Michael Webster: Defining legal relationships in Ontario and Problem solving

bizopcaDr. Michael Webster has an interesting background.

Michael runs a very influential weblog called the The Bizop News: Misleading Advertising Law. Some of the topics he covers are: fraud, ponzi schemes, franchising, lawsuits, business opportunities, MLMs, due diligence, and recovery of losses. He is very active cornerstone member of Blue MauMau and the AAFD.

Many people, however, fail to appreciate how deep Michael’s fraud and contract knowledge goes.

Recently he helped me out by drawing attention to a very worthwhile charity I am involved in, The David Busby Street Centre in Barrie, Canada (see Get a Date with Paul Henderson).

Legal Relationships: There are only 3 types of commercial relationships in Ontario, Canada and their related branch of laws. NOTE: 100% of all relationships are one of these three, there are no exceptions:

  1. employer/employee (labour law),
  2. independent contractor (contract), and
  3. franchisee/franchisor (Arthur Wishart Act (Franchise Disclosure), 2000).

Each of the 3 are defined in specific statute and regulation or British common law practice.

Some organizations do not have a very clear idea which of the 3 classes they are involved in in a specific situation. This can be done intentionally (as an advantage to the dominant party, acting opportunistically) or unintentionally (they’re just ignorant of the law).

However, even if an organization is ignorant of the law, their directors can be held liable for breaches of any of the three classes of law.

If the office holders are acting outside of their duties, the liability falls on them as individuals.

In 1998, I founded the Canadian Alliance of Franchise Operators, CAFO which worked to help Ontario’s 40,000 franchisees. Some franchise systems ignore the Wishart Act by misrepresenting themselves as independent contractors, licensees, dealers, etc. The penalities for showing contempt for the Ontario law (when challenged) are very substantial.

Michael and me: Michael served on CAFO’s board as Chief Counsel for several years. His generosity, support and ability to instruct (PhD & LLB) have always been very appreciated. As a franchise lawyer he is often called upon to diagnose what category a specific relationship is actually under Ontario law.

Documents may say one thing but the actual day-to-day duties may actually suggest the relationship is something else. For example, a document may say it is an independent contract but the duties and funding may be judged to be an employee/employer relationship.

Michael is also an excellent mediator and his former partners know a good deal about Ontario labour law, I recall. I always look forward to working with Michael and recommend him to anyon in a legal pickle.

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