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Laws and regulations offer certain guidelines
and protections for companies engaged in
international business.
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To describe the different forms of legal
systems
To identify the impact of laws and
regulations on international business
To explain some ways to settle differences
in international trade relationships
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Understanding foreign law will allow you to
conduct international business and protect
your interests
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Legal Systems and International
Business
There are two types of laws:
One kind of law
tells you what
to do.
Another kind of
law tells you
what not to do.
This also applies to international business.
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Legal Systems and International
Business
Three common legal systems are:
Common law
Civil law
Theocratic law
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Common Law
Common law, or case
law, gives a judge
flexibility to reach a just
decision.
common law
a set of laws based on
local customs,
traditions, and
precedent
Common law is found in the
United States, Great Britain,
and in many of Great
Britain’s former colonies.
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Common Law
A judge who follows precedent looks at
decisions made by other judges in the past
when judging a current case.
More lawsuits are filed in common law
countries because judges in common law
systems can be flexible.
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Civil Law
Judges in civil law
systems are not as
flexible as in common
law systems.
civil law
a set of codes based
on broad legal
principles
Civil law is found in Germany,
France, Japan, Russia, and
other countries.
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Theocratic Law
The most common form
of theocratic law is
found in Islamic law.
theocratic law
a set of laws based on
religious teachings
The theocratic laws of Islam
are based on the Koran,
Islam’s holy book.
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Laws and Regulations
Product Safety
and Consumer
Protection
Labor
Laws
Laws and
Regulations that
Affect Business
Licensing
Requirements
Intellectual
Property Laws
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Product Safety and Consumer
Protection
Product safety and consumer protection
laws apply to those who manufacture goods
and those who purchase goods.
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Product Safety and Consumer
Protection
Manufacturers are likely
to face liability laws.
Those injured from
unsafe or poorly made
goods can sue violators
for damages.
liability
legal responsibility for
the financial cost of
another person’s
losses or injuries
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Product Safety and Consumer
Protection
Businesses in other countries tend not to
hold other businesses accountable as
they do in the United States.
Extensive consumer protection and
liability laws sometimes put U.S.
businesses at a financial disadvantage.
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Labor Laws
What Labor Laws Regulate
Minimum wage rates
Length of the work week
and overtime
Hiring, firing, and layoff
policies
The age at which a
person can work
The right to form a labor
union
The right to strike
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Labor Laws
In countries with few or no protective
labor laws, businesses may exploit
workers.
Governments may use trade agreements,
embargoes, and other tactics to address
these problems.
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Intellectual Property Laws
Piracy is the illegal use
of intellectual property.
The use may include
illegal copying of films,
books, articles, and
music.
intellectual property
an original work fixed
in a tangible medium of
expression that can be
copyrighted, patented,
or trademarked
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Intellectual Property Laws
Legal protection
of a creator’s
intellectual
property or
product
Exclusive rights
to manufacture,
sell, or use an
invention which
can be a new
physical product
or something
that improves
an existing
product
A device that
legally identifies
ownership of a
registered brand
or trade name
Copyright
©
Patent
Intellectual
Property
Protections
Trademark
®
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Intellectual Property Laws
Many businesses demand that their
governments impose sanctions on
countries where their intellectual property
is stolen.
Business owners should know how much
protection to expect.
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Techno Pirates Some Microsoft® software
users unknowingly bought goods that
were counterfeit products. In the late
1990s and early 2000s, Microsoft
discovered that a group in Thailand was
copying and pirating its software to sell
around the world as the real thing.
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Licensing Requirements
Multinational companies must comply with
licensing requirements.
A license may be needed for a specific
business.
Licensing requirements can be used by a
government as a trade barrier.
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Licensing Requirements
Knowing the
requirements
Successfully
completing the
paperwork
Addressing
Licensing
Issues
Meeting the
requirements in a
cost-effective
way
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Licensing Requirements
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Resolving Legal Disputes
Methods for
Resolving
Legal Disputes
Litigation
Mediation
Arbitration
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Litigation
A major issue in
litigation is deciding
which court system is
the most appropriate.
litigation
a legal process used to
resolve a dispute
through the court
system
Litigation is slow,
expensive, and
complicated.
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Resolving Legal Disputes
U.S. Courts
State Trial Court
District Court
Federal Court
Each court has specific processes for working through cases as well
as methods for appealing decisions.
Most other countries have only one court system.
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Mediation
For mediation to be
successful, both
disputing parties must
view the mediator as
impartial.
A mediator is a
negotiator and advisor.
mediation
a process of
intervention between
conflicting parties that
promotes resolution of
their conflict outside
the court system
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Arbitration
Arbitration is less
expensive, less
complicated, and faster
than a lawsuit.
The arbitrator weighs the
evidence, and then
presents a solution.
arbitration
a process to resolve
disputes in which each
side presents its case
to an independent
individual, the arbiter,
who makes decisions
that are binding
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Arbitration
Arbitrating organizations include:
The International Court of Arbitration of the
International Chamber of Commerce
The International Center for Settlement of
Investment Disputes
The United Nations
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Contracts and Avoiding
Disputes
Be as cooperative as possible.
Tips for
Contracts
and
Avoiding
Disputes
Adhere to intellectual property laws and licensing
requirements.
Create quality goods and services that meet all legal
requirements.
Clearly discuss and write contracts and agreements.
Carefully follow the terms of contracts and agreements.
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