ch21 - The International Legal Environment of Business...

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The International Legal The International Legal Environment of Business Environment of Business Generally, know terms Generally, know terms Chapter 21 Chapter 21
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International Issues International law and business U.S. import policy Business structures in foreign markets Foreign Corrupt Practices Act and its restraints on competitiveness for U.S. firms International contracting Insuring losses Resolution of international disputes
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The International Business Environment Includes all business transactions that involve 2 or more countries Movement of goods across national boundaries Movement of services across national boundaries Issues regarding capital Issues regarding personnel
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Risks of International Business Transactions Financial Political Regulatory These stem from differences in: Currencies Language Business customs Legal systems Social philosophies National goals
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The Foreign Corrupt Practices Act (FCPA) 1977 Punishment of payer of bribe to foreign officials “Corrupt ” person displays reckless or conscious disregard for consequences of one’s actions Payer knows payment will go to public official “Any reasonable person would have realized” “Consciously chose not to ask about what he/she had reason to believe would be discovered” “Simple negligence” or “mere foolishness” exception Routine governmental action (Grease Payment) exception: “facilitation or expediting payment. . . the purpose of which is to expedite or secure the performance of a routine governmental action.” ( i.e. visas, providing basic utilities, transportation services, etc.-- small amount and very limited usage).
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Punishments Under FCPA Individuals: Maximum of $100,000 & 5 years in jail Corporation: Up to $2,000,000/violation Exception: Dept. of Justice “pre-deal interpretation” Watch: “Slush funds” or “Salaries, commissions or fees” disproportionate to service provided
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International Contracts Cultural Aspects i.e. Asia, Europe, Latin America all have long- term approach to relationships Payment Clauses & Exchange Rates Repatriation of Profits Choice of Language Clause Force Majeure Clauses Forum Selection Clause Selection of Court Choice-of-Law Clauses Select law that applies Letters of Credit Assurance by bank of buyer to pay seller upon receipt of documents that prove goods were shipped and contract fulfilled Revocable or Irrevocable
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Loss of Investment ( Political Upheavals, Unstable Monetary Systems, Changes in Laws) Nationalization : Gov’t “nationalizes” foreign investment Gov’t may pay less than value i.e. Iran, Cuba, England Expropriation : Taking foreign property in accordance with international law Confiscation: Taking is discriminatory Insuring Against Risk of Loss Short-term private insurers Major insurers (i.e.
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ch21 - The International Legal Environment of Business...

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