiations. The hope is that communications between the two parties will be greatly facilitated by this third-person go-between. The parties are prohibited from taking more drastic forms of action, such as strike or lockout, as long as a conciliator/mediator is involved in the negotiations.

In some jurisdictions, conciliation is a pre-requisite to strike or lockout. Although conciliators have no authority to bind the parties, they do have the power to make recommendations that will be embarrassing to an unreasonable party. In many jurisdictions, a conciliator can be imposed on the parties by the Labour Relations Board, even when neither party has requested one. 

Arbitrators can also play a role in the bargaining process. Arbitration differs from conciliation in that the arbitrator’s decision is binding on the parties. Under federal legislation, the parties can choose to voluntarily submit any matter respecting renewal, revision, or the entry into a new collective agreement to an arbitrator for a binding decision. Alternatively, legislation may empower labour relations boards to impose a first contract where the parties themselves cannot reach an agreement.

All collective agreements must contain provisions for the settlement of disputes arising under the agreement. This is usually accomplished through a grievance process ultimately leading to arbitration. The contract will set out a process involving a series of structured meetings where the parties can negotiate a settlement. When no settlement can be reached, the matter is submitted to an arbitrator (or panel of arbitrators), who will hold a hearing and make a decision that is binding on both parties. This grievance process is used to resolve disputes not only over the interpretation of the contract provisions but also as a response to individual employees’ complaints of violations of their rights by the employer.

 

Case one

Fact:             John worked as a production designer for McGraw-Hill Publishing Company for 15 years. The company was going to initiate a new line of mathematics textbooks and discontinue their art books. John was informed that if he wanted to stay with the company, he would have to work in a now production design department. As John has acquired quite a reputation as a production designer, he informed that he was not interested in doing anything else but production design work. He was than told that he was dismissed at the end of this month. John sued McGraw-Hill Company for wrongful dismissal. But McGraw-Hill Company discovered that John had been using his production design skill for another company which breach the contract. So McGraw-Hill Company counter-sued John.

Issues:          Is constructive dismissal involved? Is the restrictive covenant reasonable?

Law:             Employment Contracts are binding: Hilton v. Norampac Inc.(2003),26 C.C.E.L, (3d) 179,(2003),176 O.A.C. 309(O.C.A.); Wesalan v. Totten Sims Hubucki Associates Ltd.(2003) O.J. No. 1242, 2003 CanLII 49300 (On.S.C.)

Conclusion:  McGraw-Hill did wrongful dismissal.

Argument:    Constructive dismissal and wrongful dismissal 

Answer:

Constructive dismissal means employer breaks contract when nature of job is changed without consent. John was given the opportunity to change his job, but he was not interested in it, so the company asked him to leave. This seems that John had been unilaterally changed the job. When an employer demotes the employee or otherwise unilaterally changes the nature of the job, this may constitute constructive dismissal, and the employee can sue for wrongful dismissal. So, John can sue McGraw-Hill for wrongful dismissal. 

It also involved wrongful dismissal. If an employer dismisses an employee without reasonable notice, without salary in lieu or without just cause, the employer has wrongfully dismissal the employee and will have to pay damages. In this case, the employer, McGraw-Hill Companyhad a wrongful dismissal to John. When John said he was not interested in the new job, he was only given a short time to prepare for leaving. John can sue McGraw-Hill Company for the damage awarded. John also has an obligation to mitigate the loss and must seek other employment.

When restrictive covenants are included in the original contract, committing the employee not to work in a particular geographic area or in a particular or in a particular industry after leaving the position, they have to specify a reasonable time and area. In the case, a term of John’s employment contract prohibited him from working for any other publishing company anywhere for 5 years after leaving the McGraw-Hill Company. This restrictive covenant is too broad, so it is not reasonable and the covenant is not enforced. 

In the case, John worked as an employee for McGraw-Hill Company. From organization Test, where the individual is an integral part of the organization, working only for that company and subject to group control, that person is likely an employee. John had the employment contract of McGraw-Hill, so that he could not work for Pronk Publishing as a freelancing worker. When John worked part-time for Pronk Publishing, he had breach the employment contract, so John could be sued. 

 

Case Two

Fact:             The Acme Company was a manufacturer of consumer products. In 1988, it embarked on an ambitious program of expansion that involved the acquisition of a new plant and equipment. Financing was by real property mortgages, chattel mortgages, and conditional sales agreements, with few internally-generated funds. In 1989, because of the energy crisis and poor economic climate, the company failed to pay a trade account to one creditor, bankruptcy proceeding were instituted. 

Issues:          How much funds will pay to various creditors? How much will pay to unsecured trade creditors?

Law:             The court will decide to pay secured creditor first, and then general creditors. What to do when two creditors claim funds: Redi Mix Ltd. v. Hub Dairy & Barn System Ltd. (1987), 63 Sask. R. 262 (Q.B.)

Conclusion:  Acme Company will pay to secured creditors first, and then preferred creditors, and at last are general creditors.

Argument:    Priority among creditors. 

Answers: 

In a chattel mortgage, the debtor transfers title in goods to the creditor but may retain possession. If the debtor defaults, the creditor can take possession of the goods and sell then to satisfy the debt.In the Acme Company, trucks and automobiles are purchased by chattel mortgage.

Acondition sale involves a two-step process. First, possession of the goods is given to the buyer. The seller, who is also the creditor, retains the title as security. Second, after the final payment is made, title to the goods is conveyed to the buyer. In this case, theproduction equipment was purchased by conditional sale. 

In an assignment of accounts, the debtor, who is owed money by the third partied, gives to the creditor the right to collect the amount that the debtor is owed.

In a bankruptcy proceeding, there are three kinds of creditors: secured, preferred, and general. The trustee in bankruptcy must pay out the creditors according to their priority. Secured creditors retain their priority position, having a prior claim to at least the value the property used a security.In the case, Bank claim under s. 178 of Bank Act is as secured creditor. 

After secured creditors, preferred creditors are paid, pursuant to s. 136 of the BIA. The following are to be paid, in this order: funeral expenses; costs associated with the bankruptcy process; claims for arrears in wages for a limited amount and time period; municipal taxes; arrears in rent for a limited period; some direct costs incurred by creditors in the execution process; amounts owed for workers compensation, employment insurance, and income tax that should have been deducted from salaries; and other claims of the Crown. In the case, unpaid wage, bankruptcy expenses, fees and levy, unpaid municipal taxes are the preferred creditors. 

Unsecuredcreditors, usually suppliers of goods and services, are paid only after all of these obligations have been satisfied. The unsecured creditors will receive a share on a pro rata basis. 

 

Total value of bankrupt Acme Company’s property $488,000   

Distribution to secured creditors   

    1st mortgage on land and buildings (290,000)   

2nd mortgage on land and buildings (45,000)   

3rd mortgage on land and buildings (40,000)   

Bank claim under s. 178 of Bank Act (25,000)   

Production equipment conditional sale agreement (10,000)   

Total Amount paid (410,000)   

Distribution to preferred creditors   

Unpaid wages  (12 employees @ $250 each) (3,000)   

Unpaid commissions to salespeople (one @ $1,500) (1,500)   

Bankruptcy expenses, fees and levy (39,000)   

Unpaid municipal taxes (9,000)   

Total amountpaid (52,500)   

Distribution to general creditors (on a pro rata basis)   

Unsecured trade creditors (60,000) (12,540.98)   

1st chattel mortgage on trucks and automobiles (22,000) (5,224.41)   

2nd chattel mortgage on trucks and automobiles (40,000) (7,733.61)   

Total amount (122,000) (25,500)  

Amount paid to:

 

Unsecured trade creditors 60,000/122,000*25,500 (12,540.98)   

3rd mortgage on land and buildings 25,000/122,000*25,500 (5,224.41)   

2nd chattel mortgage on trucks and automobiles 37,000/122,000*25,500 (7,733.61)   

Balance 0  

 

Case Three 

Fact:             Gertrude, the president of a large university fired Matilda who was approached by members of the Knowledge Workers’ Union to organize Gertrude’s workforce. She told the employees if the union was organized and certified, she would close the university and move to Mexico. Some worker said that they didn't want to join the union, others went out on strike. All the strikers were fired. Gertrude retained a private security firm to allow the worker to go through the picket line. And then a violent confrontation occurred, and some of the picketers were injured. 

Issues:          Did Gertrude have the responsibility for this confrontation? Did Matilda have the right to sue Gertrude for wrongful dismissal? Was the strike legal?

Law:             There is no guaranteed right to strike: Ontario Hospital Assn. v. Ontario Public Service Employees Union, 2003 CanLII 45957 (ON.L.R.B)

Conclusion:  Gertrude took the most of the responsibility for this situation. 

Argument:    Wrongful dismissal, strike and lockout

Answers:

For a union to become the bargaining agent for a group of employees, it must sign up the certification vote. To obtain certification, it must receive the support of a majority of the vote and over 35 percent of the workforce must have participated in that vote. Granting of certification without a vote is unusual. In the case, 85% of the remaining workforce signed a petition state that they wanted nothing to do with a union. Although they signed the petition, it is not reasonable because of Gertrude’s intimidation. 

If a person is fired without reasonable notice, without salary in lieu or without just cause, he can sue the employer for wrongful dismissal. And he will be awarded the difference, including any benefits and pension rights to which he would have been entitled. In the case, Gertrude fired Matilda and the striker who wanted to associate with union without any notice, therefore, Gertrude has obligation to pay for the damage.Matilda can sue Gertrude for wrongful dismissal. 

It is unlawful for a strike or lockout to occur while an agreement is in force. Strikes and lockouts can take place only after the last agreement has expired and before the next one comes into effect. Any strike or lockout associated with the recognition process or involving jurisdictional disputes between two unions is also illegal and must be dealt with through the certification process. In the case, the union was still in the stage of foundation. So, the strike is illegal. And the union should prevent the strike. 

Picketing is permissible only when a lawful strike or lockout is in progress. The use of picketing is severely limited and controlled. Because the strike is illegal, the picketing for the union is not permitted.Picketing must be peaceful and merely communicate information. Violence will not be tolerated.So in the case, because the confrontation, Gertrude can resort to the courts or labour relation boards to get an injunction to limit or prohibit the picketing. 

 

Case Four

Fact:             Mr. Red bought a powerboat from Black’s Boat Sales under a conditional sale agreement with the down payment of $5,000 and the remainder of $20,000. Black sold the conditional sales agreement to the Blue Finance Company with a wrong number recorded. Red resold the powerboat to Scarlet for $15,000, but did not let the Blue know. Scarlet auction the boat off at an undervalued price and refuse to pay Red. And then Red refused to pay Blue. Scarlet sued both Blue and Red. Red sued Black, and Blue sued Red. Black sued Yellow who guaranteed the loan. And Yellow sued Red.

Issues:          What kinds of the rights and obligations of all the parties have?

Law:             Register correctly or lose your Priority: Re Gauntlet Energy Corp. (2003), 336 A.R.302 (Q.B.)    Guarantor released because of material changed: Toronto-Dominion Bank v. Duffett (2004), 234 Nfld. & P.E.I.R. 223 (Nfld.S.C.T.D.)

Conclusion:  Black should take the major responsibility. Scarlet could not auction off the boat. Yellow have to pay the debt as he is the guarantor to the loan.

Argument:    Conditional sale agreement and defaults

Answers:

A conditional sale involves a two-step process, one of the process is the possession of the goods is given to the buyer. The seller, who is also the creditor, retains the title as security.In the case, Black owned the title when he sold the powerboat to Red,and Red could use and sell the boat.Then Black sold the conditional sales agreement to Blue, so Blue had the title. He was a creditor has the right to retake the powerboat and action it from Red when Red refused to pay to Blue. But the Red did not know the transaction between Black and Blue of the conditional sale agreement before he sold the boat to Scarlet. It is legal for Red to sell the boat to Scarlet with the approval of Black, and because he did not know the transaction, he made thepayment to Black. So Black should take the responsibility of this situation. 

In the process of the registration of the agreement under the provincial PPSA, Black recorded the wrong number. And without the knowledge of Blue, when Red resold the boat to Scarlet, he could not detect the conditional sale agreement in the registry under the Canada Shipping Act. He should notify it but he didn’t. So he auctioned the boat off to a business acquaintance offer a price of $2500 which was below the fair market value. So Scarlet should also take some of the responsibility.

In the event of a default by the debtor, the creditor has recourse as set out in the contract and as provided in the PPSA. This usually involves taking possession of the goods and selling them to recover the amount owed. So if Red default the contract, Blue have the right to take the boat back and resale it to recover the loss.

According to the PPSA, the Guarantor must pay when debtor defaults. As Yellow is the guarantor of the Red. When Red refused to pay the credit, Yellow have to pay the rest of the money. But the creditor should also avoid any subsequent dealings that may weaken the position of the guarantor. Any substantial change in the nature of the contract between the creditor and debtor without the guarantor’s consent will relieve the guarantor of any obligation. Red sold the boat to Scarlet without Yellow’s permission, so the obligation of Yellow was reduced. 

 

Case Five

Fact:             Henry is the owner and operator of Farm Equipment Sales Ltd. He hired Hector as a new management trainee. The first night on the job, Hector was asked to sweep the floors and clean the window, but not talk to the customers about any farm equipment just take their names and phone number. When Mr. Field came to the store, Hector introduced the cultivator to him and let Mr. Field test it without the permit. Finally, the cultivator careened across the road, smashing into Mr. Swank’s car, and Mr. Swank was injured. The machine was damaged. But Mr. Field decided to make the order. When Henry knew the situation, he fired Hector and did not want to go through the deal. However, another representative placed the order. When Henry got the deposit, he called Mr. Field to nullify the order, but Mr. Field refused.

Issues:          Did Henry have the responsibility for this situation? What was Hector’s liability?

Law:             Even innocent principals can be liable for an agent’s negligence: Betker v. Williams (1991),86 D.L.R. (4th) 395 (B.C.C.A.)

Conclusion:  Hector had the right to sue Henry for wrongful dismissal. Henry would breach the contract if he did not continue the order. Henry had the vicarious liability for the damage.

Argument:    Vicarious liability, wrongful dismissal, breach the contract, agency

Answers:

An employer can be held liable for torts committed by an employee during the course of employment.This is the principle of vicarious liability. Because the employer benefits from the work of the employee, the employer is held responsible for losses caused by the employee while working. In the case, Mr. Swank’s car was broken and he was injured seriously because Hector let Mr. Field test the machine. So Henry had to pay for the loss to Mr. Swank, because Hector was a new management trainee in the company. Henry had the vicarious liability. Also, Mr. Swank could sue Henry for negligence.

Because Hector caused such a big problem, there is no requirement for an employer to give any notice. An employee can be dismissed without notice for such things as serious absenteeism, consistent tardiness, and habitual negligence. Henry has right to fire Hector without any notice. 

As another sales representative examined the agreement, took the deposit and handled the sale in the normal way, the contract was legal, so the company must continue the contract. If Henry wanted to nullify the order with on reason, Mr. Field could sue Henry for breach of contract.

Mr. Field was the third party, and Henry was principal, sales representatives were agent. When an agent does not have the authority claimed, either actual or apparent, that agent may be sued by the third party for breach of authority. Also, an agent who intentionally misleads the third party into believing that she has authority when she does no may be sued by the third party for the tort of deceit.In the case, Hector did not have the authority to deal with the customer, since he was not allowed to talk to thecustomer. So when he talked to Mr. Field, whichwas misleading Mr. Field into believethathe had authority.So when the damage occurred, Mr. Field could sue Hector and Henry for all the damage.