Responsibilities of Directors in Public Companies
Discuss about the Law, IT and Business Environment.
Public Organization:
This kind of business enterprises are owned and operated by a group of individuals for the benefit of the general public. Therefore, the directors are responsible for all the debts and liabilities incurred during the course of business (Alidousti et al. 2016). In case of a public company, the control of the asset of the business lies upon the directors. However, in certain cases, the director is at the authority to delegate his responsibilities to other employees on hire. It is noteworthy to mention here that, the director of a public company is entrusted with various responsibilities in relation to business liabilities. Therefore, the director of a public business organization is at the responsibility to take necessary steps for the purpose of promoting the success of the company. It is evident that in a public company the directors are at the responsibility to take relevant decisions regarding tax matters (Rayton, Brammer and Millington 2015). However it is important to act with due diligence and care and make the decisions for the benefit of the company by avoiding conflict of interests.
It is worth stating that a director of a private company has various duties and responsibilities towards the company. In this assignment the chosen private retail organization is Al Diyafa Holding. It is important for the directors of the Al Diyafa Holding to act in good faith and involve in activities that will promote organizational development in the future (Dorobantu, Kaul and Zelner 2017). It is worthwhile to mention here that private companies involve independent directors. Therefore, it is worth stating that special responsibilities are entrusted on such independent directors in order to ensure the fact that the decisions taken during the course of business are for the best interest for the company. The responsibilities regarding fulfilling the position of the lead director lies upon such independent director and therefore he is at the obligation to ensure that the management policies are applied accordingly (Kaiser and Buxmann 2017). Ensuring swift accountability of management is one of the major responsibilities of the independent directors (Weber et al. 2016). The most important duty of the independent directors is to involve themselves into the processes of mergers and acquisitions for the benefit of the company.
From the very beginning, voluntary organizations has been performing various functions for the benefit of the society and the nation. For the purpose of achieving their goals towards individual benefit, the directors are at the authority to file petition against illegal activities of the bureaucrats and the politicians (Emerson 2017). These organizations are responsible towards the achievement of social mobilization. Therefore, it is worth noting that for the purpose of avoiding concentration of power on the part of the government authorities, these organizations have involved individuals associated with noble affairs to serve the nation (Tan 2015). As a result of such responsibility regarding sharing of power by the directors of such voluntary organization, these organizations has been successful on their part in developing their organization from the purview of developing monopolistic to organization of services.
Duties and Responsibilities of Directors in Private Companies
For the purpose of forming a valid contract between an organization and a third party, it is important that the essentials of contract must be there. A contract is an agreement formed between two or more parties which are legally enforced by law in relation to specific requirements. Therefore, in order to form a valid contract between the organization and the third party, it is important that there must be an offer, acceptance, consideration and the intention to form legal relations.
An offer is a proposal on the part of the one of the party to the contract regarding the terms and conditions of the contract. Acceptance can be defined as the approval on the part of the one of the parties to the contract to whom the offer was made. However, it is important that before the acceptance of the offer the terms and conditions of the offer should be read carefully. Consideration is an essential requirement in a contract between an organization and the third party. In order to make the contract, legally binding upon the parties, there must be a presence of valid consideration. There must be an intention on the part of the parties to make the contract legally binding.
In case of commercial contracts, it is important to incorporate certain terms and conditions in order to maintain clarity and accuracy. These terms can be classified into implied terms, express terms, exclusion clause, conditions and warranties. Implied terms are the terms which may or may not be mentioned in the contract by the parties however; it is important to include implied terms in commercial contract for the purpose of making it legally enforceable. Implied terms can be classified into two kinds- terms implied by the Courts and terms implied by the Statutes (Kaiser and Buxmann 2017). Express terms can be regarded as the terms that have been agreed by both the parties and have been specifically included in the contract during its formation. It is worth noting that those certain important terms are associated with contract which can be classified as conditions and warranties. Conditions are considered to be important elements in contract because without prior knowledge of the existing conditions the parties shall not enter into the contract. However, warranties are promises on the part of one of the party to the contract regarding the nature of the goods and services provided. The presence of an exclusion clause in contract is important as it protects the parties from being liable for the breach arising out of contract. However, in order to escape liability, it is important to bring the presence of such exclusion clause into the knowledge of both the parties.
Written Contract:
Written contracts provide certainty and clarity of expression to the parties involved. These contracts served as an efficient proof of agreement to the parties involved. Therefore, these contracts help to minimize risks arising out of the conduct of one of the parties.
Most of the commercial agreements take place in the form of verbal contracts. Verbal contract may be in the form of emails and discussions between the parties. However, it is worth mentioning that in some cases verbal contracts may be inaccurate or uncertain. In case of breach arising out of contract, verbal contracts do not provide sufficient proof.
Role of Voluntary Organizations in Society
A standard form of contract can be defined as a pre-incorporated contract was there have been no negotiations on the part of the parties.
Period Contracts are hired by independent contractors for a considerable period. In this kind of contract, the terms of the business are clearly depicted in relation to the responsibilities of the contractor regarding the performance of the business activities from time to time. These contracts are often termed as period trade contracts. Period contracts have been proved to be beneficial for both the parties however; the only issue associated with it is that these contracts are often uncertain in relation to the period of work.
A contract is an agreement between two or more parties in order to make them legally binding. In case of tort, there is no agreement between the parties. However, the major difference between contractual liability and tortuous liability is regarding the nature of the duties on the part of the parties. The duties in case of contract are fixed by the parties to the contract; on the other hand, the duties in tort are fixed by the application of law (Sharkey 2016). In case of breach of contract, there must be an existence of valid agreement between the parties. However, in case of breach of tort, it is not necessary that there must be a valid agreement. In case of contractual liability, the breach is conducted knowingly however; in case of negligence the breach is caused as a result of negligent activity on the part of one of the parties (Morgan 2015). In case of liability in negligence there is an existence of duty of care which was observed in the case Donoghue v Stevenson 1932.
According to the principle of vicarious liability, an employer shall be liable for the acts of his employee. Similarly a principal is liable for the acts of his agent and the master is liable for the acts of his servant. In Roe v Minister of Health [1954] 2 All ER 131, it was observed that the employees of the hospital were negligent on their part and as a result of which the authorities of the hospital were held vicariously liable for the negligent act (Wang, Dou and Jia 2016). The principle of vicarious liability can be applied in business organizations where the employer is held vicariously responsible for the acts of the employees. In Mersey Docks and Harbour Board v Coggins and Griffith (Liverpool) Ltd: HL 1946, it was observed that the employer was held vicariously responsible for the acts of the cane driver (his employee).
It is noteworthy to mention here that, the concept of business environment is a dynamic term which is associated with different terminologies and management practices. It is worth noting that modern business environment comprises of various uncertainties however; in the presence of global structures, some important aspects of it has proved to be beneficial in sustaining competitive business environment (De Medeiros, Ribeiro and Cortimiglia 2014). In this regard, the importance of business environment on public, private and voluntary organizations can be taken into consideration. The most important aspect is to fulfill the objectives of the existing shareholders. It is worth stating that if the objectives of the shareholders are ignored, then it will not be possible to sustain long term business relationship (Prajogo 2016). The second important aspect is to meet the day to day requirements of the customers. For any organization, customer plays an important role and by fulfilling their needs and demands, organizations will be able to gain success in the long run.
Essentials of Forming a Valid Contract
The impact of international trade on business organizations is enormous. With the implementation of international trade, the growth of the business will be increased overtime. International trade creates favorable impact in diversifying the risk associated with the business enterprises. It helps to create better margins by increasing sales overtime. In this regard, the pricing factors are also taken into consideration for the purpose of reducing seasonal market fluctuations. International trade provides the ability to these business organizations to stand out as a separate entity in the presence of huge competition.
E-business can be referred to as a business model in which buyers and sellers are at the authority to exchange information related to goods and services with the utilization of certain electronic technologies. The most important benefit of these E-businesses is that it allows business enterprises to increase their sales in a short time by reducing the cost of transactions on their part. However, in spite of such benefits certain difficulties are associated with the adoption of e-business technologies. The major issue faced by these e-businesses is regarding the inadequacy of compatibility between the existing technical infrastructure and e-business technologies (Cormier and Magnan 2015). With the adoption of e-business technologies, there has been considerable increase in cost reduction. The major barrier to e-business is on the part of the management for not providing with appropriate technologies and lack of participation on their part. However these barriers could be easily addressed if Al Diyafa Holding functions according to the abovementioned principles.
The common legal issues faced by E-Commerce Businesses can be emphasized.
- Security Issues: The major issues faced by E-Commerce business are associated with trademark protection. Trademark forms the major part of the organization symbol and logo therefore, it is essential to protect it before it gets infringed.
- Copyright: The content of the E-Commerce website involves various hazardous risks to the business. If any copyrighted content whether intentionally or unintentionally is published in the company website, other organizations will be at the authority to sue the business of such company.
- Business Structures: It is evident that a business structure can be incorporated in several ways. In the presence of various business forms, for instance, sole proprietorship, limited liability and partnership business each of them has separate legal and tax implications (Stavrou et al. 2014).Therefore, it is worth mentioning that, E-businesses involves higher degree of financial vulnerability as compared to other traditional forms of business. Therefore, at present Al Diyafa Holding should emphasize on dealing with legal issues more efficiently.
Different market structures can be emphasized as-
- Perfect Competition, a structure where there is an existence of different sellers of the same product.
- Monopoly, where the organization is at the sole authority to determine prices and the customer shall not have the choice to buy.
- Oligopoly, a market structure in the presence of large number of sellers in relation to the same product.
The existing market forces are-
The organizations are bound to provide appropriate response regarding the demand of products. If the demand of a suitable product increases overtime, the response of the organizations will increase towards such product. However, in case of increase in supply, there is a decrease in demand. The objective of every organization is to satisfy the needs of the customers with suitable products. If they fail to do so, the customers may find other alternatives. The retention of employees plays a crucial role that can change the behavior of the organization. In order to ensure efficient working of the production process, every organization is dependent upon their suppliers (Haas, Criscuolo and George 2015). It is worthwhile to refer here that, various factors involving- political, economic, social, technological, environmental and legal can affect the behavioral patterns of the organization to a large extent. Therefore, it is important on the part of Al Diyafa Holding to provide appropriate responses to these market forces.
The environmental factors creating impacts on markets in case of Al Diyafa Holding can be emphasized as-
- Cultural Environment: from the very beginning, religion is considered to be an important source of culture. Therefore, while adapting marketing concepts, it is important on the part of the organizations to become aware of the existing cultural differences.
- Economic Environment: the income levels of the consumers should be taken into account in order to evaluate their purchasing power.
- Political and Legal Environment: it is worth noting that the political and legal environment of the home country of the organization plays significant role in determining the marketing activities of international enterprises.
Internet marketing has been efficiently used by organizations for the purpose of implementing internet facilities in business transactions. The important tools which proved to be essential for internet marketing on the part of Al Diyafa Holding can be emphasized as-
- E-mails.
- Calls-to-Action.
- Social Media.
Interactive order processing can be defined as an important element in e-commerce which has to be presented to customers during online business transactions. The important features includes-
- Speed.
- Integration.
- Efficiency.
- Fewer Errors.
Therefore, it is important on the part of Al Diyafa Holding to maintain accuracy in interactive order processing.
References:
Case Laws:
Donoghue v Stevenson 1932.
Mersey Docks and Harbour Board v Coggins and Griffith (Liverpool) Ltd: HL 1946.
Roe v Minister of Health [1954] 2 All ER 131.
Journals:
Abbott, K.W., Genschel, P., Snidal, D. and Zangl, B., 2016. Two logics of indirect governance: Delegation and orchestration. British Journal of Political Science, 46(4), pp.719-729.
Alidousti, N., Taghizadeh, E., Ashouri, M. and Farsani, A.K., 2016. Comparing Subject of Assignment of Contract with Similar Concepts of Other Countries’ Domestic Laws and International Documents. J. Pol. & L., 9, p.173.
Cormier, D. and Magnan, M., 2015. The economic relevance of environmental disclosure and its impact on corporate legitimacy: An empirical investigation. Business Strategy and the Environment, 24(6), pp.431-450.
De Medeiros, J.F., Ribeiro, J.L.D. and Cortimiglia, M.N., 2014. Success factors for environmentally sustainable product innovation: a systematic literature review. Journal of Cleaner Production, 65, pp.76-86.
Dorobantu, S., Kaul, A. and Zelner, B., 2017. Nonmarket strategy research through the lens of new institutional economics: An integrative review and future directions. Strategic Management Journal, 38(1), pp.114-140.
Emerson, R.W., 2017. An International Model for Vicarious Liability in Franchising. Vand. J. Transnat’l L., 50, p.245.
Haas, M.R., Criscuolo, P. and George, G., 2015. Which problems to solve? Online knowledge sharing and attention allocation in organizations. Academy of Management Journal, 58(3), pp.680-711.
Kaiser, J. and Buxmann, P., 2017. Organizational design of IT supplier relationship management: a multiple case study of five client companies. In Outsourcing and Offshoring Business Services (pp. 153-195). Palgrave Macmillan, Cham.
Morgan, J., 2015. Liability for Independent Contractors in Contract and Tort: Duties to Ensure That Care Is Taken. The Cambridge Law Journal, 74(1), pp.109-139.
Prajogo, D.I., 2016. The strategic fit between innovation strategies and business environment in delivering business performance. International Journal of Production Economics, 171, pp.241-249.
Rayton, B.A., Brammer, S.J. and Millington, A.I., 2015. Corporate social performance and the psychological contract. Group & Organization Management, 40(3), pp.353-377.
Sharkey, C.M., 2016. Tort Liability for Pure Economic Loss: A Perspective from the United States and Some Comparative European Insights. Journal of European Tort Law, 7(3), pp.237-271.
Stavrou, V., Kandias, M., Karoulas, G. and Gritzalis, D., 2014, September. Business Process Modeling for Insider threat monitoring and handling. In International Conference on Trust, Privacy and Security in Digital Business (pp. 119-131). Springer, Cham.
Tan, D., 2015. Internalising Externalities-An Enterprise Risk Approach to Vicarious Liability in the 21st Century. SAcLJ, 27, p.822.
Wang, Q., Dou, J. and Jia, S., 2016. A meta-analytic review of corporate social responsibility and corporate financial performance: The moderating effect of contextual factors. Business & Society, 55(8), pp.1083-1121.
Weber, I., Xu, X., Riveret, R., Governatori, G., Ponomarev, A. and Mendling, J., 2016, September. Untrusted business process monitoring and execution using blockchain. In International Conference on Business Process Management (pp. 329-347). Springer, Cham.
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