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International Business Environment > Legal Environment > Flashcards

Legal Environment Flashcards

1
Q

What is law?

A

Refers to the framework of rules and the institutions through which minimum standards of conduct are formulated and enforced

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2
Q

What do laws regulate and why do they change?

A
  • They regulate behaviours and relationships within and between societies
  • They change in response to changing social, economic and political circumstances
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3
Q

What are the sources of law?

A
  • Customs - accepted social norms
  • Judicial precedent - based on decisions in court, lower courts must follow previous decisions of higher courts
  • Legislation - enacted by parliament, business law or consumer law
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4
Q

What is civil law?

A
  • The most widespread
  • Primary source - legislation/legal codes
  • Inquisitorial process
  • Written statements
  • Judges determine trial
  • Lawyers are advisors
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5
Q

What is common law?

A
  • Operates in UK, US, Canada, Australia and India
  • Based on English law
  • Responds to changes in society
  • Sources - case law; statutes
  • Oral arguments are important
  • Lawyers are principle advocates
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6
Q

What is customary law?

A
  • Important role in many countries e.g Africa, China and India
  • Source - life experiences, religious or philosophical principles
  • Fluid and evolutionary
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7
Q

What is sharia law?

A
  • Operates in Muslim countries
  • Source - the Koran
  • May be limited to only personal behaviour
  • Banking and finance
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8
Q

How did Islamic banking cope with the financial crisis in comparison to conventional banking?

A

Islamic banks were more profitable than conventional peers in the run up to the crisis.

Islamic banks only saw a minor impact on profitability in the early stages of crisis, while credit and asset growth remained strong

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9
Q

How are legal systems not mutually exclusive?

A

There are some countries that have a mix of legal systems.

Customary law is often mixed with civil or common law e.g Kenya, China and India

Sharia exists alongside common law in some Muslim dominated countries or states e.g Nigeria

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10
Q

What are the functions of legal systems?

A

To provide a framework within which people can exist and operate

Deter wrongful conduct

Redress abusive conduct

Provide a means for resolving conflict

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11
Q

What is a contract?

A

Legally binding agreement between buyers and sellers, employers and employees, business partners

Can be oral, written, formal or informal

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12
Q

What is contract law?

A

Provides redress for breaches of contract - complainant can get redress through the courts

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13
Q

What are the elements of a contract?

A
  • Offer - a declaration
  • Acceptance
  • Consideration - benefit or expense
  • Intention to create legal relations
  • Capacity - minors, mentally disordered, drunks not capable
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14
Q

Which countries take the longest to enforce contracts?

A
  • India - more than 1400
  • Brazil - more than 700
  • South Africa - 600
  • China - 500
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15
Q

Which countries have the most expensive cost of enforcing a contract (resolving a dispute)?

A
  • UK - above 45% of claim
  • Nigeria - above 35%
  • South Africa - above 30%
  • India - above 30%
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16
Q

What is tort law?

A
  • Involves injury to people or damage to their assets - not necessarily criminal
  • Negligence, defective goods and services
  • The aggrieved can pursue the accused through the courts
17
Q

What is criminal law?

A
  • Relates to legal wrong (criminal offence) - punishable on behalf of society
  • eg Selling forbidden products, fraudulent accounting, bribery
  • Prosecution is undertaken by the state
18
Q

What are examples of companies being done under criminal law?

A
  • L’Oreal for advertising in US that it’s Genifique product could deliver “visibly younger skin in seven days” false advertising (2014)
  • Ryanair for misleading advertising - in 2010 they advertised “£10 one way fairs to Gothenburg and Dusseldorf”
19
Q

What are the extraterritorial influences of laws?

A
  • Business conduct abroad may be regulated by a domestic law in a company’s home country
  • Some domestic laws are applicable in foreign countries e.g UK Bribery Act, USA - Foreign Corrupt Practices Act
20
Q

What is an example of the extraterritorial influence of laws?

A

Siemens bribed Greece 100m euros to win gov contracts during Athens Olympics 2004 - penalty of $450m in 2008

21
Q

What is international law?

A
  • Law that applies across boundaries - takes the form of treaties, codes and conventions
  • Facilitates international trade and investment by reducing: cost of disputes, uncertainty about which country’s laws apply
  • Number of disputes with suppliers and customers
22
Q

What is international arbitration?

A
  • Arbitiration involves the settlement of a dispute by an impartial third party e.g UN, WTO
  • Increasingly popular with business because:
    Arbitrator is neutral
    Confidentiality
    Flexible procedures
    Decisions enforceable in dfferent countries
23
Q

What does the EU give EU firms the right to do?

A
  • Export and import goods and services within the EU
  • Transfer workers anywhere in the EU
  • Invest in any member state
24
Q

What does the EU prohibit?

A
  • Cartels (article 101)
  • Abuse of dominant market position (article 102)
  • Member states assistance to business that distorts/threatens competition
25
Q

What laws are there around the internet?

A
  • No single set of laws
  • Difficulties applying and enforcing law on individuals and businesses domestically and especially abroad
  • Need for international law
26
Q

What laws are there around cybercrime, IPRs and privacy?

A
  • IP laws vary globally

- Illegal downloading of software, music and films not equally enforced

27
Q

How does the law relate to business?

A
  • Establishing the org: company law, partnerships, business names
  • Acquiring resources: property, contract, agency
  • Business operations: employment laws, H and S, contract
  • Selling output for consumption: consumer laws
28
Q

What relevance does law have to international business?

A
  • Whether products are permitted in foreign countries
  • Whether the legal environment would hinder or facilitate operations
  • Whether products/operations would need to be modified
  • Degree of legal protection in foreign states

International Business Environment (11 decks)

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