The warehouse was burgled and the company suffered a loss of $30,000. The insurance company claimed that the insurance policy did not cover burglary and therefore refused to pay.
Duty of care was breached when Daniel failed to check the content of the insurance policy. When Quality Sofa expected to collect insurance it was faced the losses of 30,000 $ which affected its financial state, because he did not carefully check the statement and should be held liable for it. If Daniel is unaware of nature of insurance policies, because he is an accountant, it is no excuse to just sign the policy. He should have spent time and even requested legal advice if necessary not to be held liable in this particular case.
As for his liability in duty of loyalty, he is liable for getting personal benefit by offering a client of Quality Sofa Bed a discount that not the company’s interest, but rather his own interest. If the client had approached Daniel as an individual, then he would not be held liable.
Although Daniel should have disclosed that the warehouse that Quality Sofa and Bed purchased was his, he saved for Sofa and Bed 5,000 $ because the fair value was valued +5,000 $. In the specific incident he kept his self-interest aside and put the company’s benefit on the first place.
Although Daniel did not technically breech his duty of loyalty in the warehouse incident, he definitely breeched his duty of care with the insurance contract and his duty of loyalty with the personal gain he benefited from. There were two violations of duties. I think that although he sold his warehouse for less than fair value and since he insisted on the directors to purchase his warehouse, he should have at least disclosed that he owned the warehouse or even restrained from voting. Since he already breached one duty of care and one duty of loyalty he can’t be considered a reliable director.