Managing the Law The Legal Aspects of Doing Business 4th edition Mitchell McInnes, Ian R. Kerr, J. Anthony VanDuzer - Solutions

Janetti Inc, a Montreal sweater manufacturer, concludes a security agreement with Bank Y in which it gives the bank a security interest in all of Janetti’s accounts receivable in exchange for a loan of $1 million. Janetti then files for bankruptcy, and the bank gives notice that it seeks to
Dalfen Courier Inc has a package delivery business. It has a loan of $50 000 from ScotiaBank that is secured on all the assets of the business. It also bought two trucks on credit and still owes the seller $50 000. The seller’s claim is secured on the trucks and has priority over the bank. The
MIR Networks is in financial trouble. It is a large business with more than $500 000 000 in assets. In the past few years it has expanded beyond its core telephone switch business into new areas, including personal computers and telephone handsets both in the United States and Canada. These new
Jodie is a well-known local business person who has a flour supply business. She loaned $10000 to Kelly, one of her customers, to help Kelly renovate the building where she operates her bakery business in September 2014. The business has struggled since. After repaying $1000 of the loan, in January
Kerry’s Bagels Inc is a corporation that is owned and operated by Paul Kerry in Victoria, British Columbia. Bagels were a popular item in the late 1990s but recently the trend has been toward wraps and Italian-style sandwiches, and Kerry’s Bagels sales have fallen off. In June 2014, Paul found
Belinda and Joe previously lived together. After a disagreement, Belinda and her daughter, Marianna, moved out 18 months ago. She has an order from a British Columbia court against Joe, under which he is required to pay $1200 a month to her for support. Joe sends cheques for seven months and then
Amanda decides to incorporate her business of homemade organic soaps and body lotions. She causes the corporation to borrow $2500 in 2014 from a bank, and her good friend Sharon agrees to lend the corporation a further $5000 in 2015 in exchange for a promise to be paid back with interest. On top of
Bengt Norsson lives in Toronto. He works as a carpenter and drives his truck to work at various sites every day. Unfortunately, he does not really like his job and gambles on the side. Bengt gambled away thousands of dollars recently and is contemplating an assignment in bankruptcy. If he does make
Elaine runs the Five Brothers restaurant in Niagara Falls. She has given the bank a general security interest on the restaurant property that she owns in exchange for a loan of $200 000. The restaurant is not successful and, because of a recent decline in tourism, has a fair market value of only
Who can take advantage of an arrangement under the CCAA? Explain when an action under the CCAA may be preferred over action under the BIA.
What are some of the advantages of a proposal for a debtor?
What are the circumstances in which a creditor would be interested in supporting a debtor who was making a proposal under the BIA?
What concerns would you have if you were the director of a corporation that was about to be the subject of a bankruptcy order?
Jerome has just made an assignment in bankruptcy. He had started a restaurant business as a sole proprietorship but, despite his best efforts, it failed. He could not pay off all his creditors. He is very embarrassed because he has never had a business failure before. What is the likelihood that
If you were a debtor in financial difficulty who thought that your creditors were likely to seek a bankruptcy order against you in the next few months, could you protect some of your assets against your creditors by transferring them to your spouse for $1?
What is a “discharge from bankruptcy”? What debts are non-dischargeable? Why?
What is the significance for an unsecured creditor of being a general creditor or a preferred creditor?
What is the effect of the bankruptcy of a debtor on a secured creditor of that debtor?
What is “exempt property” under the BIA and what is its purpose? Who is responsible for defining what property is exempt under the law?
What is the procedure for filing an application for a bankruptcy order? What is its effect?
When might a creditor want to apply to have a bankruptcy order made against a debtor?
When might a debtor want to make an assignment into bankruptcy?
Describe the role of the trustee in bankruptcy. Who does the trustee represent? Who regulates the trustee?
How does the law differ between commercial and consumer bankruptcies?
Identify and briefly describe the statutes that deal with businesses in financial distress.
Against whom does the “stay” operate in bankruptcy? What does it stay?
What are the purposes of bankruptcy? How are these purposes different from the purposes of proposals?
How is “insolvency” different from “bankruptcy”?
Bankruptcy law overcame problems that arise when an insolvent debtor has multiple creditors. What were they?
Global Realty Inc owned an office building. It leased the fourth floor to Jensen Corp for two years beginning 1 January 2013. Sarah Jensen, the president and sole shareholder of Jensen Corp, gave Global a personal guarantee of all of Jensen Corp’s obligations under the lease. By June 2013, Jensen
Gilles has a restaurant business that he operates as a sole proprietorship. He has a line of credit with ScotiaBank that is secured by a general security agreement. The bank has perfected its security interest by filing a financing statement under the applicable PPS legislation. Gilles was moving
Giovanni Boats Inc has a line of credit with Imperial Bank in Vancouver. The line of credit is secured on all the assets that Giovanni has or later acquires. The bank filed a financing statement to register its security interest under the British Columbia PPS legislation on 1 March 2013. In
Elmira Bakery Inc operates a bakery business. Elmira entered into a general security agreement with Brunswick Bank on 1 January 2014 to provide security for a loan from the bank. On 1 April 2014, Elmira defaulted on the loan. At that time the outstanding balance was $50 000. The bank seized the
Elena operates a computer consulting business. She has a small number of large clients whom she bills monthly. Elena is seeking a loan from Northern Bank. How could Northern manage its risk that Elena will default on a loan from Northern if the business has no significant physical assets?
Senf Mustard Manufacturing Inc borrowed $75 000 from Lucia Lending Inc. As security for the loan, Senf agreed that Lucia could have possession of some gold bullion that it owned. Senf agreed that Lucia could sell the gold to pay off Senf’s debt if Senf defaulted. Subsequently, Senf borrowed $100
Goldie bought a new refrigerator from Cool Refrigerators Ltd, a retail appliance dealer, under a conditional sales agreement. In the contract, Goldie was given the right to possession of the refrigerator in return for promising to make six equal monthly payments of $150. Cool was to retain
Samra had agreed to guarantee a loan of $50 000 that her brother, Amman, had received from the Bank of Vancouver. Amman had entered into a general security agreement with the bank giving it a security interest in all his personal property, which included several vehicles and some jewellery. After
Is it necessary for a person to understand the nature of the obligations being undertaken in a guarantee for the guarantee to be enforceable against that person?
Janet guaranteed Eldon’s debt of $18 000 to the Bank of Montreal on 1 January 2014. Eldon’s loan agreement with the bank provided that he was to pay back $1000 every month for 20 months. On 1 February 2014, Eldon and the bank agreed that the loan amount would be increased to $25 000 with the
What rights does a debtor have once the secured party has taken possession of the collateral following a default?
When does a creditor’s obligation to act in a commercially reasonable manner arise, and what does it require?
What must happen before a secured party can seize collateral?
Describe the kind of protection that an attached but unperfected security interest has.
If you were buying a boat from a friend, would you have any concerns about whether your friend had given a security interest in the boat to a creditor? If so, what would you do about it? Would your answer be any different if you were buying the boat from a boat dealership?
If a manufacturer wanted to sell their product on credit to a dealer who had already given a bank a security interest in all of their current and future property, could the manufacturer obtain a security interest in the product they supplied that would rank ahead of the bank’s? Assume that the
What advantage does a secured party obtain by perfecting its security interest? When should a secured party perfect?
When does a security interest “attach”? What is the legal significance of attachment?
What types of interests are not subject to PPS legislation? What problems does this pose for secured parties?
Salvatore carries on an excavation business in British Columbia. He has just agreed to lease a bulldozer from Condon Leasing Inc for two years. Should Condon register its interest under the British Columbia PPS legislation?
How does provincial PPS legislation improve the ability of creditors to manage the risks associated with debtors’ defaults compared to the rules that were in place before the enactment of such legislation?
Why is the security that banks may take under the Bank Act different from other types of security interests?
Corrine has been a real estate developer in the City of Ottawa for more than 20 years. She regularly buys and sells properties. In 2014, Corrine agrees to go into business with Akbar who has experience buying and selling property in the small towns that surround Ottawa. They agree to set up a
Carl owns 51 percent of the shares of Probex Inc, which carries on a successful building supplies business. At the last shareholders’ meeting, Carl elected Morris, Ellen, and himself as the directors of the company. Morris, Ellen, and Carl appointed Carl as the CEO of the company. The
You are the manager of a National Bank branch. Janis, a wealthy business person, who runs several successful restaurants in town, has asked for a loan to support a new business venture. She wants to incorporate a new corporation to carry on a business selling gelato from a kiosk at a local skating
Tryon Medical Services Inc is a corporation in a partnership with Jordan. The sole business of the partnership has been leasing premises that the partnership owns to Elton Medical Clinic. Elton rented the premises for 30 years and then moved out when its lease expired. A real estate agent has
Samron, Amir, and Laura have carried on a florist shop business as a partnership for 10 years. The partnership uses the name “Samron, Amir, & Laura Flowers.” The business has a line of credit with a local bank, but the business has drawn only $25000 of the total of $50000 available. The
When does a corporation need a licence to operate in a particular province?
What kind of rules does provincial partnership legislation provide for the internal organization of partnerships? How are these rules addressed in a partnership agreement?
Sarah is a partner in a partnership that carries on an engineering consulting business. She will retire on January 1. Does she need to worry about any liabilities incurred by the partnership after she retires? Is there anything that she can do to manage her risk?
Trusty Resources Ltd is a producer of natural gas. Trusty entered into a contract with Power Marketing Inc to find a purchaser of Trusty’s gas that would commit to a long-term purchase agreement. Trusty entered into a 15-year supply agreement with Clean Energy Inc, a purchaser found by Power. The
Koh agreed to provide cleaning services for one year to Mid-Town Management Inc, which operates several large office buildings in Saskatoon. The contract price was much cheaper than what other cleaning services were offering. In its dealings with Mid-Town, Koh always made clear that it was acting
Is the Canadian Code of Practice for Consumer Protection in Electronic Commerce legally binding in Quebec and New Brunswick? In which provinces should businesses adhere to the Code of Practice and why?
Name and discuss the variables that a court may consider in deciding whether a specific online interaction falls under its jurisdiction.
What are the relevant contract formation rules governing the sending and receiving of electronic documents? As a risk manager, what steps can you take to avoid related disputes?
Louis Saint Chicken has sued its closest competitor, Bistro Poultry, for misappropriation of trade secrets, and former employee Nicolette Lemar for breach of confidence with regard to Louis’s secret dipping sauce. Nicolette, who worked for Louis as a supervisor in its sauce laboratory for the
Lindsay is a game designer who created a new board game using rods of different colours and lengths to help children learn math. The game has become an important tool within classrooms in the Maritime provinces as a math learning aid. As part of the instructions for the board game, Lindsay provides
What legal remedies are available for trademark holders in a judicial finding of trademark infringement by another party?
List three kinds of trademark, and give an example of each.
Must a copyright be registered to be enforceable? Explain your answer.
One of the most significant changes in The Copyright Modernization Act is the digital lock provision. How might the new digital lock rules affect Canadian businesses? Consider both the perspectives of creators and users.
Marlon bought a delivery van for his business from Tanita for $20 000. Half of the purchase price was paid with cash, and the other half with a cheque that was payable to bearer. After meeting with Marlon, Tanita took the subway back to her office. Unfortunately, she forgot her purse, which
Earl Tetley worked as a payroll clerk for Tinwings Inc. Over the course of several months, he defrauded the company of about $250 000. His plan was simple. He drafted cheques, on behalf of the company, that were payable to people who had recently quit or been fired from Tinwings. He then forged the
Hamilton Co-Axial Ltd was indebted to its president, Hudson Elmore. In payment of that debt, it gave a promissory note to Elmore. That note was made payable to the order of Elmore. Elmore later purchased land from Aldercrest Developments Inc. As payment for the land, Elmore delivered the promissory
In late January, Kurtz Enterprises purchased office supplies from Kilgore Equipment. It paid with a promissory note for $25 000 that was made to the order of Kilgore Equipment and was due on September 1. In June, Kilgore specially endorsed the note and sold it to Willard Financial Inc. On September
Ren/Tex Realty Inc (Ren/ Tex) sold several properties on behalf of Erin Amelia Investments Ltd (Erin Amelia). Erin Amelia therefore became contractually obliged to pay a commission of $38 000 to Ren/ Tex. Erin Amelia drew a cheque for that amount upon its account at the National Bank of Canada, and
Officeplus contractually agreed to purchase office furniture from Centrac in exchange for a price of $48 000. That sales contract required payment to be made by way of a certified cheque. Officeplus had a bank account at the Canadian Imperial Bank of Commerce (CIBC). Immediately before the
Sam Jasper agreed to sell 4000 litres of animal feed to Kate Hughes, who operates a wildlife park. After receiving the product, but before inspecting it, Kate told Sam that he could collect a cheque, as payment, from on top of the desk in her office. Before Sam did so, however, Kate inspected the
After being badgered for months for payment, Alice Munt attempted to pay her overdue rent by providing her landlord, Revati Singh, with a cheque for $15 000, drawn on her account at the Bank of Cambridge. When Singh presented the cheque for payment, the bank discovered that Munt’s account held
Roger, who was in the market for a computer, visited Hussein’s Electronics with a view to finding a bargain. He was directed to a computer that had been used as a floor model in the store. Although the sales representative was unwilling to provide a warranty, he did assure Roger that the unit
Bibi, a lawyer, provided legal advice to Bjorn on a small matter. When he asked her for her fee, she said, “Oh, just pay whatever you think is appropriate.” Although the evidence indicates that the reasonable value of Bibi’s work was $2500, Bjorn gave her a cheque on February 14 for $15 000.
Gilles, who is 16 years old but looks much older, bought a snowboard from Eva’s Sporting Goods. He paid the $750 price with a promissory note that was payable in three monthly instalments of $250 each. Eva stamped the words “consumer purchase” on the note at the time of the sale.
Allan Zimmerman created a contract with Echo Helstrom for the design and manufacture of a custom guitar. Upon delivery of the instrument, Helstrom paid Zimmerman by providing a cheque, drawn in his favour, for $10 000. Zimmerman endorsed that cheque and gave it to Hibbing Music Inc in an effort to
List and briefly explain four types of defences that may act as either defect in title defences or real defences.
Identify and briefly explain seven types of endorsement.
Briefly describe a holder in due course. What types of defences are available against a holder in due course? Why is a holder in due course given special treatment under the Bills of Exchange Act?
What is a “notice of dishonour”? When must it be given? What are the consequences of not giving a notice of dishonour?
What is a “bearer instrument”? Explain the ways in which a negotiable instrument may be put into “bearer” form.
What is the danger of receiving an instrument in bearer form? Explain how you can protect yourself against that danger once you have received the instrument.
“Unlike a cheque or a bill of exchange, a promissory note does not create any rights or obligations involving a third party.” Is that statement true? Explain your answer.
What is an “acceleration clause”? When is such a clause used?
If you make a promissory note that is payable in instalments, what precaution should you take after you pay each instalment? What is the potential result of not adopting that precaution?
Explain the difference between a demand draft, a sight draft, and a time draft.
Which of the following statements is true? (i) “A cheque is a type of bill of exchange.” (ii) “A bill of exchange is a type of cheque.” Explain your answer.
“The concept of certification is rather unusual. Unlike other concepts associated with negotiable instruments, certification was not created or codified by the Bills of Exchange Act.” Is that statement true? What is “certification”? Explain your answers.
Explain the nature and effect of a postdated cheque. Describe a situation in which postdated cheques often are used.
What is a “stop payment order”? How is such an order given?
What options does a bank have if a customer writes a cheque on an overdrawn account?
“A cheque becomes staledated only when the statutory limitation period lapses.” Is that statement correct? Explain your answer.
“A negotiable instrument is only as good as the person who originally created it. If that person has no money, the person who holds the negotiable instrument cannot possibly obtain payment under the instrument.” Is that statement true? Explain your answer.
What is the main advantage of receiving the negotiation of an instrument rather than the assignment of a contract?

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Managing the Law The Legal Aspects of Doing Business 4th edition Mitchell McInnes, Ian R. Kerr, J. Anthony VanDuzer - Solutions

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