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BUSI 4000: Business Law Final Exam Review and Study Guide

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Course
BUSI4000 Business Law (BUSI4000)

Institution
Memorial University Of Newfoundland (MUNSU )

Comprehensive chapter notes (Ch 3-19) designed to help efficient study process for both mid-term and final examinations. This includes a final exam outline. These notes are based off of both the required text and in-class lectures. Grade achieved in this course: 81

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Uploaded on July 5, 2020
Number of pages 56
Written in 2017/2018
Type Study guide

business law
intro to business law
busi4000
mun
mun business
final exam review
memorial university of newfoundland
study guide

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Chapter 3 (not as important as other chapters)

Why is it important for businesses to asses the legal environment?
● Reduce the likelihood and impact of mistakes that are:
● Costly in terms of expense of legal services and damage claims
● Distracting in terms of time and effort
● Harmful in terms of relationships and reputation

What is a legal risk management plan?
● A comprehensive action plan for dealing with the legal risks involved in operating a
business
● Involves the cooperation of managers and employees at every level
● May use a variety of methods such as surveying, interviewing, managers and
employees, forming committees, or convening a panel of experts

Creating a legal risk management plan
● (1)Identify the legal risks
● (2)Evaluate the risks
● (3)Devise a risk management plan
● (4)Implement the plan

(1)Identify the legal risks
● Assess the organization's functional areas
● Review the organization's business decisions
● Examine the organization’s business relationships
● Analyze the organization’s operations and transactions
● Examples of potential legal risks:
○ Business could harm the environment and result in prosecution under
environmental legislation or civil actions by affected people.
○ Employee harassment could result in human rights investigation
○ Aggressive marketing could result in investigation under the federal competition
act
○ Companies must take all steps required to make sure they are safe from hackers

(2)Evaluate the risks
● Assess the probability of loss
● Assess the severity of loss
What is the probability of this actually happening, and what is the expense of the
exposure of an event (financial, reputation, loss for the business)

,(3)Devise a risk management plan
● Avoid or eliminate the risk
● Reduce the risk
● Transfer the risk
● Retain the risk
● How might a business absorb or retain the risk?
○ Self insurance the organization can establish a funded reserve
○ Insurance policy deductibles the organization can retain risks to a certain dollar
amount
○ Noninsurance the organization can charge losses as an expense item

(4)Implement the plan
● Carry out the plan
● Monitor and revise the plan

Reacting when prevention fails
All risks can not be prevented/avoided
● Example:
○ Maple Leaf foods response to a widespread outbreak of listeriosis in 2008 that
was linked to the companys plant in toronto, which resulted in 22 deaths.

Lessons from these events?
● React quickly and in a positive fashion
● Use a prominent spokesperson to tell the companys side of the story and, as
appropriate, publicly apologize.
● Explain how the problem occurred and what the company is doing to fix it.
○ Can not come out and just say sorry, because that puts liability right in your
hands, have to be careful what you say and how you say it
● Use appropriate messages in different media: the companies expressed concern for the
victims and did not argue whether it was responsible
● Be open and consistent in acknowledging the problem

When to seek legal advice
● Consulting lawyers to soon and too often is expensive and cumbersome
○ Legal advice is better to get at the beginning, rather than at the end
● Consulting them infrequently to save money may be more expensive in the long run

Managing legal risk

, ● A business can manage its legal environment by:
○ Assessing that environment
○ Developing a risk management plan
○ Reacting to changes in the legal environment
○ Managing it legal services

Chapter 4

How business activities can lead to disputes
● Pollution incident
● Motor vehicle accident
● Hacking attempt
● Bylaw charges
● Delinquent customers
● Equipment breakdown
● Dissatisfied customers
● Damaged goods
● Problem employees

Is litigation the only option for resolving legal disputes?
● Alternative Dispute Resolution (ADR) A range of options for resolving disputes as an
alternative to litigation
● Advantages of ADR:
○ May preserve confidentiality
○ May preserve relationship
○ Can be less costly
○ Can be less time consuming
○ Each side can agree on an outcome it can live with, whereas in litigation, only
one side can win

ADR Options: Negotiation A problem solving process in which parties discuss their differences
and attempt to reach a mutually agreeable resolution
○ Can be used to resolve virtually any type of dispute
○ Lawyers can be of assistance
○ If the loss is one for which there is insurance, the insurer should carry out the
negotiations or insurance coverage can be jeopardized

ADR Options: Mediation A neutral person, called a mediator, assists the parties in reaching a
settlement of their dispute
● Can be used for most disputes
● Parties choose the mediator
● Mediators DO NOT make decisions. Rather, they facilitate discussions that lead to the
parties resolving the dispute voluntarily

, ● Has a high success rate, but each side must be ready to compromise
● Popular because, as with negotiation it:
○ Less expensive and quicker
○ Private and confidential if the parties choose
○ Helps to preserve the relationship between parties
○ Can result in a resolution tailored to the needs of the parties

ADR Options: Arbitration A third person, call an arbitrator, appointed by the parties makes a
decision. It is similar to litigation in that it usually involves a hearing where the parties or their
representatives make submissions and the resolution is outside the control of the parties
● When is arbitration used?
○ Works particularly well for most commercial and business disputes because the
parties can select an arbitrator with relevant experience and keep commercially
sensitive information private
○ Can be agreed upon by the parties at any time
● When is it used?
○ Very common in international contracts, significant commercial contracts
○ Parties can agree in contract not to sue and use arbitration to resolve disputes
● How arbitration works
○ The parties may agree on an arbitrator or they may have a third party choose an
arbitrator. There are no mandatory qualifications
○ The parties decide on the rules for conducting the arbitration
○ May establish their own rules or incorporate rules set out in the arbitration
statutes or developed by a recognized body such as the ADR Institute of Canada
○ At the end of arbitration, the arbitrator renders a decision
○ The finality of the decision depends on what the parties have agreed to
beforehand
○ The award, unless it is overturned or varied on appeal, is binding and enforcable
by the court

The Litigation Process
● Arises when one party brings a legal action against another
● Should be a last resort when other methods have failed
● Plaintiff The party that initiates a lawsuit against another party
● Defendant The party being sued

Private (Civil) Litigation
● Must be brought by the person claiming the loss at their own cost
● Each province has its own rules for civil litigation
● Some provinces have “small claim courts” that hear lawsuits involving smaller claims.
Usually a lawyer is not required and the process is quicker and less expensive

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