Learning Outcomes After reading this chapter, you should be able to: • Describe how law relates to business and its significance to business decision-making. • Describe the process for developing a legal risk management plan and explain its importance. • Explain the concept of legal precedent in Canada’s common law system. Learning Outcomes (cont’d) • Explain the function of the three branches of government and identify the source of law that is derived from each. • Explain the significance of Canada’s Constitution for the government’s law-making powers. • Describe how the federal, provincial, and municipal governments regulate business activity. • Explain the significance of the Canadian Charter of Rights and Freedoms to business activity. • Classify law as either substantive or procedural. Learning Outcomes (cont’d) • Classify law as either substantive or procedural. • Differentiate public law from private law and identify legal terminology associated with each. • Explain how administrative law affects business. • Discuss the difference between business law and business ethics. • Describe the benefits of studying business law. Business and the Law Managing Legal Risk • Identify the legal risks. • Evaluate the legal risks. • Manage the legal risk by devising and implementing a legal risk strategy: • Four strategies: 1) risk avoidance, 2) risk transference, 3) risk reduction, and 4) risk retention). • Review and revise your legal risk strategy. Business and the Law Table 1.1: Evaluating the Severity and Probability of Legal Risk The Canadian Legal System: A Framework for an Orderly Society Canada’s Two Legal Systems: • The civil law system • A system of codified law. • The common law system • System of law that recognizes court decisions with the same force of law as statutes. The Canadian Constitution and Other Sources of Law in Canada • The Constitution Act, 1867 (formerly the BNA Act). • The Three Branches of Government: • Legislative Branch • Executive Branch • Judicial Branch The Canadian Constitution and Other Sources of Law in Canada (cont’d) Table 1.3: A Sampling of Statutes That Affect Business The Canadian Constitution and Other Sources of Law in Canada (cont’d) • Constitution Act, 1982 (includes the Canadian Charter of Rights and Freedoms). • Canadian courts are empowered to strike down any law that violates the Charter. • Charter protects rights and freedoms from government interference. • Rights and freedoms are guaranteed by the Charter but are not without limits. See Section 1. Categories of Law Substantive Law Versus Procedural Law Substantive Law • Sets out the rights and obligations of individuals. Procedural Law • Rules establishing how substantive law will be enforced. Categories of Law (cont’d) Public Law Versus Private Law Public Law • Rules governing the relationship between individuals and government at all levels. Private Law • Relates to the legal relationships between persons, including corporations. Categories of Law (cont’d) Table 1.5: Examples of Laws Categorized as Public or Private Legal Aspects of Business Activity • Law aims to create stable environments in which members of society can plan their affairs with some certainty and predictability. • Key areas of law are common to all types of businesses, regardless of industry. • Knowledge of business law forms basis upon which to assess legal risk and, in turn, develop important skills for avoiding legal risk. Business Law and Business Ethics • Legal principles and ethical values often intersect, but they are not the same thing. • Business ethics: the values and moral principles that help to identify right and wrong in a business context. • Legal standards may be minimum requirements. • People in business should understand both legal and ethical risks in business decision-making.