Based on the Ideas of Gulshan (2009). Free Essay

A business can be interpreted as Either an individual entity or a group of persons who have put proper measures to provide different goods and services, in tandem with the framework of laws and regulations of the land governing, intending to make profits. Generally, there are several types of business organizations, namely sole proprietorship, partnership business entities, corporate business entities, cooperative organizations, charitable organizations, and lastly, voluntary organizations. Apart from making profits, another object of the above-mentioned business organizations is to empower the local community economically. This essay seeks to critically analyze the responsibilities of three business enterprises namely; sole proprietorship, partnership, and lastly, private and public companies. Furthermore, the legal responsibilities that these business organizations owe to multiple entities are also discussed with much emphasis laid on the legal contract formed between these business enterprises and the third parties and the ramifications of repudiating the contract formed.

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Sole proprietorship

A sole proprietorship or a sole trader is a business enterprise that is fully owned and registered under the name of one individual. Sole, proprietorship lacks the legal distinction between the owner and the business entity, meaning that the owner is solely held responsible for the omissions of the business (Gaylord). The sole proprietor keeps all the profits after paying the required taxes and its employees. However, the day to day running of the business is not solely vested on the proprietor, for he can either employer workers or work with the family members.

Sole proprietorship in the United Kingdom is regulated under the Companies Act of 2006, the insolvency act of 1986 and the UK Corporate Governance Code. Any person can start a sole proprietorship in the United Kingdom by:

Making an application to the registering the business entity with the HM revenue and customs department indicating their employment status for the purpose of tax and National insurance.

After registering, the proprietor is expected to pay the subscribed fees required for the business to become operational.

Responsibilities

A sole proprietor owes certain responsibilities which they must meet. Firstly they are responsible for the maintaining the business books of records. Secondly they are expected to file without fail, the annual tax return for their self-employment and any other works done by them. Thirdly sole proprietors are expected to lodge their respective self-assessment tax return for each financial year and pay the requisite income tax and the national insurance policy. Those whose revenue turnover exceeds 83,000 pounds a year are required to register for value added tax. Lastly sole proprietors are expected to abide by the relevant labor laws and pay their employees’ salaries and wages. In order to meet their responsibilities, sole proprietors must adhere to the standard ethical requirements for business such forming good customer care and rapport and maximize on the profits.

Partnerships

A partnership is a business enterprise formed by a minimum of two members no maximum membership. A partnership is a relationship that exists between different persons carrying out a business with the common aim of making profits. In law, there are different types of partners, namely active partners and dormant partners. The partnership is a distinct legal entity; therefore, it can act on its own, for instance, borrows money from banks. (Ricketts and Tunnel, 2006). In the United Kingdom, partnerships are formed under the partnership act of 1890 and the limited partnership act of 1907.

The responsibilities of partnerships

Section one of the partnership act states that the sole intention of any partnership is to maximize the profits. However, most importantly, the core responsibilities of the partners are; paying all the taxes required by the government of the United Kingdom. In the foregoing, it also helps in operating the partnership business in accordance with the set of laws that governs business organization. Maintaining and updating the books of accounts and submitting the annual audit report to the relevant authorities.

For the partnership organization to fully meet its responsibility duties that it owes the government, the public and its customers, it must meet the following standards; first, the partnership must engage in legal business and pay its dues owed to the government to avoid run ins with the government. Second the books of accounts must be audited in order to indicate whether the partnership is making profits or losses. Third the partnership must have sound and reliable financial backup to boost it in the event that it experiences financial crunch.

Private and public limited Companies

The document of incorporation of the corporation indicates that the ownership corporation can be both private that is it is limited and strictly restricted to few persons and the public is barred from the day to day running of the business. Similarly it can also be registered under a public affair that is it is open to any person who is interested in owning a business by purchasing of the shares. Another distinction between the public limited company (PLC) and the private limited company is, a plc stocks are listed on the stock exchange markets and publicly traded while private limited companies stocks are not listed on the stock exchange markets and are traded privately. These companies are formed under the companies’ act of 2006.

Responsibilities of a Private and Public

Both private and public limited companies owe responsibilities and duties to the government, the public and they have corporate responsibilities. They are required to file the correct and genuine annual tax return reflecting the true financial status of the corporations; they must also submit to the government agencies audited and updated financial books for scrutiny. They must pay their employees dues and salaries, including payee. Lastly, they must engage in any charity activity of their choice in the community as a way of giving back to society.

From the above-mentioned responsibilities, it is evident that both private and public limited companies have an enormous task to accomplish. In order to achieve these it must ensure that:

• It complies with all the regulations governing the business.
• It pays taxes and other levies to the government
• The workers welfare is well taken care of in order for them to be productive.
• The companies should practice business honesty and maintaining strong rapport with its workers, customers, and the government agencies.

Forming a contract with a third party

A third-party contact basically means a contract between two or more parties whose performance is bound to directly benefit a third party. For a contract to be valid and legally binding, there are some elements which must existed. The elements are offer, acceptance, and intention to create binding relations, legality, capacity and consideration. These elements are critical and the absence of any of them renders the contract between the third party and the organization null.

Terms of a Contract

There are some key terms which fall into different categories of a contract. A contract might be expressly agreed upon either orally or in writing for example a shopkeeper opening his shop for his customers and the landlord letting out his premise. A contract can also be implied by the law or via the conduct of the parties involved. These terms gives the contract the necessary legal force required for the execution of a contract.

Types of a contract

In law there are several types of contracts for instance implied and expressed contracts, unilateral and bilateral contracts, unconscionable contracts, and adhesive contract among others. Each type of a contract has its own limitations for example in adhesive contracts one party is likely to be manipulated by the other party who has the higher bargaining power. Similarly fixed price contracts tend to benefit the seller than the buyer. Finally aleatory contracts which are not enforceable until the occurrence of an outside force for instance, insurance policy, tends to benefit the insurer in the event that the risk does not occur.

Contractual liability and liability for negligence

Contractual liability in insurance seeks to protect against the liabilities by the policy holder assumes when they enter into a contract. In contrast, liability for negligence is a civil matter in which the victim is tasked to prove that the defendant owes them a duty of care and the existence of breach of duty of care.

Importance of vicarious liability

Vicarious liability arises when one party acts negligently on behalf of the other party who, while being held as secondarily liable for the omissions of the one party. For instance, a transport company held liable for the actions of its driver, who has caused an accident. It is important because it holds the employer responsible for the acts of the employee committed in the line of duty. Due to the enormous amount of cash required to compensate the victims, the employee might not have the required amount; thus, it is incumbent on the employer to pay. In summary, different business organizations are pegged on the various laws of the land, which guides them on various matters, for instance, the formation of a contract and different types of liabilities.