FOREWORD

Canada ranks next to the United Kingdom as the greatest customer for United States products and is by far our leading source of imports. While Canada possesses a population of only 11,000,000, United States exports to that country in 1937 ($509,508,000) exceeded those to France, Germany, Belgium, and the Netherlands combined, and amounted to more than the total to our eight leading Latin American markets. The vital interest which American business men have in Canada, and Canadian business men have in the United States, is very evident from the value and variety of products annually exchanged, particularly when coupled with the fact that, as of December 31, 1937, United States capital (long- and short-term) invested in Canada, according to estimates of the Finance Division, Bureau of Foreign and Domestic Commerce, totaled $3,667,000,000 and Canadian investments in the United States $1,226,000,000.

Although the common law of England is the foundation of the jurisprudence in both the Dominion and Provincial spheres, except in Quebec which derived its legal system from the French codes, many variations have developed, as in the United States, in consequence of legislative enactments adjusting the commercial law to local and modern conditions.

It is believed, therefore, that a study devoted to a discussion of the principal Canadian commercial laws should be of special interest to the many firms already selling in Canada, as well as to those who for the first time contemplate entering that market.

In the preparation of this publication, the author acknowledges the cooperation of the office of the United States commercial attaché in Ottawa and the consular offices in the capitals of the Canadian Provinces.

JUNE 1938.

ALEXANDER V. DYE, Director, Bureau of Foreign and Domestic Commerce.

VIII

TRADING UNDER THE LAWS OF CANADA

INTRODUCTION

CANADA'S STATUS IN THE BRITISH EMPIRE

Since the enactment of the British North America Act by the British Parliament in 1867, there has been a gradual development of Canada's status in the British Empire. Instructions issued in 1878 provided that the Governor General of Canada, with a few exceptions, should act upon the advice of his Ministers. Further progress toward nationhood was evident in the successive Colonial Conferences and Imperial Conferences (as these assemblies for the discussion of Empire problems and policies were termed subsequent to 1907).

The departures from features of colonial status became more evident when the Prime Minister of the United Kingdom served as President of the Imperial Conference of 1911 instead of the Colonial Secretary, as henceforth such meetings were viewed as conferences between the Government of the United Kingdom and the Governments of the self-governing Dominions. In 1917 the British Prime Minister called into operation the Imperial War Cabinet which included the five ministers of the British War Cabinet, the Prime Ministers of the self-governing Dominions, and a representative of India, who met on terms of equality, acting in cooperation and responsible to their respective parliaments. Recognition of the Dominions as nations by foreign powers occurred when they became signatories to the Treaty of Versailles and members of the League of Nations.

The movement toward full recognition reached its climax in the Imperial Conference of 1926 when the present status of Canada as well as that of the other self-governing Dominions was clearly defined. The Inter-Imperial Relations Committee in its report recommended that the Governor General should in the future be regarded as the personal representative of the Crown rather than as an official of the Government of Great Britain, and that the Dominions might have their own representatives in foreign countries. The conference endorsed the following definition contained in the committee's report as to the relative position of Great Britain and the Dominions: "They are autonomous communities within the British Empire, equal in status, in no way subordinate one to another in any aspect of their domestic or external affairs, though united by a common allegiance to the Crown, and freely associated as members of the British Commonwealth of Nations."

In accordance with her status as a nation, a High Commissioner for Canada represents Canada in London and a High Commissioner for Great Britain represents the British Government in Ottawa, and diplomatic representatives have been established in several foreign countries. Since 1930 Canada has maintained a legation in Washington and the United States a legation in Ottawa.

STATUTE OF WESTMINSTER

Legislative recognition of the changed status of the Dominions is contained in the Statute of Westminster 1 enacted by the British Parliament in 1931 for the purpose of giving effect to the resolutions of the Imperial Conferences. The Statute provides that no law and no provision of any law made after the commencement of this act by the Parliament of a Dominion shall be void or inoperative on the ground that it is repugnant to the law of England or to any existing or future act of Parliament of the United Kingdom, and the powers of the Parliament of a Dominion shall include the power to repeal or amend such acts insofar as they form part of the law of the Dominion, and further that the Parliament of the United Kingdom cannot legislate without the request and consent of the Dominion. However, it is provided that nothing in the Statute shall be deemed to alter in any manner the British North America Acts which define the legislative competence of the Parliament of Canada and of the legislatures of the Canadian Provinces.

INTERNATIONAL STATUS

The attainment of nationhood by Canada has likewise been emphasized in decisions of the Canadian Supreme Court at Ottawa and of the Judicial Committee of the Privy Council in London. Section 132 of the British North American Act of 1867 provides that: "The Parliament and Government of Canada shall have powers necessary or proper for performing the obligations of Canada or of any Province thereof as part of the British Empire toward foreign countries arising under treaties between the Empire and such foreign countries." Originally the only class of treaty which would bind Canada was considered to be a treaty by Great Britain as provided for by section 132. The Judicial Committee in the Radio Reference case in 1932 stated: "This idea of Canada as a Dominion being bound by a convention equivalent to a treaty with foreign powers was quite unthought of in 1867. It is the outcome of the gradual development of the position of Canada vis-à-vis the mother country Great Britain which is found in these later days expressed in the Statute of Westminster."

3

In the Labor Reference cases to determine the validity of certain labor statutes of Canada passed in 1935 by the Dominion Parliament in which the titles recited that they were enacted in accordance with conventions adopted by the International Labor Organization

122 George V, ch. 4. December 11, 1931.

2 Radio Reference (1932) A. C. 304.

3 Labor Reference Case (1937) A. C. 326 (Re Weekly Rest in Industrial Undertakings Act, The Minimum Wages Act, and The Limitation of Hours of Work Act, 1935).

of the League of Nations in accordance with the Labor Part of the Treaty of Versailles of June 28, 1919, the Judicial Committee asserted that: "The obligations are not obligations of Canada as part of the British Empire, but of Canada by virtue of her new status as an international person, and do not arise under a treaty between the British Empire and foreign countries. This was clearly established by the decision in the radio case (1932) A. C. 304, and their Lordships do not think that the proposition admits of any doubt."

*

* *

These labor statutes were held ultra vires of the Dominion Parliament solely on the principle that this legislation came within the classes of subjects assigned exclusively to the legislatures of the Provinces by section 92 of the British North America Act, viz., property and civil rights in the Province. The decision pointed out that: " no further legislative competence is obtained by the Dominion from its accession to international status, and the consequent increase in the scope of its executive functions. * There is no existing constitutional ground for stretching the competence of the Dominion Parliament to keep pace with enlarged functions of the Dominion executive. * It must not be thought that the result of this decision is that Canada is incompetent to legislate in performance of treaty obligations. In totality of legislative powers, Dominion and Provincial together, she is fully equipped. But the legislative powers remain distributed and if in the exercise of her new functions derived from her new international status she incurs obligations they must, so far as legislation is concerned when they deal with Provincial classes of subjects, be dealt with by the totality of powers, in other words, by cooperation between the Dominion and the Provinces."

THE CONSTITUTION OF CANADA

The British North America Act of 1867 is the fundamental law of the Canadian Constitution, whose purpose is to define the respective powers of the Dominion and Provincial Governments. The many unwritten conventions of the British Constitution are also recognized as a part of the Canadian Constitution but with the important distinction that the former is unitary and the latter Federal. The Dominion Government has exclusive legislative power in all matters except those specifically delegated by the British North America Act to the Provincial legislatures. In this respect the Canadian Constitution is the converse of that of the United States.

The legislative competence of the Dominion and Provincial Governments has recurrently required judicial determination to prevent encroachment by the respective legislative bodies on the powers granted to the other by the British North America Act. Unlike in the United States, where the Supreme Court acquires jurisdiction only in actual cases and controversies, the Supreme Court of Canada. may render advisory opinions on the constitutionality of legislation submitted to it by reference of the Governor-General in Council. A series of reference cases involving legislation enacted by the Dominion Parliament during 1934 and 1935 were decided by the Supreme Court of Canada in 1936 and appealed to the Judicial

In accordance with her status as a nation, a High Commissioner for Canada represents Canada in London and a High Commissioner for Great Britain represents the British Government in Ottawa, and diplomatic representatives have been established in several foreign countries. Since 1930 Canada has maintained a legation in Washington and the United States a legation in Ottawa.

STATUTE OF WESTMINSTER

Legislative recognition of the changed status of the Dominions is contained in the Statute of Westminster1 enacted by the British Parliament in 1931 for the purpose of giving effect to the resolutions of the Imperial Conferences. The Statute provides that no law and no provision of any law made after the commencement of this act by the Parliament of a Dominion shall be void or inoperative on the ground that it is repugnant to the law of England or to any existing or future act of Parliament of the United Kingdom, and the powers of the Parliament of a Dominion shall include the power to repeal or amend such acts insofar as they form part of the law of the Dominion, and further that the Parliament of the United Kingdom cannot legislate without the request and consent of the Dominion. However, it is provided that nothing in the Statute shall be deemed to alter in any manner the British North America Acts which define the legislative competence of the Parliament of Canada and of the legislatures of the Canadian Provinces.

INTERNATIONAL STATUS

The attainment of nationhood by Canada has likewise been emphasized in decisions of the Canadian Supreme Court at Ottawa and of the Judicial Committee of the Privy Council in London. Section 132 of the British North American Act of 1867 provides that: "The Parliament and Government of Canada shall have powers necessary or proper for performing the obligations of Canada or of any Province thereof as part of the British Empire toward foreign countries arising under treaties between the Empire and such foreign countries." Originally the only class of treaty which would bind Canada was considered to be a treaty by Great Britain as provided for by section 132. The Judicial Committee in the Radio Reference case in 1932 stated: "This idea of Canada as a Dominion being bound by a convention equivalent to a treaty with foreign powers was quite unthought of in 1867. It is the outcome of the gradual development of the position of Canada vis-à-vis the mother country Great Britain which is found in these later days expressed in the Statute of Westminster."

3

In the Labor Reference cases to determine the validity of certain labor statutes of Canada passed in 1935 by the Dominion Parliament in which the titles recited that they were enacted in accordance with conventions adopted by the International Labor Organization

122 George V, ch. 4. December 11, 1931.

2 Radio Reference (1932) A. C. 304.

3 Labor Reference Case (1937) A. C. 326 (Re Weekly Rest in Industrial Undertakings Act, The Minimum Wages Act, and The Limitation of Hours of Work Act, 1935).