AFM 231: Spring 2014

Class 2: Sources of Law

May 7, 2014

Quiz
Remember purpose: to guide you as to
what you need to read and understand.
Content for today covers very basic
principles about the legal environment
in Canada. Many you will already know.
They are foundational and you are
responsible for ensuring you know
them.
Today, is your chance to make sure you
dont have any unanswered questions.

Sources of law
Need

to understand where law comes

from.
From the perspective of the manager or
professional:
They will either know the concepts
themselves or have legal advisors explaining
legal obligations.
They may want to be actively monitoring
changes to the legal environment and
lobbying where relevant or operating through
their trade or professional association.

Big Picture
Who

(what level of government) does what in

terms of law is determined by the Constitution.
The key who in the Constitution are the
federal and provincial governments.
Municipal (town, city, region) also may be very
important in terms of creating law that
directly impacts business. However, municipal
governments get their power from the
provincial government and therefore, in broad
terms, can only act in matters where the
Constitution gives the provinces that authority.

What is the significance of allocation

of power in the Constitution?
Governments

must have jurisdiction to act in a

particular area. If they act ultra vires their
jurisdiction, their actions will be null and void.
These are important basic expressions you should
know and remember.
In many cases jurisdiction overlaps in the sense
that both federal and provincial governments
have authority. Sometimes the results are clear
(e.g. we can have both federally and provincially
incorporated companies) and sometimes they are
not so clear (e.g. can Canada have a single,
federally governed securities regulator?).

Canadian Charter of Rights

and Freedoms
As

part of the Canadian Constitution,

this also governs all governments.
It establishes basic principles with
which all regulation must be in
compliance.
Again, if a government takes action
(passes a law) that violates one of
these principles, the consequences
will be that the law is null and void.
(Note Section 33).

Statute law, Common law and

Civil Law
What

governments do is pass statutes or

legislation (laws). You should know in general
terms how this happens it is a very
deliberate, formal and slow process.
Make sure you know that statutes always
have to be proclaimed and have no effect
until that happens e.g. current situation in
Ontario with not for profit corporations.
Very important from a practical business
context is the difference between the
statutes and the regulation to the statutes.

Regulations
Check

p. 30 for what regulations are.

Statutes are normally reasonably short and formal.
The operational parts of the statute the part that
actually details how it is to be applied may be
much longer and certainly much more detailed.
The executive branch of government (cabinet
assisted by the particular department) develops
and approves the regulations. So relatively easily
changed.
As a business, it will be the regulations that will
likely be most important.

Example of Regulations
Transportation

of Dangerous Goods Act, 1992

From the Statute: dangerous goods means a
product, substance or organism included by its
nature or by the regulations in any of the
classes listed in the schedule.
The Schedule (also in the Act) has 9 broad
categories.
The Regulations provide all the critical details.
http://www.tc.gc.ca/eng/tdg/clear-part2-339.htm
These tell a shipper, for example, exactly what
the rules are with which they must comply.

Common Law and Civil

Law
In

Canada we have both. Ensure you

understand the key distinctions.
The expression common law can be
used to describe the general legal
system that contrasts with civil law.
It can also be used to contrast with
statute law.

Common law
Common

law:

Can mean the body of law that judges have developed over
the centuries e.g. most of contracts law, tort law, etc.
Can also mean the law that develops as judges interpret
particular statutes to mean X, Y or Z.
Important: if the two conflict, statute prevails. And
governments can always pass statutes that change existing
common law rules (but these still get interpreted by judges).
Do you understand (in terms of how our system of
government operates) the reasons for the current tension
between the Federal Government and the Supreme Court?
Make sure you know the language of common law and what
precedent is.

Equity
The

rules of equity were designed to overcome

outcomes that were unfair because of the rigidity of
common law.
What you should know:
That there are areas of law, principles, that are equitable
(they are part of equity law) e.g. fiduciary responsibilities,
remedies (specific performance, injunction).
These are governed by the notion of fairness. That doesnt
make the application of law random (that would be unfair)
but it does mean you will only e.g. get a remedy if that is the
fair outcome.
Example of an equitable principle: you cannot approach the
court with dirty hands i.e. you will not get a remedy (a court
decided benefit) if you yourself have acted badly.

Terms on p. 40
These

are descriptions that probably are more

important to law students than to you.
It is useful though to know that law operates at
the international level. It also can be
governments imposing rules on us all (public e.g.
criminal law) or individuals creating their own
legal relations (e.g. contracts and torts).
One omission in the text is the law relating to First
Nations in Canada. For businesses, treaties and
land claims for example may well have a direct
and very serious impact on how and where they
operate.

Administrative law
This

is important as it covers a good

deal of what in practice may affect
you in business or in the professions.
The text describe some of the
administrative tribunals that affect
business (p. 43). Also think about the
OSC.
The key is that they must operate
according to their own rules but also
the over-riding principles of natural

What is natural justice?

These

are rules that apply to any tribunal

that has serious impact over others e.g.
the tribunals in the text or at this
university if I were formally appealing a
disciplinary action against me as a faculty
member at UW or you as a student. They
were established by the common law.
They establish key things such as you
must know the case against you, you
have a right to present your case, etc.