QUESTIONS FOR REVIEW, PAGE 20

Copyright © 2020 by Nelson Education Ltd. 1-1

Chapter 1 Knowledge of Law as a Business Asset Solutions Manual for In-text Questions, Exercises, and Situations for Discussion by Shannon O’Byrne 1

QUESTIONS FOR REVIEW, PAGE 20

• What is the function of law?

The function of law is to protect persons and their property, facilitate interactions, and provide mechanisms for dispute resolution.

• How does the law offer protection?

The law protects members of society in two ways: first, it sets rules with penalties to encourage compliance, and second, it seeks to make those who break the law accountable for their misconduct.

1 With research assistance from Daniel Howitt, a law student at the University of Alberta, Faculty of Law.(Canadian Business and The Law, 7e Dorothy Duplessis, Shannon) (Solution Manual all Chapter) 1 / 4

Solutions Manual for In-text Questions, Exercises, and Situations for Discussion to accompany Canadian Business and the Law, Seventh Edition Copyright © 2020 by Nelson Education Ltd. 1-2

• How does the law facilitate business activity?

The law facilitates business activity by establishing rules that govern the marketplace. For example, the law of contract provides a way for parties to enter into binding agreements, thereby creating a measure of security and certainty in their business operations.

• In what ways does the law facilitate certainty in the marketplace?

The law facilitates certainty by providing rules, particularly in the area of contracts, which allow business enterprises to plan for the future and to enforce their expectations. In short, legal rules provide definition and context to doing business.

• Does the nature of the business relationship affect the enforcement of legal rights?

Yes. Parties to a contract do not always observe their agreement to the letter, preferring to maintain their relationship rather than resort to litigation for breach of contract.

• How does the law resolve disputes?

To avoid litigation, the legal system offers mediation and arbitration. Sometimes those prove unsuccessful and the matter is taken to court.

• Does dispute resolution always involve going to court?

Going to court is an option, though ordinarily one of last resort, given the time it takes and the uncertainty and expense associated with it. Other methods of dispute resolution include mediation and arbitration.

• In what way is knowledge of the law a business asset? 2 / 4

Solutions Manual for In-text Questions, Exercises, and Situations for Discussion to accompany Canadian Business and the Law, Seventh Edition Copyright © 2020 by Nelson Education Ltd. 1-3 Informed owners and managers can protect their businesses by ensuring compliance with legal requirements. They can capitalize on the planning function of law to ensure the future of their businesses by entering into contracts. They can also seek enforcement of legal rules against those who do business or have other interactions with the enterprise. In this way, the property, contractual expectations, and profitability of a business are made more secure.

• How might a lack of knowledge of the law negatively impact a business?

Business owners can suffer much anxiety, grief, and financial loss through a lack of knowledge of the law. In Lionel’s case, for example, the law holds him responsible for the head injuries suffered by his customer because he was negligent in how he assembled the display case.A lack of legal knowledge may result in a business’s failure to maximize opportunities or to lose out on them altogether. More seriously, however, businesses or business owners who are unaware of (or ignore) pertinent legal standards may find themselves subject to regulatory and judicial sanctions, which could range from being fined to being forced to close down.

• How does contract law facilitate interactions?

Contract law allows businesses to formalize the rules and boundaries of their interactions with other businesses or clients. It makes clear what the initial expectations of both parties are, and sets out how the parties are expected to act in regards to these expectations.Contract law further provides certainty to interactions. Contracts will often anticipate certain changes; for instance, a contract may include clauses about how parties are to act if the value of a product changes over time. Contract law also provides recourse for businesses when the terms of a contract are broken. 3 / 4

Solutions Manual for In-text Questions, Exercises, and Situations for Discussion to accompany Canadian Business and the Law, Seventh Edition Copyright © 2020 by Nelson Education Ltd. 1-4

• Why should a business put a legal risk management plan in place?

A legal risk management plan identifies the legal risks associated with a business and seeks to implement concrete measures for managing those risks. Such a plan therefore helps avoid the negative business experience that Lionel created for himself.

• Why is it important that certain activities, such as the recreational use of drones, be

regulated?Drones pose a significant threat to people and property on the ground, as well as to aircraft.There are privacy concerns raised by their use. All of this is multiplied by the fact that the use of drones continues to increase. Regulation in this area is consistent with government’s obligation to protect persons and their property, as discussed in the text chapter, including in relation to new and emerging hazards.

• What is the role of business ethics?

The role of business ethics is to place demands on an enterprise to conform to principles of commercial morality, fairness, and honesty. Business ethics concern moral principles and values that determine right and wrong in the business world.

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