UNIVERSITY OF WATERLOO

School of Accountancy

AFM 231 - Business Law

Mid-Term Examination

Date: Friday, June 19 2009 – 4:30-6:00 pm

Professors: Darren Charters & Michele Braniff (Please circle name)

Student Name: ______

Student ID. :______

Time of Class: ______

1.  Please answer ONLY IN SPACE PROVIDED

2.  There are no additional aids required for this exam.

3.  There are 17 pages in total (including cover page)

Good Luck

Question / Mark Available / Actual Mark
1 / 36
2 / 24
3 / 20
4 / 20
TOTAL / 100


Question 1 (36 Marks Total- 6 Marks Each). – REVISE MARKS

Please answer only FIVE (5) of the following:

a.  What is meant by the concept of jurisdiction (in the context of levels of government) and specifically, the concept of concurrent jurisdiction?

b.  Describe a bill and legislation making sure you identify a difference between them.

c.  Explain the concepts of public law and private law ensuring you clearly identify a difference between them and give an example of each.

d.  Identify and explain three differences between a trial case and an appeal.

e.  Explain the significance of section 1 in the Charter of Rights and Freedoms and discuss the judicial test developed from it.

f.  Identify and describe two steps of the risk management plan outlined in the text.

g.  Identify and explain three considerations that might make you conclude NOT to commence litigation against somebody even though your legal position prior to commencing the litigation appears quite strong.

h.  If a number of people facing the same issue wanted to sue somebody identify and describe the type of litigation mechanism that might be used and why.

i.  Why is it necessary to use terminology such as inferior and superior court?

j.  Identify and explain two options available for dealing with legal risks if you are developing a risk management plan.


Question 2 (24 Marks Total- 8 Marks Each)

Please answer only THREE (3) of the following:

  1. Identify and explain three reasons why people would NOT automatically appeal a court decision that they are unhappy with.
  1. Your best friend recently told you about their first unpleasant experience retaining legal counsel for a student painter business they started here in Waterloo. They are the sole owner of the business and they needed assistance to prepare a standardized customer contract and to incorporate. She hired very prominent senior business law partner specializing in mergers law at the largest law firm in Toronto. She got the name of the lawyer through her uncle who runs a large successful business (and this individual is his lawyer). She advised the lawyer what she wanted and said “send the bill to me the same as you would with Uncle Saul”. She was appalled at the size of the bill she received once everything had been completed. Advise of three factors she should have taken into consideration that might make her future dealings with legal counsel more positive.
  1. You are the purchasing manager for a grocery store chain. You made an agreement to purchase your produce from a supplier that had the following written contractual clause. “Deliveries will always be made by no later than 9 o’clock.”. For the first two months of the contract deliveries were made by no later than 9 am, which is exactly what you wanted, as it gave you same day fresh produce. However, two times this week delivery was not made until 7 pm. You called the produce supplier who claims the delivery still met the 9 pm deadline and that you have fresh produce to sell first thing tomorrow. The two parties now disagree over what the term means. Both parties had an opportunity to review and amend the contract before signing it. If this were to go to Court, thoroughly explain the options a Judge would have in determining whose understanding is correct? (Note- ignore any discussion related to remedy)
  1. You are the CFO of a large local building company. You were contracted by the Tech University to build a new building for the science faculty. Unfortunately, things haven’t gone well from the perspective of your company nor for the university. The university isn’t happy with the construction to date and you aren’t happy about the fact that the university is holding back interim payments on the completed construction. They claim it is due to their concerns but you believe the university is in serious financial crisis due to the recent market meltdown. Both parties do share a common desire to maintain confidentiality but negotiations to date between you have not been successful. Explain how you would proceed to resolve the dispute, identifying multiple options, identifying both strengths and drawbacks of your recommendations (options), and what your recommendation would be to the CEO of your company.


Question 3 (20 Marks Total- 10 Marks Each)

Marking Comment: While the first two questions/sections of the mid-term (60%) were primarily of a recall nature. The remainder of the mid-term (40%) was primarily of an application nature. That is you needed to identify the applicable concept and discuss it in specific detail to be in a position to obtain full marks. If a full discussion wasn’t made or it was somewhat confused students could still be awarded close to full marks. If a student incorrectly applied the wrong concept, we still typically were willing to award up to 40% of the value of the question (i.e., 4 marks) provided what they did talk about was coherent. As a result, it wasn’t the case that if you missed the concept you were going to automatically receive almost no marks (or no marks) for the question.

Please answer only TWO (2) out of the following:

a.  Singh, in order to build up his resume, went to Little Budgie daycare and indicated he would volunteer at the daycare during the term for two afternoons each week for a total of 10 hours. He was volunteering elsewhere on other days. The daycare happily accepted his offer and things went really well for the first six weeks. Once mid-terms hit Singh advised that he could no longer continue. Little Budgie is extremely unhappy since they specifically choose to not hire a part-time person since he was coming in. They want to know whether they can sue him for breach of contract.

b.  The ticket from the Lily Allen concert has terms and conditions pre-printed on the reverse, and on the front, the date of the concert (June 20), time, venue, and seat location. The concert is taking place an outdoor theatre. Once of the clauses on the back states “in the event of cancellation for inclement weather a full refund will be provided. NO REFUND if concert is cancelled for any other reason although ticket will be honoured for any rescheduled date”. The day of the concert, although sunny and clear, broke a 100 year old record for the coldest day of on record for June (6 degrees C) and it will be colder by the start of the concert. The promoter cancelled the concert but has not acknowledged it was due to the weather. You are well aware that Lily Allen is a bit of a diva and possibly refused to perform in the cold. You simply want a refund. Fully identify and explain the principles of law and facts that would you rely on to argue you are entitled to a refund?

c.  You possess a mint Michael Jordan rookie card that has been valued at $5000. In order to round up some money for university tuition you have decided that it is time to sell it. When you advertise it as a “mint Michael Jordan rookie card” on Kijiji you were confused about how to enter your asking price and instead only entered $50 and didn’t realize your error. Within 15 minutes you were e-mailed by Shannon Pripyat who goes by the online name of “nbacardexpert” accepting your offer. Identify and explain two legal principles you might rely on to argue that you do not need to legally complete the transaction.

Question 4 (20 Marks Total- 10 Marks Each)

Please answer only TWO (2) out of the following:

a.  Steve Simmons decided to get into ‘green retailing’ and when he heard last year the hemp products store in Cambridge- Everything Hemp- was for sale he was intrigued. Last fall he went down to the store and had a number of conversations with the ‘then owner’ Colleen Pepper. Over three visits Colleen said to Steve that the profit from the hemp store would cover the costs of running it, and that hemp products are a growth area as people become more environmentally focused. She also indicated that every product sold in the store was source from within a 200 km radius of the store. This was important to Steve as he is a huge ‘buy local’ supporter. She also indicated that the purchase price included 9 fibreglass kayaks, inventory left over from when she operated an outdoors store. Steve was hooked and ended up buying the store although he figured he’d just sell the kayaks on E-Bay as quick as possible. The first six months of operation for Steve were terrible. The store has lost money every month (as have most small retail stores since the start of the recession). As well, he has identified 11 products he sells that are sourced from Europe (the store sells over 150 hemp related items). Finally, he heard from another hemp store owner that nobody wants hemp products and most hemp stores struggle financially. To top it off, when he took over the store the kayaks were gone. He now wants get out of this transaction but since he doesn’t want to sell the store to some other ‘innocent’ purchaser he’d really like to force Amanda to take back the store. What legal action and related remedy (be precise – there is only one “best fit” remedy that is relevant here) will Steve have to rely on? Define this legal action and explain (giving reasons) all the things Steve will have to prove in order to win his case. Provide two (2) reasons why the he may have difficulty proving the claim and obtaining the remedy he wants. No conclusion is necessary.

Marking Comment: On the whole this question was done fairly well. Students sometimes incorrectly identified breach of contract as the issue and discussed that. As well, some students identified both, and if they discussed them in a confusing manner that suggested they really didn’t understand the distinction- this impacted the mark for the question.

b.  Steve sells a waterproof and bug resistant hemp tent through Everything Hemp for $1,000. Anoop bought the tent last week on for $750. Steve gave Anoop a deal in order to make his first tent sale. Steve also allowed Anoop to pay 50% now with the remainder due in 30 days (that is how desperate Steve is). The transaction receipt noted the product description of “waterproof and bug resistant hemp tent” and “final sale- no refund on sale item”. Anoop could have bought a similar synthetic product tent for $350 but he wanted to make a positive environmental impact. He took the hemp tent up to Algonquin Park for three days of camping last weekend where it rained all weekend and the black flies were terrible. While there he discovered the tent was neither waterproof nor bug resistant. He spent the weekend soaking wet and was covered in big bites by the end. He is now very angry and wants a refund of the $350 deposit and a release of the balance owing. Anoop wants to outline his legal argument and his legal entitlement in a letter to Steve. What legal action and related remedy would Anoop have to rely on? Define this legal action and explain (giving reasons) all the things Anoop will have to prove in order to win his case. No conclusion is necessary.

Marking Comment: On the whole this question was done fairly well. Students sometimes incorrectly identified misrepresentation as the issue and discussed that. As well, some students identified both, and if they discussed them in a confusing manner, that suggested they really didn’t understand the distinction- this impacted the mark for the question.

c.  Assume that Anoop did NOT return the hemp tent to Everthing Hemp. However, to get rid of it he decided to try and sell it in the classified section of the local newspaper for $150. Two days later Chan Ho comes by Anoop’s house before heading to work. They discuss the tent and Anoop is quite truthful about its shortcomings. The entire exchange takes place quickly since Chan Ho does not have money on him and needs to leave immediately for his work shift. On a piece of paper they write “Anoop agrees to sell and Chan Ho agrees to buy the hemp tent for $150”. They both sign their names underneath it. As they are writing up the documentation and Chan Ho notices two other camping items (an outdoor stove and a high quality cooler) and wonders aloud if Anoop will include them in the sale. Anoop pauses and then appears to nod yes. When Chan Ho shows up the next afternoon with the money he finds out that Anoop is claiming the stove and cooler aren’t included and that he is planning to sell them for $75 each- a sum Chan Ho isn’t prepared to spend. Can Chan Ho legally claim the stove and cooler? What rules(s) apply? Explain.

Marking Comment: Sometimes people did not identify parole evidence but would provide a thorough discussion of offer/acceptance/ consideration and gratuitous promise. If it was a very solid discussion they were awarded up to 6 marks.

a.  Brandy Wheine is the owner and manager of “Brandy’s Restaurant and Grill”. In response to problems with fighting and theft of bar glasses by some of the “regulars”, Brandy hired Hank Hogan, a former professional wrestler as the new bouncer. Last weekend, Hank Hogan ejected two of the regulars (known to Brandy as “Tom and Jerry”) and apprehended a third (“Miss T”) while she was putting the Brandy beer mugs into a knap sacks. The bus boy told Brandy that he was outside when the customers were evicted and that Hank Hogan had broken the nose of one and had twisted the arm of the other behind his back and the bus boy had heard “bones crack”. Hank Hogan had locked Miss T, the alleged “shop lifter”, in a small broom closet. Miss T had been released from the closet by the cook because she was screaming and apparently having a panic attack. The bus boy is a student in a legal studies course at University of Waterloo and he has suggested to Brandy that Hank Hogan is a “legal liability for the tavern” and a “law suit waiting to happen”. Discuss whether Tom and Jerry and / or Miss T have civil causes of action against Hank Hogan or Brandy Wheine / Brandy’s Restaurant and Grill. Include discussions of the liability of each and any defence which may be available.