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What is a liability waiver?
A liability waiver is an exclusionary clause that is drafted to protect a party from liability by excluding liability altogether or limiting liability. Also known as “limitation of liability” clause or “waiver”. If taking part in the activities involved in your business could lead to any risk of injury for the patrons of your business, as a business owner, you will want your customers to sign a liability waiver. This blog post is intended to give a brief overview of liability waivers and to give business owners some tips on how to approach this issue. Standard Form Contracts Standard form contracts are massed produced documents that often include the liability waiver and can be the document that you get every customer to sign. There are many advantages to a standard form contract. The standard form means that you will not have to negotiate specific terms with every customer that comes to your business, this leads to reduced costs and increased certainty in the terms. These are very commonplace in startup companies and should be used correctly to ensure that the liability waiver is enforceable. As Professor Girgis has written[1], the standard form contracts present the customer with a “take it or leave it” agreement, and the lack of negotiation between the patron and the company brings into question whether the clause should be enforceable. How to ensure your waiver is enforceable First, it is well established law that reasonable notice needs to be given to patrons. Practically, this refers to when you bring the liability waiver to the attention of the patron and how you go about bringing this to their attention.[2] The more onerous the clause, the more notice you should give to the patron. If the document waives you of liability even when you, the company, is negligent, you will need to bring a considerable amount of early notice to the patron. In a British Columbia decision involving a bike park[3] the company’s waiver was enforced and protected the company from any liability. The notice given in this case involved the waiver itself, but also signs around the park written in bold saying “STOP – READ THIS” to bring extra attention to the waiver of liability. Within the document, the bike park used yellow boxes, bold print and larger letters in places to draw attention to the important details. Further, the language used in the document was clear and blunt, and left no doubt that the typical adult could understand the waiver. In another British Columbia case[4], however, signage did not help a ski resort from escaping liability. An important distinction to be made here is that there was not a signature required for the waiver of liability. When a liability waiver does not require express signature or a document that the patron’s attention can be drawn to, businesses are required to meet a higher bar for reasonable notice. In other words, there is no magic formula to ensuring that your waiver will be enforceable and certainly protect you from any liability. Concluding Recommendations In order to have an effective waiver of liability you need to use plain language and to bring sufficient notice to your patrons. The language used should be understandable to any person and should avoid unnecessary legal jargon. Further, it should be a company policy to affirm with the customer that they have had enough time to read the contract. If an exclusionary clause ends up being challenged in court for its enforceability, the outcome is ultimately unpredictable. However, a prudent business owner will follow the two basic tips set out in this post: use clear language, and ensure the customer has the time to read the contract. _______________ [1] Jassmine Girgis, “Incorporating Waivers of Liability into Contracts” (May 11, 2020), online: ABlawg, http://ablawg.ca/wp-content/uploads/2020/05/Blog_JG_Apps.pdf [2] See Thornton v Shoe Lane Parking Limited, [1970] EWCA Civ 2, [3] Jamieson v. Whistler Mountain Resort Limited Partnership and Gravity Logic Inc., 2017 BCSC 1001, [4] Apps v Grouse Mountain Resorts Ltd., 2020 BCCA 78 (CanLII)
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Where are all the BIPOC Entrepreneurs in Canada? Entrepreneur. What image comes to mind when you think of that word? Perhaps a Zuckerberg-esque, T-shirt wearing tech genius in his mid-twenties. Maybe a duo of university drop-outs utilizing their computer programming skills to fulfill their dream of making computers small enough for people to have in their homes and offices. The image you envision when you think of an entrepreneur likely doesn't borrow traits from Madam C.J. Walker, whose hair-care business led to her becoming the first American woman millionaire. You most likely don't picture Michael Jordan, who used his success as a basketball player to build a best-selling footwear brand. Steve Jobs. Elon Musk. Jeff Bezos. Why is it that the figure of the white male has become the pinnacle image associated with entrepreneurship? In 2013, economist Ross Levine and London School of Economic professor Yona Rubinstein released a working paper that explored the demographics, personality traits and earnings of entrepreneurs. They found that entrepreneurs are "disproportionately white, male, and highly educated". Big surprise. While entrepreneurial activity is on the rise, Black, Indigenous and People of Color ("BIPOC") entrepreneurs remain underrepresented within the startup sphere. This underrepresentation of BIPOC entrepreneurs extends beyond the borders of any one country in particular. In Canada, although 1.2 million Canadians identify as Black, a 2015 survey conducted by Black in Canada found that there are only 2,000 Black-owned businesses of "significant scale" within our borders. Strikingly, I was unable to find any published statistics regarding the prevalence of Indigenous-owned businesses in Canada. It is obvious that there is a systemic issue that results in the underrepresentation of BIPOC entrepreneurs within the start-up sphere in Canada. The question remains, however, as to why such under-representation exists? Well for one, you need money to start a successful business. One of the most significant challenges that BIPOC entrepreneurs face is securing capital to back their endeavors. Many early-stage growth companies and start-ups receive their financial backing in the form of venture capital. Due to the reliance many growth companies have on venture capital, venture capitalists act as gatekeepers for the success of start-ups. Although diverse founding teams, defined as a group with at least one founder with a non-white perceived ethnicity, have earned a 3.26x median realized multiple on IPOs and acquisitions, 30% more than the 2.5x realized multiple for all white founding teams, there is still a severe funding gap between BIPOC and white entrepreneurs. For example, venture capital funding for Black American women entrepreneurs accounted for 0.2 percent of all venture funding in the US in 2018. Again, I was unable to find comparative statistics regarding the financing of Indigenous Canadians. Despite the clear financial evidence indicating that investing in companies founded by BIPOC entrepreneurs is a good move, the funding gap between white and BIPOC-led companies is prevalent. This can be attributed to unconscious bias. Venture capital investment decisions are likely to be subconsciously influenced by familiarity bias, or the preference of an individual to remain confined to what is familiar to them. If an entrepreneur reminds a venture capitalist of Zuckerberg, Musk, or Bezos, familiarity bias creeps in to increase their perceived trustworthiness and the view that the company is more likely to be a sound investment. The geographic remoteness of many Indigenous populations further exacerbates the problems BIPOC entrepreneurs face when trying to obtain capital to finance their businesses. Statistics Canada indicates that around 60% of indigenous peoples live in rural areas. The vast majority of rural Indigenous communities do not have a bank within their boundaries. Collectively, the four major banks in Canada have less than 50 aboriginal branches, banking outlets, or banking centres located on-reserve. Section 89 of the Indian Act prohibits the use of reserve land as collateral, and banks are reluctant to provide loans if assets cannot be seized in the case of a default. As you can see, there are a number of factors that contribute to the racial funding gap for entrepreneurs. Oh yeah, and there's racism. Although sometimes not overtly obvious, systemic, anti-BIPOC racism resulting from biases is ingrained in the business sphere. It is easy to quantify the barriers that BIPOC entrepreneurs face in the financial realm. However, in addition to the barriers in obtaining capital to back their ventures, BIPOC entrepreneurs face a multitude of social barriers that are difficult to quantify. Building a strong network of business personnel tends to lend an image of legitimacy to an entrepreneur. If you surround yourself with successful people, you are more likely to be perceived as successful. However, the systemic anti-BIPOC racism that exists in offices and executives suites restricts BIPOC access to high level positions within companies. For example, a Ryerson University study on diversity of companies in Vancouver, Montreal, Calgary, and Toronto was released in June and indicated that Black people held only 13 out of 1,639 board positions at the companies involved in the study. If your access to executive positions within a Company is restricted, it is difficult to build a network of high-level, well-respected business personnel. Additionally, as a direct result of inequitable government support and funding to indigenous communities, only 48% of on-reserve indigenous peoples graduate high school. In a society where the corporate world relies so heavily on educational background, social access to corporate networking for Indigenous business-owners is heavily restricted and largely absent. Systemic racism, combined with statistics that show that BIPOC entrepreneurs are less likely to receive financial support at the venture capital level, have made the start-up world as inaccessible as ever. In the aftermath of George Floyd's murder at the hands of Minneapolis Police Officers, difficult conversations about systemic racism in the entrepreneurial world are no longer avoidable. Instead of merely taking performative measures such as posting a black square or writing about support for the Black Lives Matter movement on their social media, entire industries must be challenged to review how their actions contribute to the underrepresentation of BIPOC entrepreneurs in the start-up sphere. Rather than echoing Doug Ford's sentiment that "we don't have the systemic, deep [racist] roots that the [US] has had for years”, Canadians need to recognize that Canada is not immune to the systemic racism that plagues society and stifles BIPOC entrepreneurship in the US. Innovation is a key facet of entrepreneurship. To function successfully, innovation demands inclusivity. Taking time to inform yourself of the barriers that BIPOC entrepreneurs face is a good first step. After reading this post, I encourage you to research BIPOC entrepreneurs who have been successful in spite of the multitude of barriers they face in obtaining their success. I have provided a list of BIPOC entrepreneurs below. Hopefully, in going through this list, the image that you perceive when you hear the word "entrepreneur" will be changed. Navigating the Non-Profit Scene in Alberta
The Charity and not-for-profit sector is a vital and growing part of the Canadian economy. In 2017, economic activity in the non-profit sector totalled $169.2 billion, representing 8.5% of Canada's GDP.[1] Despite the large impact non-profit corporations have on the Canadian economy, the organizational legislation for non-profit corporations has been largely unaltered in Alberta since the 1920's.[2] This has led to a fragmented and potentially confusing landscape for keen social entrepreneurs looking to make their mark in the not-for-profit scene. This article will attempt to demystify the process of incorporating a non-profit in Alberta by outlining the different options a new organization has to incorporate. Different Ways of Creating a Non-Profit Organization in Alberta Depending on the purpose of the organization, an applicant may choose from any of the following pieces of legislation to incorporate a non-profit in Alberta: (i)Companies Act, RSA 2000, c C-21; (ii)Societies Act, RSA 2000, c S-14; (iii)Canada Not-for-Profit Corporations Act, SC 2009, c 23; (iv)Business Corporations Act, RSA 200, c B-9; or (v)Cooperatives Act, SA 2001, c C-28.1. There is no single, universal best way to incorporate a non-profit. The path a start-up non-profit takes will depend on its unique objectives and needs. The sheer amount of options that an applicant has can lead to confusion. In order to offer some clarity, the features, advantages, and disadvantages of incorporation under the Companies Act, Societies Act, and the Canada Not-for-Profit Corporations Act (the three most common ways of incorporating a non-profit) will be further outlined. (i)Incorporation under the Companies Act Non-profits corporations created under the Companies Act are formed to promote art, science, religion, charity or other similar endeavors or for promoting recreation for their members.[3] A non-profit corporation can operate in almost any way; however, it must operate on a cost-recovery basis and cannot distribute profits to its shareholders or members.[4] There are two types of non-profits that exist, (a) private, and (b) public. a.Private non-profit corporation This structure places limits on the number of shareholders / members, the number of shares or membership transfers, and puts restrictions on inviting members of the public to subscribe for shares in the company. b.Public non-profit corporation Under this structure there are no restrictions with respect to the number of shareholders / members. However, there are continuous reporting obligations. These organizations typically obtain most of their financial support through donations received from the public. The main disadvantage of the Companies Act is that it is more complex than the Societies Act.[5] A company must decide if it will act as a private or public company. If it does operate as a public company it faces more extensive financial reporting requirements. (ii)Incorporation under the Societies Act A society is an incorporated group of five or more people who share a common recreational, cultural, scientific, or charitable interest.[6] According to the Government of Alberta it is the most used method of incorporating a non-profit, likely due to the fact that it is the simplest and cheapest way to incorporate.[7] The major advantages of a society are that: i)a member of a society may not be held responsible for the debts of the society; ii)the society can enter into contracts as an entity; and iii)a society is able to apply for government grants. The major disadvantage of a society is that it is not allowed to engage in any type of ongoing business operations.[8] An organization must consider if part of its model will include engaging in a trade or business, such as a second-hand store. A society also cannot distribute property among its members during its lifetime.[9] (iii)Incorporation under the Canada Not-for-Profit Corporations Act A start-up may determine that it wishes to incorporate federally rather than provincially. If it wishes to do so, it can incorporate under the Canada Not-for-Profit Corporations Act ("NFP"). This is typically only advised for companies which wish to operate nationally and require name protection across Canada. Even if a company intends to operate in more than one province, it can still incorporate as a non-profit in Alberta and then register in the other provinces it intends to do business in. This is often the simpler and quicker option rather than incorporating federally.[10] Similar to the Companies Act, the NFP distinguishes between two types of not-for-profit corporations: (a) Non-soliciting corporations, and (b) soliciting corporations. A company will be designated as a soliciting corporation if it receives revenues from public sources in excess of $10,000.[11] Non-soliciting corporations is the residual category which every other corporation falls under in the Act.[12] ____________________ [1] https://www150.statcan.gc.ca/n1/daily-quotidien/190305/dq190305a-eng.htm [2] David G Roberts, "Charitable and Non-Profit Corporations in Alberta - an update on legal and tax issues" (1989) 27:3 Alberta L Rev 476 at 477. [3] Companies Act, RSA 2000, c C-21, s 200(1) [4] Ibid. [5] Ross Swanson, "Incorporating a Not-For-Profit Organization" Duncan Craig LLP (17 January 2018), online (blog): < https://dcllp.com/blog/2018/01/17/incorporating-a-not-for-profit-organization/>. [6] Societies Act, RSA 2000, c S-14, s 3(1). [7] Alberta, Culture and Tourism, Incorporation and Other Options - Supplemental Handout Package (Alberta: Culture and Tourism, 2015) at 5, online: <http://boardleadershipcalgary.ca/wp-content/uploads/2015/04/Handouts-BL-Calgary-Incorporation.pdf>. [8] Supra Note 6. [9] Ibid, s 4(1). [10] Ibid at 10. [11] Canada Not-for-Profit Corporations Act, SC 2009, c 23, s. 5(1). [12] Wayne D Gray, "A Practitioners Guide to the New Canada Not-for-Profit Corporations Act", (2010) 89 Can B Rev 141 at 145. Employment Agreements
One of the keys to a successful start-up venture is hiring the right employees. An important part of the hiring process involves drafting an employment agreement. A good employment agreement provides a written account of the agreement between the employee and the Start-up and affords the parties a clearer understanding of their duties, responsibilities, and obligations to each other in their employment relationship. Here are some key issues to consider when drafting a strong employment agreement: Consideration is Important: An employment agreement is a contract, and all contracts require consideration. An employment agreement entered into as a condition of the individual being offered employment is enforceable, whereas an employment agreement enter into once the employee has commenced work must be supported by fresh consideration.[1] As such, it is very important that an employment agreement and any ancillary contracts be given to an employee candidate as part of the offer of employment, failing to do so may leave the employment agreement unenforceable.[2] Keep it Simple: Life at an early-stage start-up can be turbulent, employees will likely encounter changes in the nature and character of their work as time goes on. In light of this, the description of the job duties found in your start-up’s employment agreement should be kept simple and general as possible as courts have been willing to rule that unanticipated changes in employment responsibilities can constitute constructive dismissal.[3] Having the employment agreement expressly provide for the employer’s power to change the employee’s position, duties, and responsibilities from time to time can provide additional protection to the start-up.[4] Compensation: The employment agreement should set out monthly or annual salary and should reference any stock option grants if they exist. It is important that any mention of additional compensation, such as a bonus, should be clearly stated to lie in the dole discretion of the board of directors – bonus’s may be earned but there may not be enough money to reliably pay it.[5] Termination: Unfortunately, not all employees will work out and the employment relationship will have to be terminated. Employers have an implied contractual obligation to give employees proper notice of termination of the employment relationship unless there is “just cause” for immediate dismissal.[6] Since “just cause” presents a very high legal bar to pass, it is advised that the employment agreement prepare for a “without cause” situation.[7] There are two legal regimes for determining proper notice – the relevant provincial Employment Standards Act and the common law. The relevant provincial Employment Standards Act will provide notice minimums that must be adhered to and cannot be contracted out of, whereas the common law provides for what is known as “reasonable notice”. Reasonable notice will typically exceed the minimum prescribed by statute and are determined by factors such as the character and length of service, and the employees age and prospects for future employment.[8] If the employer and employee have previously agreed on the length of notice to be given, i.e. a written employment agreement with express notice terms, then those terms will generally govern provided they comply with statutory minimum notice requirements. Generally, an employer can elect whether to provide “working notice” or whether to end the working relationship immediately by providing the employee with a lump sum equivalent to the notice period that is, a payment "in lieu" of notice.[9] In light of the above, a termination clause in an employment agreement should:[10]
Restrictive Covenants: Non-Competition Provisions: A non-compete clause is a clause under which an employee agrees not to enter into or start a similar profession or trade in competition against the employer. These clauses are notoriously hard to enforce due to courts often viewing them as an unreasonable restraint of trade.[11] Practically, you may have an easier time enforcing these clauses if:[12]
Non-Solicitation Provisions This kind of provisions bar the ex-employee from contacting the stat-up’s current employees, investors, customers, business partners or suppliers in connection with a rival business. These are more reliable than non-compete provisions but can still be struck down if too broad. Practical solutions include:[13]
________________________ [1] Bryce C. Tingle, Start-up and Growth Companies in Canada: A Guide to Legal and Business Practices, 3rd ed (Canada: LexisNexis Canada Inc, 2018) at 127 [Tingle]. [2] See Holland v. Hostopia.com Inc 2015 ONCA 762. [3] See Ferdinandusz v. Global Driver Services Inc, [1998] O.J. No. 4225. [4] Tingle, supra note 1. [5] Ibid at 142. [6] Peter M Neumann and Jeffrey Sack, eText on Wrongful Dismissal and Employment Law (2020), Lancaster House, 2012 CanLIIDocs 1 [Neumann]. [7] Tingle, supra note 1 at 128. [8] Neumann, supra note 6. [9] Ibid. [10] Tingle, supra note 1 at 129-30. [11] See Elsley Estate v JG Collins Insurance Agencies Ltd., [1978] S.C.J. No. 47. [12] Tingle, supra note 1 at 131-34. [13] Ibid at 135-36. |
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