Addressing International Legal and Ethical Issues Simulation Essay

726 Words Apr 26th, 2006 3 Pages
Addressing International Legal and Ethical Issues Simulation
Disagreements are very common in international trade. Whenever a company enters into a contract with an international entity, it must ensure that the contract is legally enforceable in order to protect the company's interest.

This paper deals with such international problems faced by a hypothetical company, CadMex Pharma based in Tampa Florida, which teams-up with another hypothetical company, Gentura based in a small developing country, Candore. A series of events takes place between CadMex Pharma, Gentura and the country of Candore, which has impact on the business operations of CadMex Pharma. The contract that these two companies get into is that CadMex will license
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In return, of this know-how, Gentura has provided worldwide marketing rights to CadMex for the drugs that are developed using CadMex's technology. One of the payment clauses of the contract says, "Gentura will pay the licensor, CadMex Pharma, a running royalty equal to 7.5% of Net Sales of the Licensed Product sold by the licensee protected by patent rights." If Gentura subsidizes the production of VioBrax, the payment terms of the contract between Gentura and CadMex will be violated.
What remedies might be available for such breach?
In event of a contract breach, CadMex has the following options
Take Legal Action
Taking legal action can affect future relations with Gentura and Candore. At the same time, not taking any action and letting Gentura vary from the payment clause by more than 5% will lead to disregard of the contract by Gentura.
Take no legal action but claim compensation
A financial settlement of the dispute will take care of the interests of CadMex Pharma, but such an action can possibly bankrupt Gentura, which will affect CadMex.
Take no legal action, but share marketing rights for another drug
This option may open new doors for CadMex by allowing it to control marketing rights of another drug and recover for losses sustained by subsidizing ViroBlax. This option could however give rise to legal complications. Once the losses have been recovered, would CadMex continue to have

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