International Business Law Essay
As globalization accelerates its pace, many companies face the drastic need to pay increased attention to global aspects of their business. Along with economic trends and cross-cultural competence, this also means the need to be proficient in international business law. A company that deals in foreign as well as domestic operations can utilize many pieces of knowledge about this domain.
In particular, knowledge of the forms of International Business is useful to someone who considers a partnership with a foreign business entity or is eager to enhance current relationships. This experience is valuable even if the company does not venture beyond the local market since it most probably has to compete with, buy from or sell to businesses that represent the international trade in its various forms.
A business executive also has to be aware of various trade regulations concerning exporting, importing, and global sourcing. In the age of the WTO and gradual movement toward free trade, with fewer and fewer government restrictions in place, the situation in the worldwide market has a direct influence on the one in the domestic market. Everyone interested in understanding the case of other businesses in virtually every industry has to read on international licensing agreements and trade controls.
As globalization of trade involves an even more significant number of countries, developing ones also increase their participation in economic dealings with other ones. A business positioned to should learn the basics of operating in developing countries, the business environment in different regions of the world, their patterns of private ownership. Less developed countries can soon become active members of the global business community, and therefore it makes sense to pay attention to what is going on there.
An international firm should also learn to manage all sorts of risks connected with global business including those related to distance and communications, linguistic and cultural differences, and currency risks. A modern businessperson should have an in-depth understanding of particular transaction risks in contracts for the sale of goods, as well as political risks and those involved in dealing with foreign legislation and judiciary.
Since every business can only function within a specific legal framework, knowledge of international law and organizations is a must for everyone venturing beyond domestic boundaries. Today, public international law and law of treaties can directly affect the situation in the domestic market. Therefore, the understanding of international law and organizations is essential even to local businesses. Every business person should have a good idea of the Vienna convention, the function of the United Nations, its General Assembly and the Security Council, as well as GATT, WTO, OECD, and the International chamber of commerce and the international court of justice. Operating within an international legal framework requires a thorough realization of differences between domestic laws and those of other countries considered in comparative law. These comparisons should be drawn at all levels of business including civil and common law. Those dealing with Muslim countries should develop an understanding of Islamic law and its specific features.
Businesspeople should learn to act ethically and responsibly react to human rights issues arising in other countries.
An organization should also accumulate expertise in technical issues related to international disputes. Those operating across borders will find disputes inevitable, and therefore understanding the framework for the resolution of international commercial disputes including alternate dispute resolution such as mediation and arbitration is a must. Occasionally, a company may become involved in litigation, in which case executives will require the knowledge of jurisdiction and different clauses that can affect the outcome of the suit. Preparation of foreign contracts also involves a great deal of experience about all sorts of arrangements, their various provisions, and clauses that can later be invoked in courts. Court disputes can require the application of the foreign and international law, and a businessperson should be prepared to understand in what way it is applied in various cases and in what ways conflicts are resolved. At times, a commercial dispute with another nation can arise, and the company needs to understand how the law will be applied in this case. It is also necessary to understand in what ways a foreign judgment is enforced if the company becomes subject to it.
Some businesses now sign foreign sales contracts. Over time, international codes such as the Universal Commercial Code (UCC) and the Convention of International Sales of Goods. Any company engaging in foreign sales contracts has to know these international codes, their provisions, and gaps in systems to understand how these laws can be applied to their exporting activity. The same is true of companies that import foreign goods. Executives should know in which cases they will be penalized, and in what cases there are excuses for non-performance in sales contracts. It is essential to know who a contract can be tested for validity to avoid signing an invalid contract. A business executive should also understand all technical details of contracts including warranties, contract terms, payment, delivery, offer, acceptance, etc. If a company faces a breach of contract, its employees should know how to react and how an illegal contract if such is signed is enforced.
A business company should also develop expertise in managing the actual sales process and understand when the actual sale takes place, i.e., when the title of goods passes from one owner to the other, what responsibilities both parties have, etc. This understanding will help the company to avoid trouble when selling or purchasing goods, especially if glitches or unethical actions on the part of the other company occur. The same applies to problems on the company’s part since an executive should understand when the company becomes liable for the damage it incurred on the other one, and how this conflict should be handled. Understanding of shipping procedures should also be inherent in the mind of a business executive. Since a carrier transports goods, the company’s employees should know to what degrees carriers are accountable for the safety and condition of goods they transport.
Insurance of goods is also a legal issue that is vital to the company interested in the safety of its goods and willing to receive compensation if goods are damaged or destroyed. The payment process is also full of various technical challenges including letters of credit, bills of exchange, time drafts, acceptances, of which a business person should have a thorough knowledge.
Since a business entity exists in a particular national state, its management should realize the relationship between the domestic state powers and international bodies. American companies, for instance, can benefit from an understanding of how national law-making affects international trade and US regulations on this trade. A group can then use this knowledge to lobby for specific projects that will improve their position relative to foreign companies in the domestic or foreign market. In the United States, an understanding of complex relations between state and federal powers is a must because many issues related to international trade will also depend on state regulations.
In essence, a business company operates in the context of laws and their enforcement. Therefore, an understanding of these rules is essential to anyone who is willing to avoid the pitfalls of litigation and trade disputes. It is also vital to know how one can hold the other party accountable if a violation of contract terms or law occurs and restore one’s rights through the judicial system. For this purpose, knowledge of the international business law is invaluable in managing the risks of dealing with foreign companies.
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