THIS PRESENTATION MAY INCLUDE THE INTERNATIONAL BUSINESS LAW THAT COVERS THE DIFFERENT ASPECTS OF BUSINESS TRANSACTIONS.

1. Presentation on international business
laws covering different aspects of
business transaction

2. International business laws
• International business law also known as
international commercial law is the body of
law that governs international sale
transactions.
• A transaction will qualify to be international if
the elements of more than one country are
involved.

3. International commercial contracts
International commercial contracts are sale transaction
agreements made between parties from different countries.
The methods of entering the foreign market include:
• Export directly.
• Use of foreign agent to sell and distribute.
• Use of foreign distributor to on-sell to local customers.
• Manufacture products in the foreign country by either
setting up business or by acquiring a foreign subsidiary.
• Licence to a local producer.
• Enter into a joint venture with a foreign entity.
• Appoint a franchisee in the foreign country ETC.

4. Convention on the International Sale
of Goods
• The United Nations Convention on Contracts for
the International Sale of Goods (CISG) is the main
convention for international sale of goods.
• The importance of CISG is its interpretation.
International context, uniformity and observance
of good faith must be regarded when interpreting
the Convention.
• Matters not expressly settled by CISG are to be
determined according to the general principles of
CISG.

5. Incoterms
• Incoterms are the set of rules which define the
responsibility of sellers & buyers for the delivery
of goods under sales agreement.
• They are published by international chamber of
commerce (ICC) and are widely used in
commercial transactions.
• Incoterms were first published in 1936, it has
been revised every 10 years.
• Incoterms 2010, the 8th revision, refers to the
newest collection of essential international
commercial and trade terms with 11 rules.

6. • The Incoterms are classified in 4 different
classes:
1. Ex (ExW);
2. Free (FOB, FAS, FCA);
3. Cost (CPT, CIP, CFR, CIF);
4. Delivery (DAP, DAT, DDP).
The 11 terms can also be classified into two
different categories depending on its contents:
• Rules for any modes of transport: ExW, FCA,
CPT, CIP, DAT, DAP, DDP;
• Rules for sea transport: FAS, FOB, CFR, CIF.

8. Contract of carriage of goods
• The bill of lading (transport document used almost
exclusively for carriage of goods by sea) is a contract of
carriage between the consignor, the carrier and
consignee that acts as a receipt of transfer of goods
and as a negotiable instrument.
• Most bills of lading today are governed by
international conventions such as the Hague-Visby
Rules, which is a revised version of the Hague Rules by
a Brussels Protocol in 1968; and Hamburg Rules.
• On the other hand, the United States and the United
Kingdom adopted the Carriage of Goods by Sea Act
(COGSA).

9. Insurance in international trade
• Insurance against perils is an important aspect of
international commercial transactions.
• In the event of loss or damage to cargo, an insured party
will be able to recover losses from the insurer.
• The type of insurance required depends on the mode of
transport agreed between parties to transport the cargo.
Such insurance forms include marine, aviation and land.
• The type of insurance contract depends on the Incoterm
adopted by the parties in a sale contract. A CIF sale contract
requires the seller to obtain insurance cover.
• An FOB contract however places no obligation on the buyer
or seller to obtain insurance.

10. Payment in international trade
Practically, payment is effected by the following
methods:
• Cash in Advance: buyer transfers funds to the seller’s
account in advance pursuant to the sale contract.
• Open Account: arrangement for the buyer to advance
funds to an ‘open account’ of the seller on a fixed date
or upon the occurrence of a specified event, such as
delivery of the goods.
• Documentary Credits: the bank, on behalf of buyer,
issues a letter of credit undertaking to pay the price of
the sale contract on condition that the seller complies
with credit terms.

11. World trade organisation (WTO)
• The World Trade Organization (WTO) is an
intergovernmental organization that is concerned with the
regulation of international trade between nations.
• The WTO officially commenced on 1 January 1995 signed
by 123 nations on 15 April 1994, replacing the General
Agreement on Tariffs and Trade (GATT).
• It represents a crucial aspect of international commercial
law through its objectives of facilitating global trade flow;
liberalising trade barriers and providing an effective dispute
settlement mechanism.

12. Principles of International Trade Laws
WTO contains three important basic principles:
• Most-favoured nation principle (MFN): expresses that any
advantage to a product originating or destined for another
country shall be treated in accordance with a like product
originating in or destined for the contracting country .
• National treatment principle: prohibits discrimination
between imported and like domestic products, other than
through the imposition of tariffs.
• Reciprocity principle: encourages negotiations between
contracting parties on a reciprocal and mutually
advantageous basis, directed towards the reduction of
tariffs and other charges on imports and exports.

13. Regional trade blocs
• Regional trade blocs are arrangements between States
to enable parties to benefit from greater access to each
other’s markets.
• Regional trade initiatives and economic integration is
integral to international commercial law through its
impact on commercial transactions.
• Some examples include the European Union, North
American Free Trade Agreement.
• GATT allows the creation of customs unions and free
trade areas as an exception to the MFN principle if it
facilitates trade and does not raise barriers to trade of
other contracting parties.

14. Anti-dumping and countervailing
measures
• Dumping refers to the unfair trading practice of exporting
products at a cost below market price.
• Anti-dumping regimes involve imposing duties that represent
the price difference between goods sold on the exporter’s
domestic market and goods sold on the import market.
Countervailing measures
• A countervailing duty is imposed for the purpose of offsetting
a subsidy.
• The Agreement on Subsidies and Countervailing Measures
forms the current regime for imposing countervailing duties
on subsidised goods to conform to GATT principles.
• The Committee on Subsidies and Countervailing Measures
exists to carry out tasks assigned under the Agreement

15. International contracts relating to
intellectual property (IP)
• Developments in international trade through e-commerce
have seen an increased emphasis on IP protection.
• The Agreement on Trade-Related Aspects of Intellectual
Property Rights (TRIPS), which replaces earlier international
IP agreements, outlines rules to control anti-competitive
practices in international licences relating to IP.
• TRIPS enables compliance disputes to be brought to
attention of the WTO.
• Further it applies basic WTO principles to IP rights, such as
the national treatment principle and the MFN principle.

16. A Quick Recall
1. After Incoterms 2010, how many Incoterms
are there?
a)8
b)6
c) 11
d)None of these

17. 2. World trade organisation officially
commenced on which year?
a. 1994
b.1936
c.1995
d.1945

18. 3. When was the first incoterm was published?
a) 1945
b) 1997
c) 1936
d) 1994

19. 4. Incoterms are published by?
a) WTO
b) ICC
c) WIPO
d) None of these

20. Answers
1. (C)
2. (C)
3. (C)
4. (B)