Legal Operations in International Business (Research Paper Sample)

Legal Operations in International Business
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Institution
Introduction
There are two major legal systems in the world: the common law system and the civil law system. The common law system originated in Medieval England and was introduced by British colonizers to the countries they conquered. The civil law system originated in continental Europe and was introduced in other countries by imperial powers such as Germany, France, Portugal, and Spain. Countries that possessed distinctive legal stems such Japan and Russia adopted the civil law system in the late nineteenth and early twentieth century. Japan and Russia adopted the civil law system so as to gain political and economic power similar to that of Western European countries. The American legal system is based on the common law system since America was a former colony of the United Kingdom.
Similarities and Differences
There are various similarities and differences between the two legal systems. The main difference between the two legal systems is that civil law is codified while common law is uncodofied (The Common Law and Civil Law Traditions, n.d.). In common law, there is no broad compilation of statutes and laws. Common law relies on a few statutes based on judicial decisions. The tradition of precedents (rulings made by judges in prior cases) is highly valued in common law legal systems. Cases are chronicled in law reports and year books. The presiding judge decides the precedent that is to be applied in each case. In contrast, civil law is codified. Civil law countries have continuous, comprehensive and regularly updated codes which specify how all matters brought before a court of law are to be handled (S.B, 2013). The procedure for handling each procedure is clearly described in civil law systems and the applicable punishment for each offense is clearly stipulated. Judges do not use precedents in civil law systems. They simply rely on specific legal codes to reach a decision.
In common law systems, judges play a significant role in making laws by issuing binding precedents. In common law systems, on the other hand, legal scholars and legislators who formulate and interpret the legal codes play a larger role in shaping the law than judges. The civil law system is more wide spread than the common law system since there are 150 countries with civil law systems, and only 80 countries with common law systems (S.B., 2013). Legal Challenges That United States-Based Companies When Conducting Business Internationally
The American law system is based on common law but there are aspects of civil law due to the Spanish and French occupation in some states during the 16th and 17th century. American Business men and women face challenges because they don’t understand how the civil law system in particular, and how international commercial law in general operates (Clayton, 2012). The United States legal system has laws that govern extra-territorial business. However, those laws are not considered binding in foreign countries. For instance, the US GAAP accounting rules, the Foreign Corrupt Practices Act, and US Export Control...