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Business and
Business and its
itsenvironment
Environment
Business and its Environment
DAVID KEITH
“The aggregate of all conditions, events, and influences that
surround and effect it ”
BUSINESS as an enterprise is a part of the society and it has
a direct relationship with the policy of the enterprise
HICKS
“THE FIRM CAN ADJUST TO THE ENVIRONMENT .OR IF
IT HAS THE ABILITY .CHANGE THE ENVIRONMENT”
Business and its
Environment
volume.
Business and its Environment
Organizational Resources
Business Ethics
IT REFERS TO THE RULES PRINCIPLES
IT IS CONCERNED WITH TRUTH AND JUSTICE
TYPES OF ETHICS
Business and its Environment
Moral Management –
Codes of Conduct
AUSTRE MODEL
HOUSEHOLD MODEL
VENDOR MODEL
INVESTMENT MODEL
CIVIC MODEL
ARISTIC MODEL
Guidelines for Ethical Business
Obeying the law
Tell the Truth
Uphold human dignity
Adhere to the golden rule:" Do unto others as you would
have others do unto you”
Above all, do no harm
Allow Room for participation
Always Act When You Have Responsibility
Unethical Practices
TO CUSTOMERS-ADULTURATION,
INJURIOUS PRODUCTS,DUPLICATES
TO EMPLOYEES-LOW SALRIES,
MALPRACTICES,CHILD LABOUR,
EVASION,CORUPTION BRIBE,POLLUTION,
PRICE HIKING
Economic Systems
Democratic
Environment – Business
Relation
There is symbolic relationship between
environmental factors.
ENVIRONMENTAL
ANALYSIS PROCESS
Scanning
Monitoring
Forecasting
Assessment
Business and its Environment
CORPORATE GOVERNANCE
decisions.
corporate governance.
Corporate Governance
IMPORTANCE –
Markets and investors take notice of well-managed companies,
respond positively and reward such companies, with higher
valuations
Indispensable to Capital markets, investor protection.
Prevents insider trading
Insiders abstain from transacting in the securities of the
company.
Principle of disclose or desist
Compete internationally – improve standard of living
Corporate Governance
PRE-REQUISITES of good Governance
performance.
control.
Corporate Governance
SOCIAL RESPONSIBILTY –
Analyze
Business Environment
and Law
Business Law
Business Law
What is Law?
The word ‘Law’ is a general term and has different connotations for different
people.
Discuss …………….
Source of Business Law
Judicial Law or Case Law – Past Judicial
decisions are important source of law. Some times
the precedents set by higher courts have a binding
force on lower courts.
Whenever there is a silence or ambiguity, the judge has to
decide the case accordingly.
Source of Business Law
Customs and Usages – Customs and usages established by
long use and constantly put into practice become binding on the
parties entering into commercial transactions .
to the agreement.
Misrepresentations, Mistake.
Flaw in Consent
Coercion Under Influence Mistake
Misrepresentation
Sec 16
Sec29 –
“agreements the meaning of which is not certain or
capable of being
made certain are void”
the terms of contracts must be
precise and certain. It must not be
left vague
e.g.: Hire –purchase terms
Possibility of Performance
Contracts
Validity Performance
Formation
Valid or Enforceability
Valid contracts
Void contracts
Void agreements
Voidable contracts
unenforceable contracts
Illegal agreements
Valid Contract
Agreements falling short of legal requirement of sec
it is such a contract which can be set aside at the option of one of the parties to the
contract. The party who can rescind the contract is the aggrieved, the other party
who causes the wrong can set aside the contract
Indemnity and Guarantee
Indemnity -
A contract by which one party promises to
save the other from loss caused to him by the
conduct of the promisor himself, or by the
conduct of any other person is called a
‘contract of indemnity’ (Sec. 124).
Discuss……
Contract of Guarantee
Guarantee -
A ‘contract of Guarantee is a contract to perform the
promise, or discharge the liability, of a third person in case
of default’.
The person who gives the guarantee is called the ‘surety,
the person in respect of whose default the guarantee is
given is called the ‘principal debtor’ and the person to
whom the guarantee is given is called the ‘creditor’.
Guarantee – Written or Oral (Sec.126)
Types of Guarantee
Specific Guarantee
Continuing Guarantee
Difference – Indemnity and Guarantee
Contract of Indemnity Contract of Guarantee
Two parties to contract -Indemnifier Three parties to contract – the Creditor,
(Promisor) and the Indemnified the principal debtor and the surety.
(Promisee).
Liability of the Indemnifier to the Liability of the surety to the creditor is
Indemnified is primary and independent. collateral or secondary.
Not necessary for the Indemnifier to act Surety gives guarantee at the request of
at the request of the indemnified. the debtor.
Liability on happening of the contingency Existing debt or duty – performance
guaranteed by surety
Cannot sue third party – only in case of Surety steps in as creditor – can sue the
an assignment. principal debtor
Extent of Surety’s Liability
It is co-extensive – (Sec. 128)
– The Quantum of obligation
is the same as the principal
debtor, unless there is a
contract to the contrary.
Surety is liable for what the
principal debtor is liable –
Liability of the surety cannot
be more nor less than that of
the principal debtor.
Rights of Surety
1. The Creditor
3. The Co-Sureties.
Rights Against Creditor
1. Before payment of the Guaranteed debt
E.g. In case of Fidelity guarantee, the surety can ask the employer to dismiss the
employee in the event of his proven dishonesty.
2 Right of Set – Off – Surety can rely on any counter-claim that which the
debtor has against the creditor
Not to mix the goods bailed with his own goods – (Sec. 155 &
156)
Avoidance of contract
Bailee’s lien
Termination of Bailment
On the expiry of the period
Gratuitous bailment
Agency by ratification
1. Agency by estoppel
3. Agency by necessity
Classification of Agents
General classification
Special Agents
General Agents
Universal Agents
Classification based on nature of work
Commercial or Mercantile Agents
Banker
Non-mercantile Agents
Duties - Agents
-
To carry out the work
undertaken according to the directions given by the principal.
With reasonable care, skill and diligence.
Render proper accounts to his principal.
Communicate with the principal in case of difficulty.
Not to deal on his own account.
Pay sums received for the principal.
Protect and preserve the interest of the principal – Death or insolvency
Not to use information obtained to the course of the agency against the
principal.
Not to make secret profit from agency.
Not to set up an adverse title.
Not to put himself in a position where interest and duty conflict.
Not to delegate authority.
Rights - Agents
Right of retainer.
Right to receive remuneration.
Right of lien.
Right of indemnification.
Right of compensation.
Right of stoppage of transit.
Duties - Principal
To indemnify the agent against the consequences of all
lawful acts (Sec. 222)
To pay agent the commission or other remuneration agreed.
Rights - Principal
To recover damages.
Expiry of
Time
Revocation by
the principal By act of Parties
Death of either
party
Revocation by
Insanity of either the agent
party
Insolvency of
either parties
Destruction of the
Subject matter
i r Pgni moce b
la nA
Dissolution of a
Company
Termination of Agency (Sec. 201)
Termination of sub-
By Operation of Law
agent’s authority
Sale of Goods
Law of Sale of Goods - 1930
Prior to 1930, the Sale of Goods act is
contained in Chapter VII of Indian contract
act.
Breach of contract of sale – The measure of
damage is prescribed in Sec. 73 and Sec. 74 of
the contract act.
Formation of Contract of Sale
A contract of sale of goods is a contract
whereby the seller transfers or agrees to
transfer the property to goods to the buyer for
a price.
A contract of sale may be absolute or
conditional {Sec. 4(2)}
Sale and agreement to sell.{Sec.4(4)}
Essentials of a Contract of Sale
Two Parties – Buyer and Seller
Goods
Price
Transfer of general property
Essential elements of a valid contract