International and Commercial Risks - Law 421 Essay
April 1, 2013
International Commercial Risks -
Business is continually growing on a global level leading to international business partnerships, agreements, and trades. During these types of business relationships disputes are common (University of Phoenix, n.d.). If a dispute occurs one party may chooses to take legal action against the other party. Making the decision to take legal action businesses must make considerations prior to proceeding. Making the right decisions can build a strong relationship between parties. Considerations to take include contracts, local law, and local customs and culture. Steps may be taken to minimize risks in international business agreements as well.
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Local counsel provide expertise on the local law leaving little, if any, concern of lack of legal knowledge. The selection is typically done by the lead counsel of the company (University of Phoenix, n.d.). This is beneficial because one expert selects another expert providing the best representation.
In order to minimize those risks a business should take specific steps. First a contract should be signed by all parties involved in the business relationship. The contract should include policies of each business and what each agrees to commit to. A choice of law clause should be included along with a forum selection clause. Additionally, legal counsel local to each country should be consulted. These steps simplify the steps to be taken if any dispute or disagreement arises.
When local laws conflict with domestic law the law of the jurisdiction of the business conducted prevails (Melvin, 2011). Te operation of business must follow the local laws because this is the ruling law of the territory the business is located. This is another example of why am understanding of local law is important.
Local customs prevail