International Business Environment and Trade (Research Paper Sample)

INTERNATIONAL BUSINESS ENVIRONMENT AND TRADE
Introduction
Laws covering trade between businesses from different nations have existed since the birth of law merchant in the medieval period. The legal dimension of business has had to follow suit since business has grown across national borders (Druzin, 2010). Law expands into almost all aspects of business and can constrain business activities. Moreover, they enable them to apply for public funding, and acts to protect workers’ rights, consumer protection and data protection.
International law can be classified into public and civil law. Public law is concerned with relations between citizens and the state, while civil law is applied while individuals and companies relate. Recently, governments have realized their limitations in regulating international transactions. Arguably, globalization has led to a weakened powerful states as well as introductions of a new body of international trade (Druzin, 2010).
International trade law includes the appropriate rules and customs applied while handling trade between countries. However, it is also applied in legal writings as trade among private sectors, which is not good. International trade law is a branch of one of the existing laws that have become an independent field of study (Bossche, 2008). This is because many nations have become part of the world trade, as members of the World Trade Organization. Since the transaction between private sectors of different states is a crucial part of the World Trade Organization (WTO), this latter law is now a very vital part of the academic works and is currently studied in a number of universities across the world.
International trade law is different from the broader field of international economic law, which encompasses not only WTO law, but also law governing the international monetary system, currency regulation and international development. International trade law is based on the theories of economic liberalism that were developed in Europe and later United States in the 18th century. It is an aggregate of legal rules of international legislation (Bossche, 2008). These rules regulate relations in international trade.
Contracts Within the Law of International Trade
A contract is an agreement between two or more parties who promise to perform, or not to perform specified duties or acts upon each other. The agreement creates for each party a legal duty, and the right to seek a legal remedy in case one party acts against the set rules. Contract law falls under the category of civil law, which concerns relations between individuals or companies (Druzin 2010). However, state courts may intervene to settle dispute that may arise between conflicting parties. In a dispute over a contract, the person who has suffered loss may bring a claim for the money compensation, or a range of other remedies against the defendant governed by the law of the nation, who carries out the performance of the contract, unless specified in the contract.
There are main points that must be addressed in the formation of a contract, such as: agreement, offer and acceptance, certainty and agreement mistakes, third party rights, consideration and form, intention to create legal relations and the content of a contract. International laws continue to regulate the vast majority of contracts made between parties. The threat to international contract law in the short term is relatively low, yet much harder to quantify in the long run.
International commercial contracts are sale transaction agreements that are made between parties from different nations. Parties involved have to follow methods of entering a foreign market, with choice made balancing costs, control and risk (Druzin 2010). Such procedures include: export directly, use of foreign agent to sell and distribute, license to a local producer, enter into a joint venture with a foreign entity, and appoint a franchisee in the foreign country, among other factors. International sale of goods contracts were established at United Nations Contracts for the international trade convection. From the convection, conclusion of the sale of goods contract was discussed, buyer and seller obligation and respective remedies. However, the law international law of contract does not concern with the validity or provisions of the contract, nor its effect on the property sold.
Contracts in the Law of International Trade
Some of the contracts in international trade include; contract of carriage of goods, title to sue, who to sue, payment and insurance in international trade.
Contract of carriage of goods
During carriage for goods whether by sea, air or land, they may be lost or damaged. The bill of landing- a transport document that is used almost exclusively for carriage of goods by sea- is a contract of carriage between the consignor, the carrier and the consignee. Therefore, it acts as a receipt of transfer of goods and as a negotiable instrument. In addition, the bill of lading also determines rights and liabilities agreed between parties to an international sale contract. Also, reservations as to the quantity and quality of goods upon landing are marked on the bill when receiving them, so as to stifle any accusations from the consignee of damage in transit.
In this type of contract, the consignor retains ownership of the particular goods until the bill of lading is transferred to the consignee. Hague Rules, Hague- Visby Rules and Hamburl Rules are the main international convections that govern most bills of lading. From these rules, minimum responsibilities and liabilities that cannot be softened by contract are imposed.
Title to Sue Contract
In case of a loss or damage to goods by a party to the contract of carriage, that party may sue directly on that contract. A seller who is under cost, insurance and freight (CIF) sale contract will have entered into the carriage contract directly with the carrier, and can sue as principal. If the loss or damage occurs when the risk has passed to the buyer, the buyer stands a benefit under the carriage contract with the seller, depending on contract terms between the buyer and the seller. Under free on board sale contract (FOB), the bill of landing gives a determination of who is the shipper between the buyer and the seller. Therefore, this will ascertain who has contracted as principal to bring action against the carrier. In case of a loss or damage to goods before they pass to the buyer, the seller may benefit under the carriage contract made with the buyer.
Who to Sue in a Contract
The party to sue or to be sued on a contract of carriage varies from the ship owner, the charter or the freight forwarder. A distinction has to be made between the physical and the legal carrier. In this case, the legal carrier acts in the capacity as the person contractually responsible for the carriage. It is the physical carrier against whom action is brought if the consignee is suing on an implied contract of carriage, or there is negligent carriage of goods.
Insurance in International Trade Contract
Insurance against risks is a crucial aspect of international commercial transactions. This is because in the event of a loss or damage to cargo due to hazards during voyage, an insured party will be able to recover losses from the insurer. However, the type of insurance required depends on the mode of transport agreed upon between parties to transport the goods. Such insurance types include marine, aviation and land.
Moreover, the type of insurance contract is dependent on the incoterm adopted by the parties in a sale contract. A CIF sale contract requires the seller to obtain insurance cover for the goods in transit. However, FOB contract places no obligation on the buyer or seller to obtain insurance, although it is wise for the buyer to protect against potential risks (Druzin 2010). It is not uncommon for the buyer in FOB contract to request a seller to arrange for insurance on an understanding that they will reimburse if any insurance costs are incurred.
Insurance obtained ought to cover merely those goods that are being sold and predetermined in shipping documents. It must also cover the entire voyage of the sale contract. The buyer will be able to reject the documents upon tender where the insurance covers only part of the transit.
Marine insurance contract is divided into hull and cargo insurance. There is no uniform law or convention for the international marine insurance. However, commercial customs, usage and practices in international marine insurance play a vital role in regulating marine insurance internationally. Therefore, the marine insurance contract is subject to both general principles of contract law, and domestic marine insurance law.
Additionally, international aviation insurance contracts are divided into hull, cargo, airport owners, and operator’s liability, hovercraft, spacecraft and commercial aircraft insurances. International convections applying to the carriage of goods in transit by air include the Warsaw Convection, Rome Convection, Hague Protocol and Montreal Protocol. Together, these convections provide guidance to domestic air insurance law (Gennaro, 2008).
Payment in International Trade
There are two methods of financing international transactions between buyer and sellers. That is, direct payment between the individual, or payment through the bank. Practically, payment must be made by the buyer to the seller in advance, pursuant to the sale contract. Other agreements that must be made between the parties are bills of exchange, documentary bill and documentary credits. For instance, in documentary credit, the bank guarantees the buyer’s title to the goods and guarantees payment to the seller.
Proposals for Improving the Position of Importer and Exporter of Goods
In order to create conducive environments for trade,...