EXAM

Question 1

What is the Statute of Frauds?

Answer 1

The Statute of Frauds makes certain types of contracts unenforceable unless that are in writing.

Even if you had an enforceable oral contract it becomes unenforceable

Question 2

What types of contracts does the statute of frauds cover?

Answer 2

i. A promise by an executor or
administrator to pay estate debts
       out of his own money,
     o ii. A promise to answer for the
       debt, default, or miscarriage of
       another (guarantee),
     o iii. An agreement made in
       consideration of marriage,
     o iv. A contract dealing with
       interests in land,
     o v. An agreement not performed within
       one year of its making, and
     o vi. Ratification of debts incurred
       while a minor.

Question 3

Part Performance and requirements for oral contract recognition

Answer 3

If the plaintiff can show that performance of the contract has begun and he has relied on its existence, the court would accept that performance as evidence of the contract without writing.

However the following conditions have to the met.

• It must be a contract on land
• The acts of performance must suggest quite clearly the existence of a contract dealing with the land in question (no ambiguity)
• Activities of either the plaintiff or the defendant may be considered acts of performance but the plaintiff must have
  relied on the existence of the contract and suffered a loss if the contract is not enforced.

Question 4

What is parol Evidence?

Answer 4

During the negotiation process, emails,
   phone messages, draft documents, faxes,
   and letters may be created and
   exchanged. These documents and
   recordings are collectively known as
   parol evidence.

Question 5

What is the parol evidence rule?

Answer 5

The parol evidence rule puts a limit on what uses can be made of parol evidence which can be used to interpret ambigious words.

A court will admit parol evidence about
   a missing term when
     o the written agreement does not
       contain the whole agreement;
     o the missing term is part of a
       subsequent oral agreement;
     o the missing term is part of a
       collateral agreement for which there
       is separate consideration; or
     o the missing term is a condition
       precedent to the written agreement.

Question 6

What are the three types of Remedies for a breach in contract?

Answer 6

o a. damages
     o b. equitable remedies—specific
       performance, injunction, and
       rescission
     o c. quantum meruit

Question 7

What are the prerequisites to be awarded damages?

Answer 7

1. Loss must flow from the breach

2. the plaintiff must have done their best to mitigate these damages

Question 8

Liquidated Vs. Penalty clauses

Answer 8

liquidated damages are damages specified in the contract that if a breach were to occur, the injured party would get x amount which could be less or more than the actual damage but it gives parties a piece of mind to know their liability

penalty clauses on the other hand are a term that specifies an huge amount of money that is more so intended to force or scare parties into performance and courts will not often require that exact amount for damage payment

Question 9

What are the types of damages

Answer 9

1. exception damages (may include opportunity costs)
2. Consequential Damages
3. general damages
4. Reliance Damages
5. Punitive Damages

Question 10

prerequisite for equitable remedies

Answer 10

First, the court must be satisfied
that damages will not adequately
compensate the loss;

and the plaintiff…

• Must come with ‘clean hands’
• the plaintiff must not delay in taking action
• a court will refuse to intervene on equitable principles when to do so would negatively affect an innocent purchaser.
• the plaintiff must have paid reasonable consideration for the defendants promise.
• Finally, a plaintiff must ordinarily be a party against whom the remedy would be awarded were he the defendant instead.

Question 11

Types of equitable Remedies

Answer 11

• Specific performance
• Injunction (requiring a negative covenant not always needed in writing)
• Recession
• Quintum Meruit

Question 12

Difference between Business and affairs

Answer 12

• the affairs are the internal relationships and arrangements among those responsible for running a corporation
• the business involves the external relations between a corporation and those who deal with it as a business enterprise

Question 13

What are the three basic groups that are common within all corporations

Answer 13

1. Shareholders
2. Directors
3. officers

Question 14

What is the role of Directors?

Answer 14

Directors manage or supervise the management of the business and affairs
of the corporation. There most
important powers are…

• To issue shares
• To declare dividends
• To call meetings of shareholders
• To delegate responsibility and appoint officers.

Question 15

Appointment and removal of a director

Answer 15

A simply majority (ordinary resolution) is enough for the appointment or removal of a director unless otherwise stated (cumulative voting)

• they must be 18 years of age, of sound mind and have never declared bankruptcy.

Question 16

What is an officer?

Answer 16

they are responsible for the day to day hands on tasks of running the corporation and are appointed by the directors who define and designate their responsibilities

Question 17

What are the duties of Directors and Officers?

Answer 17

o 1. Every director and officer of a
corporation in exercising their
powers and discharging their duties
shall
▪ a. act honestly and in good faith with a view to the best interests of the corporation; and
▪ b. exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.
o 2. Every director and officer of a
corporation shall comply with this
Act, the regulations, articles,
bylaws and any unanimous shareholder
agreement.

Question 18

What duties are owed?

Answer 18

A fiduciary duty and a Duty of care, Diligence and Skill.

Question 19

To Whom is this duty owed to

Answer 19

The corporation, the shareholders and other stakeholders.

Question 20

What are the defences to a breach of duty?

Answer 20

• due diligence defence : By establishing that the required degree of care was taken, directors and officers can defend themselves against claims of breach of the articles, bylaws,
• Good faith reliance: Good faith reliance on audited financial statements or expert reports is a defence to breach of fiduciary duty or duty of skill and care
• Corporate indemnity: An agreement with the corporation to reimburse a director or officer for any costs associated with liability for breach of duty is enforceable provided that the director acted honestly, reasonably, and in good faith
• Directors’ and officers’ liability insurance: A corporation may purchase directors’ liability insurance on behalf of its board

- The key common law defence available to directors and officers is known as the business judgment rule . Under this rule, courts will grant business experts the benefit of the doubt and not easily criticize a business decision. Judges recognize
             that they are not business
             experts and that even sound
             decisions may ultimately be
             unsuccessful. Therefore,
             courts focus on the process
             used to arrive at the
             decision; as long as
             directors and officers
             exercise an appropriate
             degree of prudence and
             diligence while making the
             decision,

Question 21

What is some conduct that involves conflicts of interest?

Answer 21

• Contract with a corporation
• Interception of Corporate opportunity
• Competing with the Corporation
• related party transactions
• Insider Trading

Question 22

Role of Shareholders

Answer 22

Shareholders play little or no part in
management. They have some rights, the
most important being the right to vote
at shareholder meetings, but generally,
once the shareholders have elected a
board of directors, they have no
further power to participate in
management.

Question 23

What are the artibutes of being ‘locked in’ and ‘frozen out’

Answer 23

-The minority shareholder is “locked in”
in the sense that he probably cannot
sell his shares except at a fraction of
what he believes they should be worth.There is two reasons for this
(1) in private corporations, the transfer of shares is restricted and usually requires the consent of the board.
(2) even if the minority shareholder is free to sell the shares he will have great difficulty in finding a buyer who would consider acquiring a minority position in a private company.

The minority shareholder may be “frozen
  out” in the following manner.
   o First, the majority directors may
     fire him from his job with the
     corporation or, at the very least,
     refuse to renew his employment
     contract when it expires.
   o Second, they may remove him from the
     board of directors or elect someone
     else in his place at the next
     election.
   o Third, they may increase salaries to
     themselves, so that the corporation itself earns no apparent profit.

Question 24

What rights do shareholders have?

Answer 24

• To vote at any meeting of shareholders
• To receive any dividend end that is declared
• to receive the remaining property of the corporation (after the payment of its debts) on dissolution

Question 25

Ordinary Vs special resolution

Answer 25

ordinary resolution , which is passed by a simple majority of votes cast, and a special resolution, which requires a two-thirds majority.

Question 26

Financial Rights of of Shareholders

Answer 26

Shareholders expect to receive a return
on their investment in one or both of
two forms—earnings distributed
regularly in the form of dividends, and
growth that can be realized by selling
the shares or on dissolution of the
corporation.

• Dividends: A fundamental right attached to shares is the right to receive any dividend that is declared by the corporation.

-Distribution of Surplus: On the dissolution of a corporation,
provided it has assets remaining after
paying off all its creditors,
shareholders are entitled to a
proportionate share of the remaining
net assets.

Question 27

What are the protection of minority Shareholders?

Answer 27

• Majority rule: A shareholder is free to cast her vote
  as she chooses, and the courts will not
  substitute their judgment for hers
  provided that her actions are based
  upon business considerations.

-Appraisal Remedy: whereby a dissenting
   shareholder need not go along with thechange. He may elect instead to have
   his shares bought out by the
   corporation. If a price cannot be
   agreed, the court will fix a fair
   price.

- Derivative Action: where directors have made a secret
   profit for themselves by exploiting a
   “corporate opportunity,” the
   corporation may sue the wrongdoer to
   recover its losses.

-Winding up

-Oppression Remedy:The oppression remedy is by far the
broadest and most flexible remedy
available to shareholders It is not necessary to prove
wrongdoing; complainants need only
show that their interests or
reasonable expectations have been
treated unfairly or oppressively
disregarded by the behaviour

Question 28

What are the conditions of oppressive remedy?

Answer 28

1. First, that the complainant’s
   expectations about how their
   interests would be managed are
   reasonable. A court will decide on
   reasonableness by looking at factors
   such as
   ▪ general commercial behaviour, ▪ the nature of the corporation, ▪ the relationship between the
   complainant and the defendant,
   past practice,
   ▪ representations and agreements, ▪ conflicting interests of other
   stakeholders, and
   ▪ evasive steps the complainant
   could have taken.
   o 2. If the complainant’s expectations
   were reasonable, the complainant
   must then show that the conduct in
   question “oppressively or unfairly
   disregards or prejudices the
   interests.” The focus here is on
   unfair conduct and prejudicial
   consequences.

Question 29

Terminating a agency Relationship

Answer 29

An agent’s authority may be terminated
on any of the following situations:
o at the end of a time specified in
the agency agreement
o at the completion of the particular
project for which the agency was
formed
o on notice by either the principal or
the agent that he wishes to end the
agency
o on the death or insanity of either
the principal or the agent
o on the bankruptcy of the principal
o on an event that makes performance
of the agency agreement impossible

Question 30

What is in the content of a typical franchising agreement?

Answer 30

• Consideration provided by franchisor: the rights of listening such as trade marks as well as training and special loans
• Consideration provided by franchisee: They have to provide initial capital, royalties and rent or lease on equipment.
• Conduct of business: franchisee is under the supervision of the franchisor and any inspections, to uphold the good name of the brand and trademark.
• Termination of the franchisee: Usually a sever breach in contract can result in a breach but usually the contract term is fixed and quite long so it will be a while before renewal
• Restricitve Covanents: territorial restrictions for both parties and non-competition agreements
• intellectual property rights: trademarks can restrictively be used by the franchisee pending the franchisors approval

-Dispute resolution: contain a provision adopting
alternative dispute resolution
methods.

Question 31

What are some key factors to determine reasonable notice?

Answer 31

Key considerations (known as the “Bardal factors”) are the length and character of employment, the age of the employee, and the availability of similar employment, given the education, training, and experience of the employee. Senior executive compensation settlements are often higher.

Question 32

Justification for dismissal with cause

Answer 32

1. Misconduct
2. Disobiedience
3. Incompetence
4. illness
5. Discovery of cause
6. Progressive disipline

Question 33

Remedies available for wrongful dismissal

Answer 33

- Damages
     o Payment in lieu of Notice
     o Damages for mental anguish or pain
       and suffering
     o Special damages associated with the
       cost of mitigation
     o Moral, aggravated, and/or unitive
       damages for employer bad faith
     o Reduction for failure to mitigate
       their damages
  - Reinstatement

Question 34

What are export import Contracts?

Answer 34

• Export/import contracts are either
  contracts for the international sale of goods or contracts for the supply of
  services abroad.

Goods or services may
be supplied in one of three main ways:
o The supplier may deliver directly to
the customer in the other country.
o Delivery may be made through the
supplier’s own marketing
organization established in the
other country.
o The customer may accept delivery in
the supplier’s home country and
himself arrange to ship the goods
home.

Question 35

What documents does an export sale require?

Answer 35

o the contract of sale
     o the bill of lading
▪ A bill of lading is an acknowledgment by the carrier that the goods have been delivered for shipment
o the insurance policy or certificate 
▪ The insurance policy, similarly,
          is evidence that the goods are
          insured against loss or damage
          during transit and is usually
          necessary in order to obtain
          financing.
o the invoice

Question 36

What are some forms of government regulation of international trade

Answer 36

• Governments want to keep a positive balance of trade so they want they use policies like….
  1. Export Promotion
  2. Export Controls
  3. import Duties
  4. Import restrictions
  5. Dumping and export subsidies

Question 37

What are the two elements of non-discrimination as described by the GATT and WTO

Answer 37

1. goods originating from one contracting state should not be treated more or less favourably than goods from another state—that is, all should receive most-favoured- nation (MFN) treatment
2. second, goods from other member states should, once the appropriate tariff has been paid, be treated no less favourably than corresponding domestic goods—that is, they should receive national treatment.
   - The once exception to MFN however is regional free trade areas,

Question 38

Difference between portfolio investment and direct foreign investment?

Answer 38

Portfolio investment
   is essentially “passive” investment,
   normally in government or corporate
   bonds or stocks, shares, and
   securities.

• Foreign direct investment
  (FDI) occurs as part of active business
  operations. investment made to acquire a lasting
  interest in an enterprise operating
  in an economic environment other
  than that of the investor,

Question 39

What are the three ways forgein direct investment is conducted?

Answer 39

1. Establishing a branch
2. A subsidiaire
3. a joint venture

Question 40

How do you determine jurisdiction when asking a court to solve disputes in international law?

Answer 40

• 1. First, the court decides whether the location where the lawsuit was started has jurisdiction at all (jurisdiction simpliciter).
o To do this the plaintiff
needs to establish that
there was ‘real and
substantial connection’
with the country or
province.
▪ This can be established (for tort) if…
• The defendant is resident in the jurisdiction.
• The defendant carries on business in the jurisdiction.
• The jurisdiction is the location where the tort occurred.
• A contract connected with the dispute was made in the jurisdiction.
▪ For contract action if no country was
• a contract was to be
performed there,
• damage from a breach
of contract was
sustained there, • the dispute
concerned property
or goods situated
there, or
• the contract stipulated that it should be governed by the laws of the country or province.
• 2. Second, if jurisdiction exists, the court may be asked by the defendant not to hear the matter and to defer the lawsuit to a more appropriate foreign court (forum non conveniens). If the defendant proves that there is some other forum that is clearly more appropriate (Forum non convenient) then a location is picked based on efficiency and fairness

Question 41

What are the three classification of offences that can be faced towards directors and officers of corporations?

Answer 41

• Mens Rea offences: where the prosecution must prove the guilty mind such as intent, knowledge or recklessness. (criminal typically)
• Offences of Strict liability: Where completing the prohibited act raises the presumption that an offences has been committed, yet the accused can avoid liability by proving that he took all necessary precautions and reasonable care (due diligence)
• Offences of absolute liability: where no mental intent is required; simply doing the act makes one guilty of the offence.

Question 42

What are protections available to creditors?

Answer 42

• preservation of capital: Laws tend to focus on ensuring that a corporation’s stated capital (money raised from the sale of shares) is not improperly reduced by preferring the rights of shareholders over those of creditors.
• Usually these rules are divided into two types:
  1. rules that prohibit any payment by the corporation to its shareholders that renders the corporation’s liquid assets insufficient to pay the existing claims of creditors;

2. rules that restrict the return of capital to shareholders even when the corporation might still be left with sufficient liquid assets to pay itscreditors. Any improper payment
   of dividends or return of capital
   will trigger personal liability
   of the directors.

Question 43

What is the solvency test?

Answer 43

If payment of dividends happen during insolvency or cause insolvency to the point they can’t pay back their creditors then the directors and officers are liable.

Question 44

Define insolvency

Answer 44

A corporation
       is deemed insolvent if the
       realizable value of its assets has
       become less than its total
       liabilities or if it is unable to
       pay its debts as they become due.

Question 45

What is the maintenances of capital test?

Answer 45

In theory, the money paid into the
   corporation by shareholders should be
   preserved as far as possible within the corporation as a capital fund,
available for absorbing business losses
so that creditors (and in some cases,
preferred shareholders) may be paid in
full.

This applies to…

1. Dividends: a
       corporation may not pay a
       dividend if there are reasonable
       grounds for believing that (a)
       the corporation is, or would be
       after the payment, unable to pay
       its liabilities as they become
       due (the solvency test), and (b)
       the realizable value of the
       corporation’s assets would
       thereby be less than the
       aggregate of its liabilities and
       its stated capital of all classes