Addressing International Legal and Ethical Issues Simulation Summary

October 27, 2014

Addressing International Legal and Ethical Issues Simulation Summary
When resolving legal disputes in international transactions countless issues may be involved. According to Melvin (2011), a U.S. firm entering into a legal contract with one from another country, the U.S. firm should ensure that the agreement could be officially enforced. This also applies to the foreign firm, which is the reason it is so important for businesses to stay updated on international trade regulations and laws. Some of the issues involved in the resolution of international transactions are political and cultural. An example of a cultural issue that can arise in an international transaction between a company in the U.S. and a company in China would be if business discussions were brought up too soon by the U.S. company. This is because China has a cultural tradition of discussing issues of personal or social matters before dealing with the business side of things. In international law, legal disputes can be resolved properly with the avoidance of these types of cultural and political differences, which is the reason companies need to be aware of them.
When taking action against a business partner in a foreign country, the first thing that needs to be considered is the laws of the other country. This is essential when trying to ensure the actions against the international business partner are taken legally based on the laws of their country. Although the U.S. legislation might have similarities to those of another country, there are likely to be some very important differences. Because U.S. laws only pertain to the U.S., the upheld laws are going to be those of the business partner’s country. Consequently, verifying that the case is even relevant, based on the laws of that foreign country is also something to consider. A behavior that is deemed illegal in the U.S. may not be viewed as so in another country. Therefore, the need to completely understand the laws of business in a foreign country is so important before business can be conducted with a company in that country. Ultimately, consideration of the ramifications due to taking legal action against a nosiness partner of another country must be taken into account as well. If not, conducting business in that country in the future may not be an option.
One major factor that may work against the decision CadMex made in granting sublicensing agreements is that as more agreements are granted, the chance of a legal case occurring is higher. CadMex needs to have the inclusion of sub-paragraphs in all of their agreements so that they can be protected from any legal actions taken against them. Without the sub-paragraphs, legal accountability for financial losses due to a lawsuit filed against a company, who holds a contract with CadMex, by another country, can be pinned to CadMex.
When organizations in different countries partner in business, and the customs and laws of those countries are in conflict, the local country’s laws and customs take precedence over the laws and customs of the partner country from abroad. If a company in the U.S. is conducting business in China, then the laws and customs of the U.S. cannot be enforced; China’s laws and customs hold precedency. As business is conducted in China by both foreign and domestic companies, only the laws of China hold valid; there is no adaptation to the laws of the foreign country abroad. Accordingly, during conflicts related to a foreign company conducting business within a country, the nation where business is being conducted is the governing laws and customs that will be upheld.
The decision to start a contract for business between two companies is made with the expectations that the legally bound contract is protected by laws of the U.S. Regrettably, not every scenario has this outcome. Certain situations occur where one company is protected by state laws, where the other company is not. Marijuana, for example is legal in some states, but not all. Before entering into contracts, companies must also consider state laws. When there are issues of a domestic nature, domestic courts handle the issues and both companies are familiar with the laws. Disputes of international nature are dealt with in courts of the business-conducted country, where