Business Law

LAW:A body of enforceable rules governing relationships among individuals and between individuals and their society.
Common Law : That body of law developed from custom or judicial decisions in English and United States courts, not attributable to legislation.
Civil Law :A system of law derived from that of the Roman Empire and based on a code rather than case law; the predominate system of law in the nations of continental Europe and the nations that were once their colonies. In the United States, Louisiana, is the only state with a rich heritage of civil law because of its historical ties to France,
International Law: The law that governs relations among nations. National laws, customs, treaties, and international conferences and organizations are generally considered to be the most important sources of international law.
Cyber Law : An informal term used to refer to all laws governing electronic communications and transactions, particularly those conducted via the Internet.

GLOBALIZATION:Globalization shapes our everyday lives and the world in which we live. Whether we realize it or not, nearly every time we make a purchase we are participating in the global economy. Products and parts of products come to our store shelves from all over the world.
Growing Trade, Shrinking World - Nations Trade. *Benefits of Specialization *Law of Comparative Advantage
*Benefits of Diversity *Competitiveness *Knowledge Intensive Products *Economies of Scale
Globalization - refers to the shift toward a more integrated and interdependent world economy. Globalization has two main components: the globalization of markets and the globalization of production.
GLOBALIZATION OF MARKET:The merging of historically distinct and separate national markets into one huge global marketplace. The global acceptance of consumer products such as Citicorp credit cards, Coca-cola, Levi’s jeans, Sony Walkmans and Discmans, Nintendo game players, and McDonald’s.
GLOBALIZATION OF PRODUCTION:The sourcing of goods and services from different locations around the global to take advantage of national differences in the cost and quality of factors of production. Business firms hope to lower their overall cost structure and/or improve the quality or functionality of their product offering and become more competitive.
DRIVERS OF GLOBALIZATION:Declining Trade & Investment Barriers.
*International Trade *Foreign Direct Investment *General Agreement on Tariffs & Trade *WTO
TECHNLOGY:The Internet and World Wide Web will be the information backbone of tomorrow’s global economy. E-commerce is a growing percentage of cross-border transactions. This allows businesses to expand their global presence at a lower cost than ever before. The facilitate the growth the WTO has prohibited countries from imposing a tax on such transactions.
The advent of commercial jet aircraft and superfreighters and the introduction of containerization, which greatly simplifies transshipment from one mode of transport to another. Containerization has revolutionized the transportation business, significantly lowering the costs of shipping goods over long distances.
While modern communications and transportation technologies are ushering in the “global village,” very significant national differences remain in culture, consumer preferences, and the ways in which business is conducted. A firm that ignores differences between countries does so at its pearl.
Jobs and Incomes: Critics argue that reducing trade barriers allows firms to move manufacturing facilities offshore to countries where wage rates are lower.
Labor Policies, and the Environment: Less LDC lack adequate regulations to protect labor and the environment.
Globalization and National Sovereignty: Critics argue that unelected bureaucrats can impose policies on the democratically elected government of nation-states, thereby undermining the sovereignty of those states. The ability of the national state to control its own destiny is being limited.

INTERNATIONAL LAW: that body of rules and norms that regulate activities carried on outside the legal boundaries of nations.
PUBLIC INTERNATIONAL LAW:deals with the rights and duties of States and Intergovernmental Organizations as between themselves.
PRIVATE INTERNATIONAL LAW:deals with the rights and duties of Individuals and Nongovernmental Organizations in their international affairs; is that portion of domestic law covering:-choice of law (which law applies to the contract or transactions);
-choice of forum (which court has jurisdiction or power to hear the dispute)
-recognition and enforcement of judgments(how can a court's judgement be enforced in another country)
INTERNATIONAL LAW=the body of rules and principles of action which are binding upon civilized states in their relations with one another; it's a rule of conduct prescribed by a s sovereign power.
Key requirement for International Law is Consent
CUSTOMARY LAW:an established tradition or usage becomes customary law if it is consistently and regularly observed and recognized by those states observing it as a practice that they must obligatorily follow.
NON-DISCRIMINATORY TREATMENT OF ALIENS=each country is bound to give the nationals of another country in its territory the benefit of the same laws, the same administration, the same protection, and same redress for injury which it gives to its own citizens and neither more nor less:provided the protection which the country gives to its own citizens conforms to the established standards of civilization.
EXPROPRIATION AND NATIONALIZATION

CONTRACT: The foundation for almost all commercial activity is the contract.
“The social order rests upon the stability and predictability of conduct, of which keeping promises is a large item.”
An agreement that can be enforced in court; formed by two or more competent parties who agree, for consideration, to perform or to refrain from performing some legal act now or in the future.
NEGOTIATING AN INTERNATIONAL CONTRACT: The substantive laws and commercial means of doing business are amazingly similar among the world’s different legal systems, but the differences in negotiating style and contract customs are profound.

International contract negotiation is a very difficult and complicated affair; the nuances of language and culture make it risky for the unsophisticated businessperson. The negotiation of the sales contract is generally more time consuming than in a domestic transaction because the development of trust is central to the relationship.
REQUIREMENTS OF A CONTRACT:Agreement Offer and Acceptance
Consideration Something of value received or promised to close the deal
Contractual Capacity Competent parties
Legality Legal and not against public policy
Form Statute of Frauds
TYPES OF CONTRACT: Bilateral (a promise given in exchange for a return promise),Unilateral(an offer can only be accepted by the performance),
Express(terms of the agreement),Implied(in-fact contract-formed by conduct rather than express),Quasi(fictional contract by the courts to prevent unjust enrichment),Formal(specific form),Informal(no specific form),Executed(completely performed),Executory(to be performed in the future),Valid(all elements of a contract are present),Void(no legal force or binding effect),Voidable(a contract that can be legally avoided at the option of one or both parties), Unenforceable(unenforceable by statute or law).
The civil law concept culpa in contrahendo requires that the parties negotiate in good faith.
UCC=United States-Uniform Commercial Codes
Comprehensive uniform body of laws relating to commercial transactions. Applies to merchants.
Widely adapted by states throughout the United States, except Louisiana, which modifies the common law on contracts.
Article 2-Governs sales contracts,”passing of title from seller to the buyer for a price.”
CISG= International Convention for Sale of Goods, 3 requirements=1. Contract is for commercial sales of goods.
2. Is between parties whose places of business are in different countries.
3. The places of business are located in countries that have ratified the Convention.
BENEFITS=Avoids major conflict of law issues-uncertainty and unpredictability;Resolves differences between national laws:Standard principles used to interpret contracts; Determine remedies for non-performance.
VALIDITY AND FORMATION:The CISG only governs the formation of a contract and the rights and obligations of the seller and buyer. The Convention does not provide rules for determining whether a contract is valid, for determining whether a party to a contract is legally competent, nor for determining whether a party is guilty of fraud or misrepresentation. These rules are left to individual state or national laws. In China, for example, contracts must be concluded voluntarily and the parties must act in good faith and fairly toward each other
Unlike common law, CISG permits parole evidence..
“BATTLE OF THE FORMS”:Problem- “Standard terms” on various forms used in international trade may significantly vary. Merchants want to use their own forms.
Under Common Law and Civil Law- difference in offer and acceptance violates “mirror image rule.” No agreement reached.
Under UCC Rules- written confirmation…may serve as an acceptance even though it states terms in addition to, or different from purchase offer….unless expressly conditioned on assent to changed terms.
Under CISG Rules- An acceptance containing new terms that do not materially alter the terms of the offer becomes a part of the contract, unless the offeror promptly objects to the change. However, if the terms are material then the offer would constitute a rejection of the offer and a counteroffer.

EXCUSES FOR NONPERFORMANCE=Impossibility of Performance- objectively impossible to perform.
Supervening Illegality- performance excused when purpose becomes illegal.
Frustration of purpose- some unforeseen event occurs. Not widely recognized in the United States today.
Commercial Impracticability- Must show extreme hardship, unreasonable expenses as result of unforeseen event. The breaching party will be excused if performance would result in extreme hardship, difficulty, or unreasonable expense as a result of an unforeseen event.
The courts generally feel that if a particular risk was foreseeable, then the parties would have provided in their contract to be excused if it occurred. Allocation of the business risk.
CIGS Exemptions:
CISG Article 79 provides that a party is not liable for a failure to perform any obligation if
1. It was due to an impediment beyond control;
2. The impediment was not reasonably foreseeable at the time the contract was concluded;
3. The impediment was unavoidable and could not be overcome, and
4. Notice was given to the other party of the impediment and of its effects on the contract.

Force Majeure Clauses- in a contract is an exculpatory clause. It excuses a party from failing to perform on the occurrence of an event specified in the clause itself.
REMEDIES FOR BREACH OF CONTRACT:
1. Avoidance of the contract due to a fundamental breach.
Buyer and seller remedies
2. Sellers right to remedy or cure.
3. Seller’s additional time to perform
4. Price reduction
5. Money damages and
6. Specific performance
WARSAW CONVENTION: established a uniform rules governing the carriage of international passengers,baggage and cargo.
The Warsaw Convention holds an airline liable for all cargo damage unless caused by:
1)an inherent defect quality or vice of the cargo;
2)defective packing of the cargo performed by a person other than the carrier;
3)an act of war or armed conflict or
4)an act of public authority (customs authorities carried out in connection with the entry, exit or transit of cargo).
Limitation of cargo-losses in the USA is 17 SDR'S (Special drawing rights).
Ocean-going cargo is always at risk;damage can result from any nr of causes including external forces, the inherent nature of the goods, the passage of time, pilferage, theft or any combination of factors.
Damage and loss to cargo must be anticipated by any international shipper.
GATT= provides as organized global structure to improve the economic,political,legal climate for trade,investments and developments;primary objective is to achieve distortion free trade through the removal of artificial barriers and restrictions.
GATT: Mayor principles of Trade Law:
1)Multilateral trade negotiations
2)Predictability of trade opportunities
3)non-discrimination and MFN trade
4)national treatment
5)Elimination of quotas and other non-tariff barriers