Flores, Nicole A.

MGMT1

Good morning everyone, Now let us proceed with Chapter 6 on the topics The Legal Environment
and Intellectual Property Protections For this topic, we will learn and understand the different
types of legal systems and some fundamental principles involving criminal contracts, tax, product
safety, and dispute settlement law.

The legal environment is not just about simple compliance with the law; it's about understanding
the legal frameworks in which a business conducts its operations to achieve and maintain
compliance. It is essential because it helps managers make decisions on their business operations
and become aware of the limitations and boundaries established. And lastly, to promote a
regulated workplace environment, the legal environment ensures that all business across the
globe is regulated

A contract is the meeting of minds between two parties for them to legally enforce the agreements
stipulated. For example, A sells a piece of land to B for 5million pesos, this is called a real estate
contract

In civil law countries, contracts tend to be relatively short and unspecific because many of the
relevant issues are already covered in the given civil code. In common law countries, however,
judges have considerably more leeway to interpret contracts in different ways, so parties really
need to provide a very specific contractual language to avoid judicial construction of their
contract.

Tax rates and laws vary significantly throughout the world, and they play a significant influence
in global firms' decisions about where to locate. However, sometimes the advantages of doing
business in a specific location are so compelling that companies may choose to operate there
despite high tax rates and complicated tax rules. For example, although the United Kingdom has
increased the top individual tax rate to 50% and has complex tax rules and regulations system,
few financial and other businesses desire to relocate their headquarters to London, England, while
many choose to stay. These companies feel that the benefits of London, both "personal and
professional," exceed the tax burden.

For example, the Enron Corporation maintained 43 companies in a small island nation off the east
coast of Africa, and was able to avoid the IRS for many years. Some popular tax haven nations with
tax evaders includes Belize, the Cayman Islands, Antigua and Barbuda, and the Isle of Man

For the Product safety law, here in the Philippines we have the REPUBLIC ACT NO. 7394 also
known as THE CONSUMER ACT OF THE PHILIPPINES. The State shall ensure safe and good quality
of food, drugs, cosmetics and devices, and regulate their production, sale, distribution and
advertisement to protect the health of the consumer. It also protect the interests of the consumer,
promote his general welfare and to establish standards of conduct for business and industry.

CAVEAT EMPTOR - the burden is placed on the buyers of products to determine their level of
safety. For example, in certain more developing countries, such as Sri Lanka, Ukraine, and
Pakistan, tobacco companies are free to sell tobacco products (cigarettes, etc.) more or less
without any governmental interference or regulation.
CAVEAT VENDITOR the burden is placed on the manufacturers and sellers of products to make
sure the products they sell are safe or, at least, to very clearly and explicitly warn consumers
about the potential safety risks of said products.
Next the Dispute settlement law which aims to settle the dispute, disagreements or conflicts
between two parties. For example, suppose two major international corporations, like IBM
Corporation in the United States and Nokia in Finland, enter into a contract. There is then an
alleged breach of this contract by IBM and Nokia wants to obtain redress for this breach. There
are two ways to potentially resolve this dispute, a public option and a private option.

The public option is to resolve the case through litigation, which means bringing the case to a
public or government-run court of law to settle the dispute. Contracts between major international
companies like IBM and Nokia likely contain clauses that specify which court(s) will hear any
disputes that arise out of them.

Arbitration is an alternative dispute resolution process agreed to by the relevant parties whereby
a neutral private party hears the case and renders a decision. For example, the contract between
IBM and Nokia may have a provision stating that any disputes arising under that contract will, in
lieu of going to court, be heard and decided by an independent private arbitrator.