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Business in an International Legal Environment With the internet becoming increasingly powerful and popular, international business is bound to do so as well. It has become more and more important for businesses to conduct global commerce. As this trend continues to rise and the world grows smaller, many issues arise regarding the legalities of international business. I will attempt to condense these issues into this brief memo.
Many advantages and disadvantages exist in international sales and trade. A few advantages are quite obvious. Expanding the companys market in order to increase overall revenue and dominate the market share are the most apparent. In addition, international business also unites the world in a way. It is important to merge international economies in order to become more global.
Disadvantages are a little less obvious and a little more plentiful. Three major problems include different legal systems, long distances, and insurance considerations. Also, since the two parties neither know or understand each other well, there exists some amount of uneasiness between the buyer and the seller. This latter problem has been somewhat resolved with the onset of the letter of credit financing device. The letter of credit is basically an assurance by the buyers bank that the seller will get his / her money.
In order for the seller to receive his money, he must provide some proof that the goods had been delivered. Other disadvantages include the price that is paid for goods distributed to another country. This is settled with international sales contracts. Trade terms are used to settle differences in distance and insurance problems. They are sometimes used to divide responsibility between two countries doing business. In 1980 the United Nations Convention on Contracts for the International Sale of Goods (CISG) added some amount of uniformity to international sales.
Under the CISG, contracts between countries are governed. This attempts to provide certainty regarding frauds, timeliness, risk of loss, and revocability of offers. One huge disadvantage to international business is the issue of disputes. When a dispute arises between two countries, the issue can be tied up in litigation for much longer than a dispute within our own country. This issue is usually avoided because of agreements adopted by many countries that perform international trade. When assessing advantages and disadvantages of international business, it can appear that the bad outweigh the good.
However, many of the disadvantages have been laid to rest due to agreements between countries. Therefore, it is far more beneficial for a large company to conduct international business than perform business within its own country.
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Research essay sample on Advantages And Disadvantages Letter Of Credit
