International Business Transactions Outline

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IBT OUTLINE—Karamanian, Spring 2008

I. Modern Forms and Patterns of IBT
a. Types of IBTs, categorized by penetration:
i. export-import transaction
ii. agent or distributor sells goods abroad
iii. licensing to a foreign entity to manufacture and distribute products abroad iv. Joint ventures
b. Forms of Trade
i. Goods
ii. Services
iii. FDI
iv. Knowledge/Technology Transfer
c. MNE
i. DEFINITION: a number of affiliated businesses which function simultaneously in different countries, are joined together by ties of common ownership of control, and are responsible to a common management strategy. From the headquarters company (and country) flow direction and control, and from the affiliates (branches, subsidiaries and joint enterprises) products, revenues, and information. ii. Reasons why MNEs are so important to IBTs

1. Provide capital, know-how, and access to foreign markets for host country, thereby increasing export competitiveness 2. FDI tied to MNEs
3. MNEs own lots of IP
d. Intl Forums and Institutions
1. UN Commission on International Trade Law 2. dedicated to formulizing modern rules on commercial transactions and to furthering the harmonization and unification of the law of international commerce. 3. CREATES TREATIES, e.g. CISG

4. CREATES MODEL LAWS, e.g. UNCITRAL Arbitration Rules ii. UNIDROIT (International Institute for the Unification of Private Law) iii. International Chamber of Commerce (ICC)

1. UCP—Uniform Customs and Practice for Documentary Credits 2. Court of Arbitration
3. Incoterms
II. International (Documentary) Sale of Goods
a. Bill of Lading
i. Contract of Carriage
ii. Shows to whom it will be shipped (non-negotiable, straight) or shows that the holder has title to the goods (negotiable) b. Incoterms
i. Generally
1. Published by the Intl Chamber of Commerce 2. Parties adopt it by K, or may be implied if the UCC applies through custom and practice. 3. apply to matters concerning the duties and obligations of sellers and buyers to a K of sale relating to the delivery of tangible goods sold. 4. Note—there are 3 Ks usually: K of sale, K of carriage, and L/C. Incoterms apply only to the Sale K (not to carriage) 5. Risk of Loss on buyer until he satisfies his delivery obligation to the buyer. These say then that duty is satisfied. 6. For CIF and FOB, risk of loss passes to buyer when the goods have passed the ship’s rail. 7. Incoterms have been revised to adopt to modern practice, e.g. the term “free carrier” has been added to deal with the case where the reception point in maritime commerce is no longer the traditional passing of the ship’s rail but a point on land prior to the loading of the goods on the vessel. ii. FOB (Free On Board) (p. 79):

1. S delivers goods past ship’s rail at named port of shipment a. bears all costs and risk of loss until that point 2. S clear goods for export

3. applies only for sea/inland waterway transport. iii. CIF (Cost Insurance Freight) (p. 82)
1. S delivers goods past ship’s rail at named port (like FOB) 2. S pays all costs and freight necessary to bring goods to named port of destination, BUT risk of loss or damage to the goods, and additional costs incurred after delivery are...
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