International Business Transactions
Edition: 3
Copyright: 2023
Edition: 3
Copyright: 2023
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This textbook provides an overview of current international business patterns and the laws surrounding such patterns, with an emphasis on what makes them different from domestic ones. A significant force underlying the internationalization of the world economy has been the rapid, sustained growth of international business, both in the traditional form of international trade and in the newer forms of multinational, global, and transnational business.
The design of this book is to provide the student with a basic understanding of the major rules governing cross-border commercial transactions in the contexts of both substantive and procedural law. It is written from a pragmatic point of view to give the student more than just the theoretical components of international business transactions.
In the context of procedural law, topics covered include international contracts, international sales, international finance, international transportation, and tax. This text covers the various types of structures used to conduct international business, the types of contracts in international transactions, trade terms, required documents for payments, shipping, transportation, and banking. It also explains tax structures, tax evasion vs. avoidance, and the various updated international tax policies recommended by the Organization for Economic and Cooperation Development (OECD).
Introduction
Acknowledgments
Chapter 1 Business Structures
Introduction
Ethical Considerations 1.1
Liability
Various Business Structures
Comparing Joint Ventures
Piercing the Corporate Veil
Several Actions That May Justify the “Piercing of the Corporate Veil”
Franchise
Sale of Products Through Resale Models
Operating Company (OpCo)/Holding Company (HoldCo)
Entering a Foreign Jurisdiction—US Case Study*
Facts and Assumptions
Potential Structures
Ethical Considerations 1.2
Summary
International Business Structures in Sweden, Germany, Russia, France & Japan
Accuracy of China Foreign Jurisdiction
Entering a Foreign Jurisdiction—China Case Study
The Wholly Foreign-Owned Enterprise (WFOE)
Joint Ventures
Variations of a JV
Hong Kong Holding Company
Entering a Foreign Jurisdiction–Brazil & Germany Case Studies
Joint Venture
Contractual Joint Venture
Wholly Owned Subsidiaries
Chapter Summary
Chapter 2 Contracts
International Contract Law
The Role of Contracts in Private International Law
Cultural Differences
Balance of Power
Enforcement and Remedies
Principles of International Contract Law
History of International Law
International Organizations and Treaties
International Chamber of Commerce
Convention on Contracts for the International Sale of Goods
Ethical Considerations 2.1
Pre-Contractual Liability
1. Contracts in Common and Civil Law System - Four Corners Rule
2. Promissory Estoppel
3. Culpa in contrahendo (Fault in Conclusion of a Contract)
4. Pre-Contractual Instruments
Frustration
1. Frustration of Purpose
2. Impossibility
3. Commercial Impracticability
4. Anticipatory Repudiation
Frustration Around the World
Force Majeure (Unforeseen Circumstance)
Material Adverse Change
Contractual Clauses
Governing Law
1. Choice of Law
2. Choice of Forum (Jurisdiction)
Other Clauses
COVID-19
Limitations Period
Intellectual Property and Licensing
Dispute Resolution
Chapter Summary
Chapter 3 Dispute Resolution
Introduction
Alternative Dispute Resolution (ADR)
Enforcement of Arbitral Awards
Ethical Considerations 3.1
Litigation
Jurisdiction
Jurisdiction and Litigation in the United States vs. Canada
Ethical Considerations 3.2
Decision Tree
Jurisdiction and Court System in Russia
Governing Law Clauses
Different Types of Clauses
Ethical Considerations 3.3
Chapter Summary
Chapter 4 Finance
Introduction
Payment Methods of International Trade
Cash-in-Advance (Prepayment)
Open Account (Direct Payment)
Letters of Credit (Documentary Credit)
Documentary Collection
Ethical Considerations 4.1
Bill of Exchange
Origins of Bills of Exchange
Bills of Exchange Today
Laws Governing Bills of Exchange
Bills of Exchange in Other Parts of the World
Bill of Lading
Consignment
Drafts
Sight Draft
Time Draft
Acceptance
Negotiable Instruments
Letter of Credit
Types of Letters of Credit
Independent Principle
Benefits of a Letter of Credit
Consequences of Not Obtaining a Letter of Credit
Parties to a Letter of Credit Transaction
Contracts in a Letter of Credit Transaction
Four-Party Transaction with a Letter of Credit
Three-Party Transaction with a Letter of Credit
Laws Applicable to the Letter of Credit
Letters of Credit Characteristics
Confirmed and Unconfirmed Letters of Credit
Ten Rules Regarding International Letters of Credit
Common Discrepancies found in Letters of Credit
Obligation of Banks
Strict Compliance
Typical Documents Required in a Letter of Credit
Types and Conditions of Letters of Credit
Back-to-Back Letter of Credit
Standby Letter of Credit
Optional Parties in a Letter of Credit Transaction
Freight Forwarder
Surveyors
Alternative Methods of Guaranteeing Performance
Performance Bond
Bid Bonds
Credit Surety
Retention Fund
Demand Guarantee
Factoring and Forfaiting
Factoring
Forfaiting
Countertrade
Barter
Buyback
Counter Purchase
Offset Agreement
Tolling
Swap
Production Sharing
Chapter Summary
Chapter 5 Liability of Carriers of Goods and Passengers
Introduction
Air Carriage
International Air Carrier Liability
Beginnings of International Air Transportation
Conventions
Ethical Considerations 5.1
Montreal Convention, Article 1
Montreal Convention, Article 17
Air Carriers and Accidents
Atlas Air Flight 3591
International Air Travel Embarking and Disembarking
Montreal Convention and the Types of Afforded Damages
US Death on the High Seas Act and Punitive Damages for International Air Carriers
Other Types of Damages
Jurisdiction and Statute of Limitations Issues
Damages for Personal Belongings and Cargo Losses
Pets on Airplanes
Sea Carriage
Liability Uncertainties
Governing Rules
Containers
Shipping Pallets
Customary Freight Unit
Exceptions to the Package Limitation
Due Diligence Required Under COGSA
Seaworthy Requirement
Burden of Proof Required Under COGSA
Conclusion
Chapter 6 Incoterms
Introduction
Historical Introduction to Incoterms
What have we learned so far about Incoterms?
Iterations of Incoterms
Overview of Incoterms 2010
Overview of Incoterms 2020
Incoterms Examination and Analysis
Rules for Any Mode of Transport
Rules for Sea and Inland Waterway Transport
Incoterms Liability & Risk Transfers
Diagrams
A Strong Note of Caution
Incoterms 2020 vs. the Uniform Commercial Code (UCC)
Common Mistakes Made When Using Incoterms
Practical Application
Other Issues of Concern
Ethical Considerations 6.1
Conclusion
Chapter 7 Intellectual Property
Introduction
Patents
Definition of a Patent
Ethical Considerations 7.1
Patentability
Subject Matter
Business Methods
Application Process
Infringement of Patent Protection
Trademarks
Definition of a Trademark
Types of Trademarks
Alternates to Trademarks
Trademarks Act
Ethical Considerations 7.2
Ethical Considerations 7.3
Non-Traditional Trademarks
Exclusions from Trademark Protection
Obtaining Trademark Protection
Trademark Infringement
Trademark Dilution
Remedies
Copyrights
Definition of Copyright
Copyright Owner vs. Author
Forms of Copyright Expression
Exclusions from Copyright Protection
Copyright Protection
Requirements for Copyright Protection
Registering a Copyright
Rights of a Copyright Owner
Bundle of Rights
Moral Rights
Copyright Registration
Copyright Infringement and Exemptions
Copyright Collectives
Legality of Posting Videos and Copyright with Creative Commons
Illegal Downloading from the Internet
How Canadian Law Views Online Video Streaming
Industrial Design
Definition of Industrial Design
Industrial Design Registration Process
Trade Secrets
Definition of a Trade Secret
Protection and Infringement
Comparing Areas of Intellectual Property
Transfer of Intellectual Property
Reasons for Transferring Intellectual Property
Transfer Arrangements
Common Licensing Clauses
Other License Agreement Considerations
International Protection for Intellectual Property
Reasons for the Existence of International Protection
World Intellectual Property Organization (WIPO)
Paris Convention for the Protection of Industrial Property
Berne Convention
Universal Copyright Convention (UCC)
Patent Cooperation Treaty (PCT)
Rome Convention
Trade Related Aspects of Intellectual Property Rights (TRIPS)
Chapter Summary
Chapter 8 Tax
Introduction
Taxable Entities
Taxation
Taxation and Income Levels
Basic Charging Provision
Income Tax Bases
Income Categories
Residence of Individuals
Temporary Absences
Deemed Residents
183 Day Rule
Dual Residency
Residence of Corporations
Taxation of Non-Residents
Space at Disposal
Agency
Place of Management
Severing Residential Ties
Short-term Residents & Departure Tax
Double Taxation
Tax Treaties
Tax Avoidance
Ethical Considerations 8.1
Tax Haven
Tax Evasion
Tax Planning
Double Irish and Dutch Sandwich
Electronic Commerce
Permanent Establishment
Cloud-Based Infrastructure
Base Erosion and Profit Sharing
Ring-Fencing
BEPS Framework
Multilateral Instrument
Trusts
Offshore Trusts
Residence of Trusts
Dividends
Chapter Summary