Running head: ADDRESSING INTERNATIONAL LEGAL AND ETHICAL

ISSUES

Addressing International Legal and Ethical Issues

LAW/421 Contemporary Business Law
October 13, 2014

ADDRESSING INTERNATIONAL LEGAL AND ETHICAL ISSUES

Addressing International Legal and Ethical Issues

American companies collaborating or undertaking business ventures with foreign
companies must understand the complexities of the laws of a culture other than their own. Many
modern nations have signed treaties establishing rules, regulations, principles and grievance
procedures to guide the actions of the parties involved in any business transaction. One such
treaty is the United Nations Convention on Contracts for the International Sale of Goods. This
treaty contains provisions for legal global specifics for member countries to conduct business in
a fair and ethical manner including the resolutions of disputes or discrepancies of conflicting
national laws (Flechtner, 2014).
However, there are many smaller developing countries that have yet to formally
recognize international treaties concerning the conduction of commerce and rely on their own
formal laws as a guiding factor. In instances such as these, it is imperative that all members of a
collaborating effort become meticulously acquainted with the local laws and customs of the
opposing partys country (Melvin, 2011). This will aid in establishing a binding agreement
between the parties involved taking into account the laws of both countries. Ordinarily, at the
onset of a potential business agreement, the laws of the initiating country are customarily
accepted to develop said agreement but may contain provisions for the opposing countrys laws
which they may be legally bound. For example, many American companies have moved their
operations overseas to exploit low wages of foreign countries, but are still bound by American
laws concerning labor issues on American soil.
In the scenario between Cadmex and Gentura, it is Gentura requesting an agreement with
the American company Cadmex. Though both parties are acting in an ethical manner in relation
to the common good of a global market, any contract between the two parties must take into
account the differences in cultures while still assuring that the contract provisions can be
enforceable in both countries. A major risk of an American company entering into an agreement
with a foreign company which has not signed any formal international agreement is the
uncertainty of stability. In smaller third world countries, the government controls the
international business transactions and the risk of an overthrow of government can leave an
American company will little to no recourse in enforcing the terms of a contract. This is not
always the case as American companies are fully aware of political unrest and tend to avoid
entering into agreements with foreign companies based in unstable regions.
Under ideal conditions, American companies will undertake extensive efforts to
understanding local business laws of foreign companies to make sure their efforts and
agreements are enforceable. In the scenario, the relations between America and Cost Rica are
cordial and there is no reason to suspect political turmoil will upset any agreement between
Cadmex and Gentura. The laws governing business in Costa Rica are specific but allow for
sublicenses and clauses for their own companies conducting business with foreign companies.

ADDRESSING INTERNATIONAL LEGAL AND ETHICAL ISSUES

Entering into an agreement carries risks for both parties regardless of national or
international treaties. American companies will always stipulate conditions into any contract to
avoid interruptions of business including grievance procedures. Given the American economy is
still considered a major force in the global market, foreign companies also will accommodate
provisions into an agreement in order for the agreement to be profitable and in almost every
instance, the rules and traditions of American companies will supersede over a foreign company
(Melvin, 2011). Foreign companies will have as well conducted research into American business
laws concerning international trade and will be assured that provisions and procedures are in
place for the ethical and professional conduct of American businesses.

ADDRESSING INTERNATIONAL LEGAL AND ETHICAL ISSUES

References
Flechtner, H. M. (2014). United Nations Convention on Contracts for the International Sale of
Goods. Retrieved from Audio Visual Library of International Law:
http://legal.un.org/avl/ha/ccisg/ccisg.html
Melvin, S. (2011). The legal environment of business: A manageriral approach: Theory to
practice. New York, NY: McGraw-Hill/Irwin.