BUSI 2390-BUSINESS LAW IN CANADA (9th
edition)-2022-2023
Richard Yates
ANSWER TO QUESTIONS FROM BACK OF
CHAPTERS
Chapter 1
Managing Your Legal Affairs - Answers to Questions
1. Explain the meaning of “sophisticated client”.
A sophisticated client is confident, knowledgeable, up-to-date and understands the role of a lawyer. This
includes when to represent him or herself and when to hire a lawyer, as well as the costs involved.
2. Why should the owner of a small business have a lawyer on “the team”?
A lawyer is an expert, providing advice relevant to the client, allowing the client to make an informed
decision.
3. Distinguish the role of the client from the role of the lawyer.
The client is the decision maker, who consults a number of experts, including lawyers, in order to make
decisions, Lawyers are experts in their field, providing advice, and are bound to follow the instructions of
the client, once given.
4. “The elimination of ‘solicitor–client privilege’ would significantly undermine the
integrity of the Canadian legal system.” True or false? Explain your answer.
True. Solicitor-Client privilege ensures full and frank disclosure between a client and his lawyer. The
value of the lawyer’s advice will be greatly reduced if it is based on incomplete information.
5. What are some examples of decisions that owners of small businesses make? What role can a
lawyer play with respect to the making of these decisions?
Organizational form of the business, whether to buy an existing business or create a new one, what are the
relevant laws and regulations affecting the business and what constitutes compliance, issues with regard
to purchase or lease of business premises, funding of the business, contracts with employees, suppliers
and customers, intellectual property and finally sale of the business.
6. What role has the computer played with respect to the solicitor-client relationship?
Computers allow clients to research easily accessible legal information on-line, rather than having to
consult a lawyer for every decision.
7. “It is a good idea to hire a lawyer when you have been charged with a crime.” True or false?
Explain your answer.
True. If convicted, you will be punished and have a criminal record.
1
,8. When you are trying to find a lawyer to help you, what are some sources of lawyer’s names?
Yellow pages, referrals from friends or relatives, provincial law societies, lawyer referral services,
provincial branches of the Canadian Bar Association.
2
,9. What is the primary purpose of an initial consultation with a lawyer?
To decide whether you will retain the lawyer and whether they will agree to represent you.
10. “Legal aid is available to anybody with a legal problem.” True or false? Explain your answer.
False. There are financial limitations and limitations on the types of disputes legal aid will deal with. This
also varies from province to province.
11. Briefly explain three ways lawyers bill their clients. Which of the three is most commonly used?
Fixed fees – for specific tasks such as will preparation, purchasing a house or incorporation.
Hourly rate – billing for time spent on the client’s file
Contingency fee – charging a percentage of the amount the client collects, appropriate for personal injury
or product liability cases. If the client does not collect, neither does the lawyer. The types of cases covered
and allowable percentages vary from province to province.
12. What can a client do if she is unhappy with the bill she received from her lawyer?
Attempt to resolve the dispute directly with the lawyer. If not successful, mediation may be an option. If
mediation is not successful, the bill could be reviewed by court officials. The method of review varies
from province to province.
13. “If a client loses money because of the carelessness of his lawyer, he will be compensated for his
losses if he makes a complaint to the law society.” True or false? Explain your answer.
False. The Law Society deals with disciplinary matters only, compensation would have to result from
settlement, or if unable to do reach an agreement, a legal suit by the client against the lawyer.
14. When will a lawyer be disbarred?
Lawyers who fail to follow the rules of conduct of the Law Society they belong to are subject to
disciplinary hearings. If the conduct complained of is a serious breach, such as misuse of client funds,
they may be disbarred.
15. “When a person acts unethically, she will also have broken the law.” True or false? Explain your
answer.
False. Ethics tells us what we should do; the law tells us what we must do. Every person breaking the law
is acting unethically, but a breach of ethics is not necessarily breaking the law.
16. What is a code of business conduct? Should such a code be used by a small business?
A statement of values and principles of ethical behaviour that establishes the principles and code of
conduct that all employees, officers and directors of the business would be expected to follow. If done
when the business is first established, it is probably the best way to ensure the long term adoption of these
principles as the business grows.
3
, Chapter 2 - Answers to Questions
l. Why is it difficult to come up with a satisfactory definition of law?
The main point that students should raise is that the definition of "law" varies with the perception of the
person being asked the question. Someone committed to an empirical approach might adopt the definition
of the legal positivist, that is, law is determined by the authority of the body that passed it. A pragmatist
would lean toward the American legal realist's definition, that is, law is whatever a judge is willing to
enforce. The point is that the student should understand that the definition of law cannot be separated
from the philosophical commitment of the person responding to the question.
2. Where do we look to predict the outcome of a legal dispute?
(a) In a common law system?
Predictability of the law is determined by precedent-making cases.
(b) In a civil law system?
Predictability of the law is determined by the central civil code.
3. Explain how the use of previous decisions differs in civil law and common law jurisdictions.
In a civil law jurisdiction only the code is binding on the judge. Cases decided by other judges are merely
persuasive. They can be turned to for guidance but the judge is not bound by them. However, cases in a
common law jurisdiction are the binding aspect of the law and, therefore, if a particular case qualifies as a
precedent the judge faced with that precedent must follow it.
4. Describe what is meant by the statement, "Common law judges did not make the law, they found
it."
When the common law was originally introduced in England it was the legal structure that was imposed,
not the rules of law themselves. The judges merely applied the law or rules that were already in place in
the local jurisdictions, thus the concept that the common law was not imposed but merely found. In reality
this can only be applied to a small portion of the common law. In fact, as the common law developed,
judges borrowed from many different sources, such as civil law, canon law, the law merchant, etc. And in
more recent times statutes have been passed which considerably alter and change the law.
5. Describe the advantages and disadvantages of the system of stare decisis.
The main advantage to stare decisis (or the process of following precedent) is the stability and
predictability that it provides for the legal system. It is not necessary for a litigant to go to court to find
out how the law will be applied in a given situation. The precedent case supplies that information, thus the
parties can avoid the cost and difficulties associated with a court action. Another advantage to the system
is that where there is no precedent covering a particular situation before the court, the court then is free to
make such precedent. The main disadvantage of the stare decisis process is that, as the number of
precedents grows, the courts are of society alter. The courts find themselves applying rules
established centuries earlier which (other than the fact that they form a precedent) may have no
justification for being applied in a modern situation.
6. Describe the problems with the common law system that led to the development of the law of
equity.
Because of stare decisis among other things the common law became rigid in its procedure and inflexible
in the rules that were applied. Similarly, the remedies that were applied were limited. The problems were
not corrected internally and, therefore, the courts of chancery developed to provide relief in those
situations where it was warranted.
4
edition)-2022-2023
Richard Yates
ANSWER TO QUESTIONS FROM BACK OF
CHAPTERS
Chapter 1
Managing Your Legal Affairs - Answers to Questions
1. Explain the meaning of “sophisticated client”.
A sophisticated client is confident, knowledgeable, up-to-date and understands the role of a lawyer. This
includes when to represent him or herself and when to hire a lawyer, as well as the costs involved.
2. Why should the owner of a small business have a lawyer on “the team”?
A lawyer is an expert, providing advice relevant to the client, allowing the client to make an informed
decision.
3. Distinguish the role of the client from the role of the lawyer.
The client is the decision maker, who consults a number of experts, including lawyers, in order to make
decisions, Lawyers are experts in their field, providing advice, and are bound to follow the instructions of
the client, once given.
4. “The elimination of ‘solicitor–client privilege’ would significantly undermine the
integrity of the Canadian legal system.” True or false? Explain your answer.
True. Solicitor-Client privilege ensures full and frank disclosure between a client and his lawyer. The
value of the lawyer’s advice will be greatly reduced if it is based on incomplete information.
5. What are some examples of decisions that owners of small businesses make? What role can a
lawyer play with respect to the making of these decisions?
Organizational form of the business, whether to buy an existing business or create a new one, what are the
relevant laws and regulations affecting the business and what constitutes compliance, issues with regard
to purchase or lease of business premises, funding of the business, contracts with employees, suppliers
and customers, intellectual property and finally sale of the business.
6. What role has the computer played with respect to the solicitor-client relationship?
Computers allow clients to research easily accessible legal information on-line, rather than having to
consult a lawyer for every decision.
7. “It is a good idea to hire a lawyer when you have been charged with a crime.” True or false?
Explain your answer.
True. If convicted, you will be punished and have a criminal record.
1
,8. When you are trying to find a lawyer to help you, what are some sources of lawyer’s names?
Yellow pages, referrals from friends or relatives, provincial law societies, lawyer referral services,
provincial branches of the Canadian Bar Association.
2
,9. What is the primary purpose of an initial consultation with a lawyer?
To decide whether you will retain the lawyer and whether they will agree to represent you.
10. “Legal aid is available to anybody with a legal problem.” True or false? Explain your answer.
False. There are financial limitations and limitations on the types of disputes legal aid will deal with. This
also varies from province to province.
11. Briefly explain three ways lawyers bill their clients. Which of the three is most commonly used?
Fixed fees – for specific tasks such as will preparation, purchasing a house or incorporation.
Hourly rate – billing for time spent on the client’s file
Contingency fee – charging a percentage of the amount the client collects, appropriate for personal injury
or product liability cases. If the client does not collect, neither does the lawyer. The types of cases covered
and allowable percentages vary from province to province.
12. What can a client do if she is unhappy with the bill she received from her lawyer?
Attempt to resolve the dispute directly with the lawyer. If not successful, mediation may be an option. If
mediation is not successful, the bill could be reviewed by court officials. The method of review varies
from province to province.
13. “If a client loses money because of the carelessness of his lawyer, he will be compensated for his
losses if he makes a complaint to the law society.” True or false? Explain your answer.
False. The Law Society deals with disciplinary matters only, compensation would have to result from
settlement, or if unable to do reach an agreement, a legal suit by the client against the lawyer.
14. When will a lawyer be disbarred?
Lawyers who fail to follow the rules of conduct of the Law Society they belong to are subject to
disciplinary hearings. If the conduct complained of is a serious breach, such as misuse of client funds,
they may be disbarred.
15. “When a person acts unethically, she will also have broken the law.” True or false? Explain your
answer.
False. Ethics tells us what we should do; the law tells us what we must do. Every person breaking the law
is acting unethically, but a breach of ethics is not necessarily breaking the law.
16. What is a code of business conduct? Should such a code be used by a small business?
A statement of values and principles of ethical behaviour that establishes the principles and code of
conduct that all employees, officers and directors of the business would be expected to follow. If done
when the business is first established, it is probably the best way to ensure the long term adoption of these
principles as the business grows.
3
, Chapter 2 - Answers to Questions
l. Why is it difficult to come up with a satisfactory definition of law?
The main point that students should raise is that the definition of "law" varies with the perception of the
person being asked the question. Someone committed to an empirical approach might adopt the definition
of the legal positivist, that is, law is determined by the authority of the body that passed it. A pragmatist
would lean toward the American legal realist's definition, that is, law is whatever a judge is willing to
enforce. The point is that the student should understand that the definition of law cannot be separated
from the philosophical commitment of the person responding to the question.
2. Where do we look to predict the outcome of a legal dispute?
(a) In a common law system?
Predictability of the law is determined by precedent-making cases.
(b) In a civil law system?
Predictability of the law is determined by the central civil code.
3. Explain how the use of previous decisions differs in civil law and common law jurisdictions.
In a civil law jurisdiction only the code is binding on the judge. Cases decided by other judges are merely
persuasive. They can be turned to for guidance but the judge is not bound by them. However, cases in a
common law jurisdiction are the binding aspect of the law and, therefore, if a particular case qualifies as a
precedent the judge faced with that precedent must follow it.
4. Describe what is meant by the statement, "Common law judges did not make the law, they found
it."
When the common law was originally introduced in England it was the legal structure that was imposed,
not the rules of law themselves. The judges merely applied the law or rules that were already in place in
the local jurisdictions, thus the concept that the common law was not imposed but merely found. In reality
this can only be applied to a small portion of the common law. In fact, as the common law developed,
judges borrowed from many different sources, such as civil law, canon law, the law merchant, etc. And in
more recent times statutes have been passed which considerably alter and change the law.
5. Describe the advantages and disadvantages of the system of stare decisis.
The main advantage to stare decisis (or the process of following precedent) is the stability and
predictability that it provides for the legal system. It is not necessary for a litigant to go to court to find
out how the law will be applied in a given situation. The precedent case supplies that information, thus the
parties can avoid the cost and difficulties associated with a court action. Another advantage to the system
is that where there is no precedent covering a particular situation before the court, the court then is free to
make such precedent. The main disadvantage of the stare decisis process is that, as the number of
precedents grows, the courts are of society alter. The courts find themselves applying rules
established centuries earlier which (other than the fact that they form a precedent) may have no
justification for being applied in a modern situation.
6. Describe the problems with the common law system that led to the development of the law of
equity.
Because of stare decisis among other things the common law became rigid in its procedure and inflexible
in the rules that were applied. Similarly, the remedies that were applied were limited. The problems were
not corrected internally and, therefore, the courts of chancery developed to provide relief in those
situations where it was warranted.
4
