Canadian Business Law

This document discusses various scenarios related to Canadian Business Law including the duties of an agent, apparent authority, and sharing of damages. It also explores the advantages of incorporating a business under the Canada Business Corporations Act.

Running head: CANADIAN BUSINESS LAW
CANADIAN BUSINESS LAW
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Answer 1:
In the given question, it is found that Alastair is working as the sales representative of the
RCD Ltd. He is acting as the agent of the company. Being the agent, he has certain duties to
perform under the common law. The first and foremost duty is to act for the best interest of the
company. Secondly, there must not be any conflict of interest between the principal and agent.
Thirdly, the agent must not make any secret profit for himself at the cost of company’s interest.
He also has the duty of maintaining confidentiality. The other duties include duty of obedience,
duty not to delegate his authority or duty without the consent of the principal, duty to account
and duty to use care and skill. Another important duty is not to act beyond the duties he is
entrusted with by his principal.
In the present case, Alastair has acted beyond his duties entrusted to him. He was
authorized to make contracts with buyers no exceeding $100000. He made a transaction of
$500000 without approval of the vice president of the company. However, the company received
the payment from the customer which showed that it has approved the agent’s act. Hence, RCD’s
argument did not constitute a valid legal defense against it by BES as it had already waived it by
receiving payment from BES. Hence, RCD is liable to the damages and loss sustained by BSE.
Answer 2:
In the present case, Dan Dionne is not liable to pay the car rental charges. It is because in
the agreement he has signed showing himself as company secretary of Windsor Warehouse Inc.
Here Dan Dionne is given apparent authority by his company to act on his behalf as he is
working as the company secretary of the company. Such apparent authority arises when a third

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party has reason to believe reasonably that the agent had an authority to act on behalf of the
principal. Here the agent is Dan and the principal is Windsor Warehouse Inc. this type of
authority arises when the principal by words or acts made third party to believe that an agent has
authority to act, even though the agent may not have express or implied authority to act with
regard to the particular mater.
Here in this case, the company has given apparent authority to act on its behalf and also
to use benefits by appointing him the company secretary. The company secretary has the major
rights to deal on behalf of the company. Thus third parties have reason to believe that Dan has
the authority to rent car in the name of the company. Hence the company is liable to pay the
renter on behalf of Dan.
Answer 3:
a) In the given situation, the damages will be shared by all the three parties equally.
Damages are monetary compensation granted to the plaintiff who has been suffered a loss or
injury due to the wrongful act of another party. The Supreme Court of Canada held “damages are
monetary payment awarded for the invasion of a right at common law” in the Canson
Enterprises Ltd. v. Boughton & Co. [1991] 3 S.C.R. 534 at Para. 39. In the present case, it is seen
that there no formal agreement between the parties regarding the terms and conditions of the
business. Due to the absence of such contract, there is no allocation of responsibilities and
sharing of profits or damages. So if Juan succeeds in the suit against Edie, Alma and Tim, three
of them will be liable to pay the damages claimed by Juan for the food poisoning. Hence such
damage will be equally shared by three of them. Similar type of observation is found in
Livingstone v. Raywards Coal Co., [1911] A.C. 301 at 307 where the court where the damages is

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to be shared by all the defendants. In the present case, Juan claims for compensatory damages
against three of them. Juan being a customer is not aware of the presence or absence of
agreement between them. Hence, if he succeeds in the case, damages should be shared by three
of them.
However, since the food poisoning was caused to Juan when Edie was cooking, Alma
and Tim may sue Edie in a separate suit for the recovery of the damages they incurred while
paying Juan.
b) In this question, the situation is that the restaurant run by Edie, Alma and Tim was
incorporated under Eats Inc where Edie owned 50 percent of the shares, Alma owned 25 percent
of the shares and Tim owned 25 percent shares. Thus their restaurant was incorporated according
to the provisions of Canada Business Corporations Act (R.S.C., 1985, c. C-44).
It is known that the main advantage to incorporating is the limited liability of the
incorporated company. A person who owns shares in a corporation is called its shareholders.
They are the legal owners of the company.. Shares indicate the ownership interest in the
corporation. Such share holders enjoy certain rights and duties in the corporation. They have the
rights to receive dividends, right to use voting rights and right to receive any remaining assets
from the corporation on dissolution. The shareholders control the corporation through their
ownership of shares with voting rights. It is because they enjoy the power to vote, dismiss board
of directors, to review and approve the corporation’s financial statements.
Unlike the sole proprietorship, where the owner of the business has all the liability of the
company when such business becomes incorporated, in the incorporated company, the liability of

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an individual shareholder is limited to the amount she or he has invested in the company.
However, the shareholders are not usually made liable for the debts of the corporation.
In the present case, as Edie, Alma and Tim are the shareholders of the restaurant; the
damages claimed by Juan will be shared by them according to their shares in the company. Thus
Edie will be liable to pay 50% of the shares and the other two are liable to pay 25% of the shares.

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References:
DuPlessis, D., O'Byrne, S., King, P., Adams, L. and Enman, S., 2014. Canadian business and the
law. Nelson Education.