Case Study 2 1 Contractual Formation Validity To establish a legally binding contract, four fundamental pillars need to be met: offer, acceptance, consideration, and intention to create legal relations. These requirements are well met in the interactions between JRC and Cerisier Corporation, making the contract legally valid. In an email dated October 3, 2024, Tilly Fagan, on behalf of JRC, proposed to buy 500 Barbapiccola drones at the price of $12,000,000, with delivery expected to be made on 30th November, 2024, and a warranty of one year on the AI systems and sensors. Cerisier, on the other hand, submitted a counteroffer and agreed to the deal under the condition that the warranty period would also be cut down to nine months through Anamarie Ruiz, who was negotiating on their behalf as the contracts manager. In this case, under contract law, a counteroffer means that the original offer is rejected and a new one is made. On October 6, 2024, Tilly made an offer adjustment where the purchase price was adjusted to $11,000,000 and accepted the nine-month warranty restriction. Likewise, Anamarie responded the same day with an affirmative response; she stated, “That works. I have no further changes to propose.” These conversations fulfilled the condition for meeting the agreement of both parties, and it formed a binding contract. There is consideration like the bargain: As for the payment, JRC promised to disburse $11,000,000, and as for the consideration, Cerisier promised to provide 500 drills with a warranty period. The common law recognizes consideration as the ability to accept even when it is nominal as long as there is something given by each party in return. The intention to enter a legal relationship can therefore be deduced from the formal bargaining, the written agreement, and the signature of both partners. The final agreement clearly provided that all prior discussions and communications were merged into the contract and rendered ineffective, which means that the oral conversation between Bomie Chatterjee and his statement that the drones would be sold “as-is” also had no legal force. The case of Hawrish v. Bank of Montreal, [1969] SCR 515, 1969 CanLII 3 (SCC) holds that one party’s silence does not amount to acceptance.1 In this case, however, Anamarie, in writing, responded back and stated in clear terms that she was accepting of the proposal. Also, in Bawitko Investments Ltd. v. Kernels Popcorn Ltd., 1991 CanLII 2734 (ON CA), an objective 1 Hawrish v. Bank of Montreal, 1969 CanLII 2 (SCC). (1969, January 28). Canlii.ca; CanLII. https://canlii.ca/t/1nlgn. 2 test decides the formation of a contract; hence, if any reasonable person would understand that the parties were entering into a contract, then the contract is valid and binding.2 When it comes to the JRC and Cerisier case, it can be summarized that the contract formation was valid. Signaling its acceptance, Anamarie accepted the revised offer from JRC through explicit communication. Mutual consideration and formal writing give more assurance of the contract’s enforceability. Effect of Verbal Statements This verbal assertion by Bomie Chatterjee that the contract should be ‘fixed’ to reflect the statement given that the drones will be sold ‘as-is’ is legally incorrect. The parol evidence rule is a common law doctrine that the court will not allow the prior or contemporaneous oral agreements to vary the terms of the written contract once it has been finalized into writing. This rule exists to maintain contractual certainty and prevent disputes arising from informal discussions that contradict written agreements. The preferred agreement specifically prohibits any other prior agreements, whether oral or written, through clause 6 of the document, which declares that they contain the entire agreement. Courts enforce the rule as it is meant to uphold the doctrine of contractual ambiguity, such as in Hawrish v. Bank of Montreal, [1969] SCR 515, 1969 CanLII 3 (SCC), where the court suit stated that prior statements held orally cannot be used to negate written terms of contract.3 In this case, Bomie’s remark about selling the drones ‘as-is’ does not override the signed agreement according to which Cerisier Corporation is to provide for malfunctions in the AI system, failure of the sensors, and software flaws for nine months. Since Bomie’s statement was made before contract formation, it falls under the scope of the parol evidence rule and is unenforceable. Courts, as seen in Hawrish v. Bank of Montreal (1969), have consistently ruled that prior oral statements cannot contradict written terms once a contract is finalized. Further, on the argument that the liquidated damages clause should be deleted, Bomie has no grounds to base it on. In the contract evaluations, Clause 5 clearly highlights the setting of $15 million as liquidated damages in cases of critical systems failure. Courts approve liquidated damages clauses as valid where such clauses can be stated as a reasonable measurement of the 2 Bawitko Investments Ltd. v. Kernels Popcorn Ltd., 1991 CanLII 2734 (ON CA). (1991, April 8). Canlii.ca; CanLII. https://canlii.ca/t/1p78x. 3 Hawrish v. Bank of Montreal, 1969 CanLII 2 (SCC). (1969, January 28). Canlii.ca; CanLII. https://canlii.ca/t/1nlgn. 3 actual loss and not a penalty charge. Thus, it is up to Cerisier to provide evidence as to why the clause in question is punitive and not compensatory. As pointed out in the case of Elsley v. J.G. Collins Insurance Agencies Ltd., [1978] 2 SCR 916, 1978 CanLII 7 (SCC), the Supreme Court held that where the provision has been made for liquidated damages, the clause is valid except where it is shown that it is penal.4 The fact that JRC utilizes these drones for pipeline monitoring and predictive maintenance signifies that a failure on the part of the AI systems could lead to financial losses and operational interruptions, including severe fines, for which the mentioned damages are justified. In addition, Bomie’s informal discussion with Tilly during the networking event does not alter the contract terms signed. Clause 8 stated that the amendments should be alterable only in writing and not orally and are required to be executed by both parties. Contract law also presents that it is also illegal to modify the contract verbally when the parties provided for a written modification clause. Gilbert Steel Ltd v University Construction Ltd (1976) 12 OR (2d) 19 supported this principle whereby a change in the contract terms orally agreed on was considered ineffectual due to lack of written variation and new notation.5 Lastly, according to the objective theory of contractual interpretation, courts are expected to assess contracts under the written and expressed agreement and not in accordance with what anybody of the parties wanted or informally suggested or thought of at the time of contract formation. Any reasonable reader of the contract would be inclined to believe that Cerisier agreed to the nine-month repair obligation and the liquidated damages clause. Consequently, the contract remains valid and enforceable per the signed terms by the parties. Breach of Contract and Damages JRC has legal grounds to claim a case against Cerisier Corporation due to the breakdowns in AI systems and sensors in the Barbapiccola drones. The contract clearly articulates all possible details of the work that Cerisier is to perform and the scope of the responsibilities for which it may be held legally liable as per contract law. Under clause 3 of the agreement signed between the parties, Cerisier Corporation is responsible for expenses associated with the AI system, failure of sensors, or bugs in the 4 Elsley v. J.G. Collins Ins. Agencies, 1978 CanLII 7 (SCC). (1978, March 7). Canlii.ca; CanLII. https://canlii.ca/t/1mkbk. 5 Gilbert Steel Ltd. v. University Construction Ltd., 1976 CanLII 672 (ON CA). (1976, April 6). Canlii.ca; CanLII. https://canlii.ca/t/g1d1h. 4 software for straight nine months starting from the delivery date. If these failures have occurred and Cerisier has not complied with the warranty, there is a basis for JRC to claim that there has been a breach of contract. In addition, the failure to provide working AI systems also constitutes a fundamental breach, which provides JRC with a basis to seek substantial remedies. Liquidated Damages Clause 5 demands that if the AI systems or critical sensors fail after the project has been implemented for nine months, Cerisier shall be liable to pay $15 million to JRC through liquidated damages. Courts allow the use of liquidated damages clauses provided they are reasonable projections of the expected loss as opined in Elsley v. J.G. Collins Insurance Agencies Ltd., [1978] 2 SCR 916, 1978 CanLII 7 (SCC). Since JRC uses the drones to monitor their pipelines in real-time, failures could result in losses, fines, and loss of service, which justifies the damages that have been agreed upon.6 Clause 4 also means that Cerisier is liable for negligence and other losses from AI-related failures to JRC and other third parties. These damages may include: Financial losses from service disruptions due to grounded drones Regulatory fines for pipeline abnormalities that are not detected Other expenses that can be attributed to alternative drone deployments JRC could recover for these losses under the rule that the party in breach is liable for the losses that arise from the non-performance of the contract as stated in Bank of America Canada v. Mutual Trust Co., 2002 SCC 43 (CanLII).7 According to Clause 7, any dispute resolution shall be exercised through arbitration with reference to the Arbitration Act of Alberta. Arbitration is relatively cheaper than a court trial and offers the final and binding decision or award. Since Clause 7 mandates arbitration under the Arbitration Act of Alberta, both parties are legally bound to resolve disputes outside of court. Courts typically uphold arbitration agreements unless there is evidence of unconscionability or procedural unfairness. Elsley v. J.G. Collins Ins. Agencies, 1978 CanLII 7 (SCC). (1978, March 7). Canlii.ca; CanLII. https://canlii.ca/t/1mkbk. 7 Bank of America Canada v. Mutual Trust Co., 2002 SCC 43 (CanLII). (2002, April 26). Canlii.ca; CanLII. https://canlii.ca/t/51s8. 6 5 Thus, JRC indeed has a clear cause of action against Cerisier for breaching its contractual duties. The company can pursue legal remedy in the form of liquidated damages, warranty enforcement, and consequential damages under the clause through arbitration. Unconscionability and Legal Challenge It may be possible for Giambattista Management Limited to challenge the contract made with JRC based on the doctrine of unconscionability. Particularly, this legal principle applies if and only if the contract can be classified as unconscionable or unreasonable to the extent that its application will not be right. The courts generally consider two different aspects of unconscionability: its procedural unfairness (the manner in which the contract was made) and its substantive unfairness, which deals with the oppressive terms of the contract. The legal test of unconscionability, which was defined in Mundinger v. Mundinger (1968) 68 DLR (2d) 181, is proved by: A significant imbalance in bargaining power favoring one party, this scenario led to a major shift in bargaining power in favor of the latter party.8 A resulting unfair bargain with harsh or oppressive terms. No freedom to make any choice or stakes one can take or decline in regard to the contract. Bargaining Power Imbalance: Giambattista was fairly a newcomer to the management of AI drone systems, while JRC had the necessary experience and capital. Natalia Singh, Giambattista’s CEO, stated that the company wanted the deal very much and that it was worried about the prospects of going out of business without it. This is implying a weaker bargaining power, which is one of the elements that are considered in establishing procedural bias. Unfair Bargain: There are harsh financial consequences, as the contract insists on a 98% availability guarantee. If uptime dropped to 97.9 percent or below for two consecutive months, JRC had the right to assess a $500,000 penalty per occurrence. Moreover, those expenses include repair costs of more than twenty-five thousand US dollars per month, mainly because Giambattista is a small company. These terms are especially disadvantageous to Giambattista, which also provides support for the argument of the substantial unfairness suffered. Lack of Meaningful Choice: Natalia, who once said that ‘Giambattista needed the contract,’ implied that there was no real option, hence meaning that the organization had no 8 “Mundinger v. Mundinger, 1970 CanLII 981 (SCC).” CanLII, May 26, 1970. https://canlii.ca/t/g1gl5 6 option but to sign what they didn’t want since it benefitted the company. The unconscionability that the courts have recognized is pressure features related to the economic power imbalance, as seen in Marshall v. Canada Permanent Trust Co., 1968 CanLII 638 (AB KB).9 Although Giambattista may be able to base his remedy request on unconscionability, chances are slim for success. In such cases, the courts have set high standards that would enable one to prove that the party with the superior bargaining power used the power to bring the weaker party into the contract. Thus, should Giambattista prove that JRC imposed the above terms with knowledge of the outcomes, then the contract may be set aside or perhaps altered. However, the fact that there are rather severe terms is not sufficient; Giambattista needs to provide procedural unfairness and absence of consent. Marshall v. Canada Permanent Trust Co., 1968 CanLII 638 (AB KB). (1968, May 10). Canlii.ca; CanLII. https://canlii.ca/t/gwfm7. 9 4/8/25, 4:53 PM Case Study #3 - SGMA 395 L01-L03 - (Winter 2025) - Business Law for Strategic Decision-Makers - University of Calgary W25 Case Study #3 Employment CoreForm Course: SGMA 395 L01-L03 - (Winter 2025) - Business Law for Strategic Decision-Makers Question #1 Contract clause Q.1 (A) approx. 100-150 words Exceptional 3 points Good 2 points Adequate 1 point Inadequate 0 points Criterion Score 3 2-2.5 1-1.5 0-0.5 /3 Correctly and thoroughly explains what the clause means Correctly explains what the clause means but may lack depth or thoroughness or clarity Fails to effectively explain what the clause means. student does not answer the question AND/OR OR Identifies legal principles and statutory provisions with errors or omissions. Or does not identify the statute at all the response provides is entirely inaccurate AND the response has an insufficient amount of information to determine the student’s understanding; Correctly identifies legal principles /statutory provisions Correctly identifies the applicable notice period the answer is clear and organized in a logical fashion Correctly identifies statutory provisions Does not identify the applicable notice period correctly or does not identify the applicable notice period at all The analysis demonstrates a basic understanding of the concepts OR Contract clause Q.1 (B) approx. 100-150 words AND/OR The analysis lacks a clear not very clear and not organized in a logical manner Question #1 Does not identify the applicable notice period or the notice period is incorrect OR understanding of the concepts Exceptional 3 points Good 2 points Adequate 1 point Inadequate 0 points Criterion Score 3 2-2.5 1-1.5 0-0.5 /3 Correctly and thoroughly explains the consequences of an expanded contractual clause Correctly explains what the consequences of an expanded clause but may lack depth or thoroughness or clarity Fails to effectively explain the consequences student does not answer the question AND/OR OR Correctly identifies statutory provisions Identifies legal principles and statutory provisions with errors or omissions. Or does not identify the statute at all the response provides is entirely inaccurate AND/OR the response has an insufficient amount of information to determine the student’s understanding; Correctly identifies legal principles /statutory provisions the answer is clear and organized in a logical fashion The analysis demonstrates a basic understanding of the concepts The analysis lacks a clear understanding of the concepts OR OR not very clear and not organized in a logical manner Question #2 Just cause approx. 500600 words Exceptional 5 points Very Good 4 points Good 3 points Satisfactory 2 points Insufficient 0 points Criterion Score Correctly states the legal test for just cause; Correctly states the legal test for just cause. Correctly states the legal test for just cause. 0-1 /5 Applies the legal test precisely and accurately with reference to the facts; Applies the legal test accurately. Does not apply the legal test to the facts or does not recognize the necessary facts Partially states the legal test for just cause with some inaccuracies provides 2 independently researched relevant and clearly analogous common law cases the response indicates that the student has a complete understanding of the legal concept; the response is accurate; appropriate case law included and sufficiently described and applied. How and why the case is analogous is clear. 1 independently researched common law case Shows a solid understanding of the legal concept. Includes relevant case law and adequately describes its application Some issues with clarity or the case is not sufficiently explained or the legislative provision is not relevant The analysis indicates a superior understanding of the concepts, showing a high level of insight and clarity. https://d2l.ucalgary.ca/d2l/lms/dropbox/user/folder_submit_files.d2l?db=264206&grpid=0&isprv=0&bp=0&ou=649728 Demonstrates a good understanding of the legal concept. The response is mostly accurate Includes a case, but it is not relevant or not explained sufficiently, not analogous. Or States it accurately but the application is missing OR Attempts to apply the legal test but lacks clarity or key facts Shows a partial understanding of the legal concept. The response contains some inaccuracies and errors. The response indicates that the student does not understand the concept; OR provided a response that is inaccurate; OR the response has an insufficient amount of information to determine the student’s understanding; OR student has failed to apply the law to the facts at all. Missing any cases or a case is from the course slides or the case is not relevant at all 1/4 4/8/25, 4:53 PM Question #3 Q3 (A) Heads of damage approx. 600 words Case Study #3 - SGMA 395 L01-L03 - (Winter 2025) - Business Law for Strategic Decision-Makers - University of Calgary Exceptional 10 points Very good 8 points Good 7 points Adequate 6 points Marginal 5 points Inadequate 4 points No answer 0 points Criterion Score Correctly identifies Correctly identifies Correctly Correctly identifies Struggles to identify 2-4 The student did not / 10 all the appropriate heads of damage; all of the appropriate heads of damage identifies all the appropriate heads of most of the heads of damage; the appropriate heads of damage; or AND AND OR identifies only one head of damage Explains how each Explains how each head of damage is assessed with head of damage is assessed reference to any relevant legal AND damage; AND tests/principles AND Provides one relevant case for each head of damage that was independently found, analyzed, providing in depth description and explanation on how the case is analogous with the facts of the case explains how each head of damage is of damage but does not explain how they assessed. are assessed AND OR explains the legal tests/ principles that are a part of each The level of analysis is superficial or Offers limited analysis of each head of damage insufficient and AND Level of analysis indicates some head of damage in relation to the facts and legal principles. misses some the facts that go along with each head of understanding of the concepts; Offers explanations of how each head of damage AND damage is assessed, including relevant mostly accurately legal tests/principles, Or identifies rules; explains how each head of damage is assessed AND OR Clear and organized in a logical fashion identifies all heads does not provide a case per each head of damage but for most of heads, or but does not show how the legal rules apply to facts; clarity. OR for each head of damage identifies does not provide a case per each head of damage and/or and or with reference to the the cases provided lack some relevance the cases provide lack relevance or or depth of explanation and sufficient explanation analogous reasoning AND Mostly clear and mostly well though some aspects may need further analysis is lacking facts and legal principles. Struggles to identify the appropriate heads of damage the analysis. answer the question at all. AND Provides minimal or Fails to describe relevant legal no explanation of how each head of principles or provide any case law damage is assessed and the legal tests/principles involved Or the principles identifies are incomplete or AND incorrect or not at all applied Offers limited analysis of each head of damage in relation to the facts The response indicates that the student does not understand the and legal principles concept of damages; AND OR Fails to describe relevant legal provided a response that is mostly principles or provide case examples in- inaccurate; depth. AND Lacks clarity Or the response has an insufficient amount of information to determine the student’s understanding. does not explain how damages are calculated AND Includes one some organization and mostly clear. relevant case for each head of damage, but the depth of description organized may vary or is not relevant Mostly clear Question #3 Exceptional 10 points Very good 8 points Good 7 points https://d2l.ucalgary.ca/d2l/lms/dropbox/user/folder_submit_files.d2l?db=264206&grpid=0&isprv=0&bp=0&ou=649728 Adequate 6 points Marginal 5 points Inadequate 4 points No answer 0 points Criterion Score 2/4 4/8/25, 4:53 PM Question #3 Q3 (B) Analysis of recovery for statutory & reasonable notice damages approx. 600 words Case Study #3 - SGMA 395 L01-L03 - (Winter 2025) - Business Law for Strategic Decision-Makers - University of Calgary Exceptional 10 points Very good 8 points Good 7 points Adequate 6 points Marginal 5 points Inadequate 4 points No answer 0 points Criterion Score Thoroughly analyzes Provides a well- Analyzes statutory Analyzes statutory Provides a cursory Fails to analyze The student did not / 10 both statutory and reasonable notice reasoned analysis of statutory and and reasonable notice damages, and/or reasonable notice damages but analysis of statutory and reasonable statutory and reasonable notice answer the question at all. damages, referencing and reasonable notice damages, referencing legislation and case misses significant legislative or case notice damages, with little depth or damages or does so inaccurately. explaining applicable legislation and referencing appropriate law, but the analysis may lack depth or law references. relevance. relevant common law cases. legislation, legal principles and completeness. Omits relevant case law or legislation or AND AND AND Mentions relevant cases without Mentions cases or legislation without AND Identifies factual similarities in cases adequately discussing their linking them effectively to factual similarities Explains factual but provides a similarities or Tanaka’s situation. and distinctions between referenced similarities and distinctions of cases, limited discussion of their relevance to implications for Tanaka’s recovery. AND No coherent argument or analysis cases and Tanaka’s situation. though minor details may be Tanaka’s claim. Argument/Analysis is presented, or the response is off-topic. common law cases AND Clearly explains the underdeveloped. AND AND AND Argument is logical but may rely too exceptional critical thinking by Constructs a strong argument for heavily on summary rather than critical integrating case law vs to construct a recovery, though the reasoning might lack analysis. compelling argument for recovery in nuance in certain areas. specific terms (days, weeks, or months). AND Demonstrates references Writing is exceptionally clear, well-organized, logical and within the approximate word limit Some key references may be missing or incorrectly cited Minor errors in Accurately references. AND AND Basic Argument: Argument is present but may be vague, unsupported, or overly general. AND Limited use of sources, with notable gaps in Writing is understandable but Writing is clear and organized, with may lack polish or have minor minor lapses in flow or slightly organizational issues. exceeding/under the word limit. or erroneous manner. Fails to reference sources meaningfully. AND Writing is Minimal references incoherent, incomplete, or with frequent errors or omissions grossly exceeds/falls below the word limit. referencing AND AND Writing lacks clarity The response indicates that the and is disorganized, with significant student does not understand the issues in flow and exceeding/under the concepts AND AND is poorly developed, overly simplistic, or lacks sufficient evidence. references them in a completely irrelevant Clarity & Coherence: Writing is somewhat disorganized or unclear, with noticeable issues in word limit. OR provided a response that is mostly structure or exceeding/under the inaccurate word limit. Or the response has an insufficient amount of information to determine the student’s understanding. Question #4 A & B Personal exposure Personal exposure if SNP is an LP Approx. 200-300 words Exceptional 3 points Good 2 points Developing 1 point Insufficient 0 points Criterion Score Correctly and thoroughly Correctly explains Tanaka's Fails to effectively Tanaka's student does not answer the /3 explains Tanaka's personal exposure personal exposure but may lack depth or thoroughness or clarity personal exposure question OR Correctly identifies legal principles /statutory provisions Identifies legal principles and statutory provisions with errors or omissions. Or does not identify the statute at all but does not sufficiently explain does not offer an explanation or the explanation is incorrect OR The analysis demonstrates a basic understanding of the concepts OR AND/OR Correctly identifies 2 legal principles /statutory provisions related to the issues in Q (a) & (b) Correctly explains Tanaka's personal exposure if Sematimba was a LP The analysis indicates a superior understanding of the concepts. The analysis lacks a clear understanding of the concepts the response provides is entirely inaccurate the response has an insufficient amount of information to determine the student’s understanding; not logically explained Clear and organized in a logical fashion References & formatting Exceptional 5 points Very Good 4 points https://d2l.ucalgary.ca/d2l/lms/dropbox/user/folder_submit_files.d2l?db=264206&grpid=0&isprv=0&bp=0&ou=649728 Developing 3 points Marginal 2 points Inadequate 1 point Criterion Score 3/4 4/8/25, 4:53 PM Case Study #3 - SGMA 395 L01-L03 - (Winter 2025) - Business Law for Strategic Decision-Makers - University of Calgary References & formatting Exceptional 5 points Very Good 4 points Developing 3 points Marginal 2 points Inadequate 1 point References & Formatting All content that requires a references is referenced Almost all content that requires references is Most content requiring references is referenced, Some content requiring references is referenced, Citations are rarely or not at all consistently and reference, with minimal omissions. but there are noticeable omissions. but there are significant omissions accurately formatted. AND Criterion Score /5 Or Citations are consistently AND and accurately formatted AND/OR Not in Word or PDF Citations are somewhat Citations are generally AND consistently and accurately formatted but may have a Word (Docx) format few minor errors. AND AND consistent and accurately formatted but contain notable errors. or not McGill guide used AND Citations are inconsistently and inaccurately formatted. AND/OR The document is in Word Times New Roman Word (Docx) format. (Docx) or PDF The document is in Word AND (Docx) format. AND AND 1' margins AND AND Times New Roman font is used. 1.5 spaced Times New Roman font is used, though not consistently. AND Margins are 1' AND AND document is 1.5 spaced AND Times New Roman font is not consistently used or AND/OR Times New Roman font is not used. AND Margins are not 1' AND Spacing does not adhere another font is used to the 1.5 spacing requirement, or the AND document lacks spacing altogether. Margins are not 1' Margins are 1', AND Spacing is inconsistent or does not adhere to the 1.5 1.5 spaced spacing requirement. Writing Quality Exceptional 5 points Very Good 4 points Developing 3 points Marginal 2 points Inadequate 1 point Criterion Score Writing Quality Overall Fluent style with virtually no grammatical or spelling Writing maintains a fluent style with minor room for Writing is generally clear but may lack some fluency Writing lacks fluency, clarity, and organization. 0-1 /5 errors (max 3 minor errors that are not obvious; improvement. and organization. Ideas are conveyed with Ideas are conveyed with ideas clearly & logically conveyed; clarity and logic, with slight areas for enhancement. clarity but may benefit from more logical flow. logical flow. accurate punctuation & quotation marks; Grammar and syntax are mostly accurate, with Grammar and syntax are adequate but contain issues significantly impact readability. minor errors (max 4 minor errors that do not affect noticeable errors uses complete sentences; Clarity & Organization of writing: grammar, syntax, spelling, word count uses academic writing style within the approximate word count range readability) copies of all the cases, CED entries, and Halsbury Laws of Canada entries used in your work as a second attachment. These copies should be in either Word or PDF format. Included Grammar and syntax disorganized. Severe grammar and syntax issues render the text almost incomprehensible. Word count is either excessive or inadequate, Numerous spelling errors. Spelling errors are rare. Employs complete Occasional spelling errors. making it difficult to comprehend. Utilizes complete sentences and maintains More than 5 serious errors; sentences are hard an academic writing style. to follow; inaccurate punctuation; or some sentences and maintains an academic writing style. Writing is extremely incoherent and Frequent spelling errors. obvious and affect flow and readability) Word count is generally within the approximate Copies of Sources (max 5 errors that are Ideas are challenging to follow due to a lack of More than 10 errors; Word count is inappropriate, hindering comprehension. range but may require minor adjustments. Word count is somewhat excessive or inadequate, impacting readability. Exceptional 4 points Very Good 3 points Developing 2 points Marginal 1 point Inadequate 0 points Criterion Score All sources provided Most of the sources provided 3 sources missing 4 or more sources missing No sources provided /4 incomplete sentences Total / 48 Overall Score Level 4 Level 3 Level 2 Level 1 11 points minimum 8 points minimum 5 points minimum 0 points minimum https://d2l.ucalgary.ca/d2l/lms/dropbox/user/folder_submit_files.d2l?db=264206&grpid=0&isprv=0&bp=0&ou=649728 4/4 SGMA 395 CASE STUDY #3 "A GUST TOO FAR" Due by April 11, 2025 at 11:59:59 p.m. 1 CASE STUDY #3 SCENARIO: You are employed as a Claims Analyst at Derecho Digital Inc. (“Derecho”), a Calgary-based marketing company that designs and manages social media campaigns for fitness, wellness, and lifestyle brands across Canada. Derecho’s head office is in Calgary, with a secondary content production studio, an hour away in Canmore. Recently, Derecho received a Statement of Claim from representatives of Aliana Tanaka (“Tanaka”), who is a former employee. From January 1, 2010, to June 1, 2023, Tanaka was employed with Derecho. She was first hired as the Campaign Coordinator for Celebrity & Wellness Accounts. Over time, she rose through the ranks to become Director of Brand Partnerships, a position based in Canmore. Your review of Derecho’s internal records confirms that, as Tanaka states in her Statement of Claim, before joining Derecho she worked as a Community Engagement Manager at Thoth Informatics Ltd., a Calgary-based consulting agency that tracked online buzz for health and fitness companies. While there, Tanaka led a quirky but wildly successful campaign that got a probiotic kombucha brand trending nationally after a pop star accidentally spilled it on live TV. At the time, Derecho was on the lookout for someone with a mix of social savvy and creative hustle to help it break into influencer-driven wellness campaigns. Management saw Tanaka as the perfect fit to lead that push. Derecho offered Tanaka a position in their Canmore office, which she enthusiastically accepted. She relocated from Calgary to Canmore one month before starting work at Derecho. Read the above scenario together with the separately attached Statement of Claim (“003B Case Study 3 Statement of Claim SGMA 395 W2025”) and answer each of the questions as per the instructions below. *** SPECIAL INSTRUCTIONS FOR CASE STUDY #3 *** You are expected to provide specific responses to the questions with reference to established common law principles and applicable legislation. Answers must IDENTIFY, EXPLAIN, AND APPLY ANY APPLICABLE COMMON LAW PRINCIPLE(S), APPLICABLE LEGISLATIVE PROVISION(S), AND/OR RELEVANT CONTRACTUAL TERM(S). ATTENTION & CAUTION: EACH QUESTION IS TO BE ANSWERED BY REFERENCE TO THE STATEMENT OF CLAIM, BUT INDEPENDENTLY OF OTHER QUESTIONS. OTHER THAN THE INFORMATION REFLECTED IN THE SCENARIO AND THE STATEMENT OF CLAIM, NO FACTS IDENTIFIED WITH RESPECT TO ONE QUESTION SHOULD INFORM YOUR ANSWER WITH RESPECT TO ANY OTHER QUESTION. You must properly cite any referenced primary authority (i.e. common law decisions and legislative provisions) and any referenced secondary authorities (e.g. textbooks, encyclopaedic digests). General citations for references to legal principles and secondary sources are also required (i.e. assertions that are not common knowledge must be cited in accordance with the Canadian Guide to Uniform Legal Citation, including principles and propositions of law). Each question has its own specific research and citation requirements. Please be sure to read the associated instructions (e.g. for Questions #3 and #4 only, you may reference cases or legislation from Modules 4, 5, or 6 slides, as specifically outlined in those questions). 2 *** QUESTIONS FOR CASE STUDY #3 *** Analyze each of these independent hypothetical scenarios: 1. QUESTION #1: [3-POINTS 100-150 WORDS APPROX.] The facts stated in Questions #2, #3, #4 are not applicable to this question. Tanaka has a written contract of employment, which includes a termination clause, stating: Derecho Digital employment: Inc. (“DDI”) may terminate your a) at any time for just cause, without notice or pay in lieu; b) at any time and for any reason whatsoever at the sole discretion of DDI upon DDI providing you with the minimum amount of statutory notice or pay in lieu thereof required pursuant to the termination provisions of the Employment Standards Code (Alberta), as amended from time to time. You are not entitled to receive any greater amount of notice, or pay in lieu thereof, at common law. You may terminate your employment by giving DDI at least two (2) weeks' written notice of resignation. DDI may waive this notice, in whole or in part. A) The Chief Risk Officer believes this clause is unnecessary and should be removed from all employee’s contracts going forward. Explain to the Chief Risk Officer what the above clause means. Your explanation is to include a discussion of Tanaka’s rights and specific notice entitlement upon a without cause termination by DDI with reference to the specifically applicable period of notice pursuant to any applicable contractual provision, common law principle, and/or legislation. [3 points, approx. 100-150 words] B) The Chief Risk Officer also wonders if the scope of the clause should be expanded with a view to eliminating any statutory rights under the Employment Standards Code for all future employment contracts. Consider this question by reference to applicable contractual provision, common law principle, and/or legislation. [3 points, approx. 100150 words] RESEARCH NOTE: Your answer must reference any legislation and secondary sources used to formulate your answer. You do not need to cite a common law case for this question. You are allowed to use and reference legislation referred to in any of the Module 004, 005, and 006 Slides - END OF QUESTION 1 - 3 2. QUESTION #2: [5-POINTS APPROX. 350-500 WORDS]: The facts stated in Questions #1, #3, #4 are not applicable to this question. The week before her employment was terminated, Tanaka was overseeing the launch of a high-profile influencer campaign for CoreForm+, a muscle-enhancement supplement produced by one of Derecho Digital Inc.’s major wellness clients. Tanaka informed Derecho’s executive team that the campaign would feature Freja Norstrøm, a Scandinavian fitness model whom she claimed to have met during a wellness expo in Oslo. She reported that Freja had been retained through a European digital talent agency with whom Derecho had not previously worked. Tanaka stated that she and Freja had finalized the influencer agreement over lunch and that she had submitted the signed contract to legal for review. The campaign launched with immediate success, generating strong client feedback and unusually high engagement. However, within days, an industry blog published an exposé questioning Freja’s authenticity. A follow-up article by a freelance journalist reported that Freja was not a real person, but rather an AI-generated persona created and marketed by a third-party content agency based overseas. The story went viral, sparking public criticism that Derecho had knowingly used non-human models to promote unrealistic body standards while falsely suggesting human endorsement. Major wellness publications began running articles questioning the ethics of AI-generated influencers in body-related marketing. Derecho initiated an internal review. It found that no contract had been logged or reviewed by legal or compliance, and that no due diligence had been performed on the talent agency, a required step under company policy. Internal auditors also discovered that the agency had first contacted Tanaka through an unsolicited spam email, and that she had relied entirely on the attached promotional materials, with no independent inquiries or assessments. The lunch Tanaka referred to in her earlier communication raised further questions. A review of the receipt she submitted for reimbursement indicated she dined alone, and surveillance footage from the Oslo venue confirmed no other party joined her. When interviewed, Tanaka stated that she had assumed the individual she had exchanged messages with online was Freja herself, and that the lunch meeting may have been “virtual or rescheduled without her remembering”. She admitted she had not verified the agency’s credentials independently but insisted she “had no reason to doubt them” based on their website and branding. When asked directly about the influencer’s nonexistence, Tanaka replied that she had assumed Freja was using a stage name or digital enhancements, “like most influencers do,” and had not thought to question whether she was a real person. ASSUMING THAT TANAKA HAS NO WRITTEN EMPLOYMENT CONTRACT [i.e. ignore the provision you discussed for Question 1], DDI'S CHIEF RISK OFFICER HAS ASKED YOU TO PROVIDE A BRIEF REPORT THAT ANALYZES WHETHER DDI IS JUSTIFIED IN DISMISSING HER FOR CAUSE. YOU DO NOT NEED TO MAKE ANY ASSESSMENT WITH RESPECT TO DAMAGES, SIMPLY DISCUSS THE TEST AND PRINCIPLES OF “JUST CAUSE” IN RELATION TO THE POTENTIAL TERMINATION OF TANAKA’S EMPLOYMENT. [10-POINTS, APPROX. 500-600 WORDS] RESEARCH NOTE: You must cite at least one (1) legislative provision and two (2) independently researched common law case for this question. The cases cannot be referred to in any slide in the SGMA 395 course. Your answer must also reference any other legislation and secondary sources used to formulate your answer. You are allowed to use and reference legislation referred to in any of the Module 004, 005, and 006 Slides. - END OF QUESTION 2 – 4 3. QUESTION #3 [15-POINTS APPROX. 500-800 WORDS EACH QUESTION]: The facts stated in Questions #1, #2, #4 are not applicable to this question. Derecho’s Chief Risk Officer has received a report confirming that Tanaka was, by all internal metrics, performing well in her role as Director of Brand Partnerships. Approximately twelve months before her dismissal, Elvi Okoye was appointed as Vice-President of Operations, becoming Tanaka’s direct supervisor. Okoye and Tanaka did not get along. While Okoye was openly critical of Tanaka’s communication style and referred to her as "too independent," the record shows Tanaka avoided personal conflict, remained focused on her portfolio, and continued to receive positive internal evaluations. One week before the termination, Okoye phoned Tanaka to ask why a monthly client report had been submitted late. Tanaka responded that the delay had been due to waiting on final input from an external partner, which had been flagged in advance by email. Okoye expressed dissatisfaction with the explanation and called Tanaka to an in-person meeting at Derecho’s Calgary head office. During the meeting, Okoye accused Tanaka of mishandling promotional licensing files during a critical pre-launch period for a major campaign, in direct violation of Derecho’s IP protection protocols. She then told Tanaka she would ensure "everyone in the industry knows you can’t be trusted," and that she would personally see to it that Tanaka would never again be cleared to work with brand-sensitive material. Tanaka was then escorted out of the building by security, in full view of staff on the main floor. As she left, Okoye allegedly shouted, “Have fun working as a fry-cook at Denny’s, Tanaka! You’re built for failure, not for this industry.” Several staff members standing nearby laughed and took cellphone photos. Okoye has since been reprimanded and removed from her oversight of HR matters. Following the termination, Tanaka alleges that she experienced significant mental and emotional distress. According to her treating psychologist, she began therapy in June 2023 and continued regular sessions for approximately fifteen months. Clinical notes describe repeated panic attacks, withdrawal from family, and paranoia related to public exposure and industry blacklisting. The therapist’s report also indicates obsessive thoughts about social collapse linked to a non-existent fungal outbreak, which the doctor attributes to delusional thinking triggered by the circumstances of her termination. Tanaka was prescribed antidepressants and remains under out-patient care. Tanaka filed a Statement of Claim seeking damages for wrongful dismissal, including reasonable notice at common law, and aggravated damages arising from the manner of dismissal and its psychological impact. ASSUME TANAKA HAS NO WRITTEN EMPLOYMENT CONTRACT. DDI’S CHIEF RISK OFFICER IS OF THE VIEW THAT OKOYE WAS NOT JUSTIFIED IN DISMISSING TANAKA FOR CAUSE AND WANTS TO MAKE A SETTLEMENT PROPOSAL. TO DO THAT, SHE NEEDS SOME IDEA OF THE GENERAL VALUE OF TANAKA’S CLAIM. YOU ARE ASKED TO PROVIDE A BRIEF REPORT THAT CONSIDERS TANAKA’S CLAIMS FOR DAMAGES AGAINST DDI AS SET OUT IN HER STATEMENT OF CLAIM. PLEASE: A) STATE THE LEGAL PRINCIPLES FOR EACH SPECIFIC HEAD OF DAMAGES AND APPLY THEM TO THE FACTS OF THE CASE. ANALYZE HOW THE LAW APPLIES TO THE FACTS. YOU DO NOT NEED TO CALCULATE A PRECISE DOLLAR FIGURE FOR ANY PART OF THIS ANSWER. [10 POINTS APPROX. 600 WORDS] RESEARCH NOTE: You must refer to one (1) independently researched common law case for each head of damages. Your answer must also reference any other legislation and 5 secondary sources used to formulate your answer. You are allowed to use and reference legislation referred to in any of the Module 004, 005, and 006 Slides B) REFERRING TO LEGISLATION AND COMMON LAW CASES, ANALYZE WHAT TANAKA MIGHT RECOVER FOR STATUTORY AND REASONABLE NOTICE DAMAGES. YOUR ANSWER MAY BE EXPRESSED IN DAYS, WEEKS, OR MONTHS. YOU DO NOT NEED TO CALCULATE A PRECISE DOLLAR FIGURE FOR ANY PART OF THIS ANSWER. [10 POINTS-APPROX. 600 WORDS] RESEARCH NOTE: You may refer to cases referenced in the Module 006 slides but must fully explain their factual similarities and relevance to Tanaka’s cause of action. You are allowed to use and reference legislation referred to in any of the Module 004, 005, and 006 Slides. You are also reminded that the CED may also reference relevant cases. Your answer must also reference any other legislation and secondary sources used to formulate your answer. - END OF QUESTION 3 - 4. QUESTION 4 [3-POINTS APPROX. 200-300 WORDS]: The facts stated in Questions #1, #2, #3 are not applicable to this question. After settling her lawsuit with Derecho, Tanaka joined a creative collective operating as a general partnership under the name Sematimba Partners. The partnership consists of Tanaka and two other media professionals, Samantha Rosenberg and Chrisjen Avasarala. Together, they produce long-form branded content for online platforms, with each partner overseeing a different aspect of production and sharing profits equally. Their most recent project, Highline Stories, featured a high-profile wellness influencer, Michio Pa, who was filmed walking a tension line across a canyon near Jasper National Park. During filming, Pa lost her balance and fell, suffering serious injuries including a fractured pelvis and concussion. She has since filed a lawsuit against Sematimba Partners, alleging the partnership failed to provide appropriate safety protocols, including proper rigging, spotters, and on-site medical personnel. Tanaka is concerned about her personal exposure to liability, as she was not directly involved in the shoot and had no knowledge of the specific safety measures (or lack thereof) used during production. She has now asked you to clarify what this lawsuit could mean for her personally, and whether the nature of the business organization makes a difference. QUESTION: Please identify and explain: a) The extent of Tanaka’s personal exposure to any liability that might arise from Pa’s injuries, especially given she was not involved at all in the project in which Pa was injured. b) The extent of Tanaka’s personal exposure if Sematimba Partners had originally been constituted as a limited partnership (i.e. Sematimba LP), and Tanaka was a limited partner whose responsibilities included production design and location coordination for the Highline Stories project. RESEARCH NOTE: Your answer must reference at least two (2) legislative provisions in additional to any secondary sources used to formulate your answer. You are allowed to use and reference legislation 6 referred to in any of the Module 004 and 005 Slides. You do not need to cite a common law case for this question. - END OF QUESTION 4 - *** ADDENDUM INSTRUCTIONS FOR CASE STUDY #3 *** Note: Be aware of your Academic Integrity obligations! • Your work must include two types of citations: o General citations for any legal principles, statutes, or secondary sources (CED, Halsburys, Swan) that support your discussion; and, o Legislation or Case law citations as specifically identified in the scenario questions. All citations must be properly formatted according to the Canadian Guide to Uniform Legal Citation (McGill Guide available on Westlaw). Failure to include either type of citation will impact your grade. Providing false citations will result in a zero grade for both the assignment and the course. • To receive full points, you must: a) Submit your completed paper via D2L Dropbox in Word format (as noted below, supporting case law authorities may be PDFs and CanLii links); b) Write in complete sentences; c) For each question, use headings that identify the question number you are answering and treat it like an essay; d) Identify and explain any legislative section, common law principle, test, or contractual provision that may be relevant to each of the Chief Risk Officer’s questions. e) Apply any common law principle, test, or contractual provision to the facts in a manner that reflects you recognize the problem's relevant facts, the relevant legal issues and can appropriately analyze how those issues would be resolved under relevant principles of Canadian law. f) Explain why any researched case(s) or legislation is of precedential value (i.e. simply referring to a case without explaining its relevance is not sufficient to be awarded marks). g) The following primary or secondary sources are not acceptable for the purposes of this assignment: ▪ Lecture slides (you cannot cite the lecture slides as a source of information for your paper); ▪ Cases identified in the lecture slides, except as permitted in specific questions. 7 ▪ Websites outside of Canlii, Westlaw, Quicklaw, or the Alberta Courts website. h) Include copies of all cases, CED entries, Halsbury’s entries, or other secondary sources used in your work as a second attachment. These copies should be in either Word or PDF format. Instead of Pdf copies cases. For cases, you may also use CanLII citation links in the footnotes (e.g. ) but no other links will be accepted). i) Type and 1.5 space your submission. Times New Roman, 12-point font. 1" margins; j) Check your spelling, grammar, clarity, and formatting (all of these count, and marks will be deducted for typos, a lack of clarity, and a failure to apply proper formatting); k) Reference using footnotes using a format set out in the McGill Guide https://library.ucalgary.ca/guides/mcgillguide. Also, the entire guide is available on Westlaw, which was identified in-class. You do not need a bibliography. • You are only permitted to use AI technology in order to correct or evaluate grammar or writing structure. You are prohibited from using ChatGPT or any similar AI language model to compose any portion of your submitted assignments. Doing so will be considered plagiarism, as further defined in the University of Calgary’s Student Academic Misconduct Policy. Be aware that your paper may be reviewed for compliance with this prohibition. • You are prohibited from sharing the assignment instructions and your work with anyone or anything (AI), online or otherwise. Failure to comply will result in disciplinary action as outlined in the University of Calgary's Student Academic Misconduct Policy. 8 
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