PP 4 part 2 – Political, Legal, and Regulatory Environments Flashcards
Common Law:
The basis is tradition, past practices, and legal precedents.
It is a system of laws which is based on judges’ decisions and on customs rather than on written laws.
–> As new decisions are rendered, the reasons offered by judges become part of the body of common law and set precedent for future rulings.
Civil or Code Law:
A legal system that reflects the principles of the Roman Empire.
It is an all-inclusive system based on rules that have been written into books or texts by designated jurists.
A body of law is derived and evolved directly from Roman Law. The primary feature is that laws are struck in writing (codified) and not determined (as in the common law) by the opinions of judges based on historic customs.
Islamic Law:
It encompasses religious duties and obligations as well as the secular aspect of law regulating human acts.
Its basis is interpretation of the Koran.
A significant difference when compared to Common or Civil law is that ‘interest’ is not allowed. But it allows ‘fixed-return models’ whereby an extra charge is built into the time payments of a debt.
Illustrations of Differences
A striking difference between common and code systems can be found in the laws governing how intellectual property-ownership is established:
–> ‘By use’ under common law (use it or lose it).
–> ‘By registration’ under code law (pay the fee; keep it forever).
Another difference is related to the compliance with the provisions of a contract.
–> Under common law, you must comply with a contract unless it is impossible for reasons of an ‘act of God’ such as floods, lightning, earthquakes, and similar occurrences.
–> Under code law, acts of God are extended to include “unavoidable interference with performance, whether resulting from forces of nature or unforeseeable human acts”, including such things as labour strikes and riots.
Illustrations of Differences - Examples:
Example 1:
A contract was entered into by a furniture factory to manufacture some furniture. After the furniture was made, but before it was delivered, an earthquake destroyed the factory (and the furniture).
- The earthquake would be considered an act of God under both common and code law.
- The ‘impossibility of performance’ would excuse compliance under that contract.
Example 2:
A contract was entered into by a furniture factory to manufacture some furniture. After the furniture was made, but before it was delivered, pipes in the factory’s sprinkler system froze and broke, spilling water on the furniture and destroying it.
- In common-law countries, the bursting of the water pipes would not constitute an act of God if it happened in a climate where freezing is common. The supplier would have to honour the contract by either paying any penalty clauses in the contract or buying the furniture from an external source and providing it to the buyer.
- However, Code law might excuse compliance with the contract.
Sidestepping Legal Issues
Get expert legal help in the target country.
To prevent (or minimize) conflicts:
- Protect intellectual property when in a partnership. An excellent contingency is ‘MAD’ (Mutually Assured Destruction); a concept borrowed from 1960’s macro-political studies. This model works if each business knows the technology secrets of their partner.
- Avoid bribery (subject to domestic definitions).
- Advertise & promote (to increase awareness and transparency).
- Establish jurisdiction in the contract.
Jurisdiction in International Legal Disputes
No (enforceable) judicial body exists that will effectively deal with legal commercial problems arising between citizens (or companies) of different countries.
Specifically, there is no international body that determines where legal action should occur in regard to legal commercial problems between citizens (or companies) of different countries.
Most international contracts will have a ‘jurisdictional clause’ that declares which country’s legal system will determine contract interpretation. For example:
–> “That the parties hereby agree that the agreement is made in Winnipeg, Canada, and that any question regarding this agreement shall be governed by the laws of the province of Manitoba, Canada.”
Intellectual Property
Intellectual property must be registered in each country where business is conducted.
Constitutes Patent, Trademark, and Copyright
- Much of the electronic technology used in long-range missiles is dual-use; that is, the technology can be used for both nonmilitary and military applications. It is the exporter’s responsibility to ensure that the final user of restricted dual-use products complies with export restrictions.
Patent:
gives the holder (who may not be the inventor) an exclusive right to make, use, and sell an invention for a specified period of time.
Trademark:
a distinctive mark, motto, device, or emblem used to distinguish a product.
Copyright:
establishes ownership of a written, recorded, performed, or filmed creative work.
Infringement of Intellectual Property
Constitutes Counterfeiting, Piracy and Associative Counterfeit
Counterfeiting:
defined as the unauthorized copying and production of a product. Motion pictures, recorded music, computer software, and textbook publishing are the primary target.
Cultural Issue
different countries have different tolerance levels of this crime; some countries have no enforcement, other countries have governments that actively support it.
Piracy:
unauthorized publication or reproduction of copyright work.
