INTERNATIONAL BUSINESS TRANSACTION
PART 1: THE CONDUCT OF BUSINESS IN THE WORLD COMMUNITY
[A] Who are the Foreign Traders?
· Smaller Traders: … Dealers
o Individual
o Partnerships
o Incorporated Businesses
· “Multinational” or “Transactional” Corporations – Large corporations whom engage in extensive international trade.
· Government = the 3rd party establishing and regulation framework within which trade & investment transpires … Regulates Trades Through:
o Legislation
o Administrative Regulations
[B] Nonmarket Economies & State Training Organizations
· Nonmarket Economies – have diminished their dependency on strict central planning of all productions
o These nations are known as = “nations in transition”
§ China
§ Russia
o Are Communist/ Socialist countries = Cuba, North Korea
[C] Dependent, Developing and Advanced Developing Countries. – The new international Economic Order and a law of Development
· Developing Nations – describes all nations which are less then developed … but there are many variations in the level of development among these developing countries:
o Those which have achieved substantial development = ADC “Advanced Developing Countries” … or … NIC “Newly Industrialized Countries”
o Variant levels are important because when a developing country reaches a certain level of development = they receive a tariff reduction
[D] International Economic Institutions
· International Organizations – have an important role as well
o Important Source of the development of international legal rules
· United Nations
o International Court of Justice – establish norms of international law
o UNCTAD = United Nations Conference on Trade and Development
§ Promotes world trade
§ Seeks Multilateral trade agreements
§ Harmonizes trade and development policies
o UNCITRAL = United Nations Commission on International Trade Law
o UNIDO = United Nations Industrial Development Organization
§ Provides advisory & Technical aid to industries in low income countries
· International Organizations which evolved form the Bretton Wood Conference
o IMF = International Monetary Fund
§ Lender of Last Resort to numerous developing nations unable to service their forign debts
o GATT = General Agreement Tariffs and Trade
§ Goal eliminate the nontariff barriers
§ Major source of international trade law for major trading nations
[E] The Role of Counsel in International Business
· Int
s govern the contract?
o Is there a Treaty or multilateral convention applicable?
· SOLUTIONS offered by the International Trading Community
(1) Assign foreseeable risks of the transation as clearly as possible in the contracts involved à To do this it has developed a special language of commercial terms
(2) Avoid large and uncertain risks by creating devices which break them down into many small and measurable risks
o EX: The letter of Credit – device to assure that seller will be paid upon shipment of the goods.
[How is a Documentary Sale Set Up by the Parties?]
2. The Sales Contract
a. Forms 1-3 used by parties to form the sales contract
· Form 1 = Letter sent from Buyer to Seller requesting a price quotation
· Form 2 = Proforma Invoice – Sellers response
o Includes pricing options/packages
o May include costs with shipping … depending on which pricing term the contract is using
· Form 3 = Buyer sends – Purchase order
This duplicates the pricing in the Proforma Invoice