Summary Commercial Law
International Business
YEAR 2
, TABLE OF CONTENTS
TABLE OF CONTENTS...................................................................................................................................... 1
CHAPTER 1 INTRODUCTION........................................................................................................2
CHAPTER 6 GENERAL CONDITIONS OF SALE.............................................................................8
Chapter 8 The international sale of goods...............................................................................9
Chapter 10 Incoterms................................................................................................................................................12
Chapter 11 Contract of carriage...........................................................................................................................14
Chapter 12 Jurisdiction and Arbitration...........................................................................................................18
Chapter 13 Applicable Law..........................................................................................................................23
Chapter 15 Payment Conditions.............................................................................................................30
1
, Chapter 1 Introduction
Individual / international contract agreements:
The success or failure of an individual contract is determined by:
The terms of the agreement
Economic changes
Geopolitical changes
Environmental changes
Societal changes
Technological changes
European law:
The main goal of the European law is to ensure fair competition between companies on the
European market and prevent abuse of a dominant market position.
Aswell as price – fixing agreements between companies. The European law also has an
impact on how companies in Europe operate the free movement of goods, persons, services,
and capital.
Global risks are:
Economic risks; income disparity, chronic fiscal imbalance, major systematic financial
failure
Geopolitical risks
Environmental risks; Climate change, raising greenhouse gas emissions and extreme
weather events.
Societal risks
Technological risks.
Risks in international trade:
Political risks
Foreign policy risks
Domestic policy risks.
Political risks:
Foreign policy: war, embargo, restrictions in trade.
Domestic policy: revolt, civil war, piracy, terrorism.
Economic policy: introduction capital controls, nationalization.
*See table 1.3 on page 9 textbook*
Border measures are import measures such as:
Specific duty increases
Reference import values
Minimum import price setting
Burdensome licensing
Special border fees
Tariff quotas
Import and export bans.
2
, Behind the border measures are part of long – term policies aiming at boosting domestic
industries, which is done by giving:
State aid
Tax advantages
Local content rules
Governmental preference to national companies.
State aid:
State aid to individual companies or sectors in the economy makes it difficult for foreign
competitors to compete with their products.
Competitive devaluation:
When a country decides to print more money, but more money devaluates the currency
compared to other currencies. This makes it cheaper for foreigners to buy products that are
from the devaluating country. Competitive devaluation can cause:
A currency war
High inflation in the country printing money.
Consumption subsidy:
When non – subsidized products become more expensive relative to the subsidized product.
Export subsidy:
When a country subsidizes a product that is being exported, competitors in the importing
country will experience a disadvantage: Their prices will be higher.
Export taxes or restriction:
Reasons why governments aim to control the export of goods:
Restrictions on the sale of technology or weapons to other countries to protect national
security.
Preservation of natural resources.
To encourage the supply of raw to local industries.
Import ban:
Import bans are used by governments seeking to protect existing domestic industries and
reduce the country’s dependence on imports. An import ban is an advantage for domestic
producers as they can sell their products more easily and against higher prices.
However, an import ban can also be used for the protection of the health of the population and
the environment.
Investment measures:
Investment measures prohibit foreigners from investing in certain industries or owning certain
industries. Also, there are countries that nationalize companies – this mostly happens if a
company has some great losses – and this is meant to protect domestic industries.
However, nationalization is not very appealing for foreign investors because they might lose
their money when a domestic company is or will be nationalized.
Local content requirement:
A measure that constrains foreign companies in local content requirements.
For example when a country demands by law that companies only use (for a certain
percentage of the time) the native language in advertisements, instead of a foreign language
3
International Business
YEAR 2
, TABLE OF CONTENTS
TABLE OF CONTENTS...................................................................................................................................... 1
CHAPTER 1 INTRODUCTION........................................................................................................2
CHAPTER 6 GENERAL CONDITIONS OF SALE.............................................................................8
Chapter 8 The international sale of goods...............................................................................9
Chapter 10 Incoterms................................................................................................................................................12
Chapter 11 Contract of carriage...........................................................................................................................14
Chapter 12 Jurisdiction and Arbitration...........................................................................................................18
Chapter 13 Applicable Law..........................................................................................................................23
Chapter 15 Payment Conditions.............................................................................................................30
1
, Chapter 1 Introduction
Individual / international contract agreements:
The success or failure of an individual contract is determined by:
The terms of the agreement
Economic changes
Geopolitical changes
Environmental changes
Societal changes
Technological changes
European law:
The main goal of the European law is to ensure fair competition between companies on the
European market and prevent abuse of a dominant market position.
Aswell as price – fixing agreements between companies. The European law also has an
impact on how companies in Europe operate the free movement of goods, persons, services,
and capital.
Global risks are:
Economic risks; income disparity, chronic fiscal imbalance, major systematic financial
failure
Geopolitical risks
Environmental risks; Climate change, raising greenhouse gas emissions and extreme
weather events.
Societal risks
Technological risks.
Risks in international trade:
Political risks
Foreign policy risks
Domestic policy risks.
Political risks:
Foreign policy: war, embargo, restrictions in trade.
Domestic policy: revolt, civil war, piracy, terrorism.
Economic policy: introduction capital controls, nationalization.
*See table 1.3 on page 9 textbook*
Border measures are import measures such as:
Specific duty increases
Reference import values
Minimum import price setting
Burdensome licensing
Special border fees
Tariff quotas
Import and export bans.
2
, Behind the border measures are part of long – term policies aiming at boosting domestic
industries, which is done by giving:
State aid
Tax advantages
Local content rules
Governmental preference to national companies.
State aid:
State aid to individual companies or sectors in the economy makes it difficult for foreign
competitors to compete with their products.
Competitive devaluation:
When a country decides to print more money, but more money devaluates the currency
compared to other currencies. This makes it cheaper for foreigners to buy products that are
from the devaluating country. Competitive devaluation can cause:
A currency war
High inflation in the country printing money.
Consumption subsidy:
When non – subsidized products become more expensive relative to the subsidized product.
Export subsidy:
When a country subsidizes a product that is being exported, competitors in the importing
country will experience a disadvantage: Their prices will be higher.
Export taxes or restriction:
Reasons why governments aim to control the export of goods:
Restrictions on the sale of technology or weapons to other countries to protect national
security.
Preservation of natural resources.
To encourage the supply of raw to local industries.
Import ban:
Import bans are used by governments seeking to protect existing domestic industries and
reduce the country’s dependence on imports. An import ban is an advantage for domestic
producers as they can sell their products more easily and against higher prices.
However, an import ban can also be used for the protection of the health of the population and
the environment.
Investment measures:
Investment measures prohibit foreigners from investing in certain industries or owning certain
industries. Also, there are countries that nationalize companies – this mostly happens if a
company has some great losses – and this is meant to protect domestic industries.
However, nationalization is not very appealing for foreign investors because they might lose
their money when a domestic company is or will be nationalized.
Local content requirement:
A measure that constrains foreign companies in local content requirements.
For example when a country demands by law that companies only use (for a certain
percentage of the time) the native language in advertisements, instead of a foreign language
3
