Business Law Assignment on Legal Aspects of International Business & Enterprise

Question

Task: The questions to be answered through this business law assignmentare:
Question 1: Discuss the role of the International Monetary Fund (IMF) in the international trading system.
Question 2: Discuss the relevance of the World Trade Organisation (WTO) in 2020. In your response outline the structure, the decision-making system and the dispute settlement process.
Question 3: Discuss the General Agreement on Trade in Services (GATS) in terms of the framework agreement, the GATS Annexes and the GATS Schedules of Specific Commitments and consider whether “Progressive Liberalisation” is a realistic long-term objective for GATS.

Question 4: Discuss the concept of moral rights. In your response, consider the differences in the treatment of moral rights in the Copyright Laws of the American legal system with that of the European Civil Code, including the Copyright Laws of Belgium, France or Germany.

Question 5: Consider the following extract from Case 10 – 6 The Shoe Seller’s Case,
“The CISG expects a buyer to accept deliveries of nonconforming goods [unless they are fundamentally nonconforming] and to invoke remedies other than avoidance (such as reduction of the price and damages) as compensation for the defects. For example, there would be no fundamental breach of contract [and no right to avoid the contract] in cases where the buyer is able to use some of the goods.” Using your knowledge from Week 10 – Sales and Logistics and with reference to the case above, explain the CISG “Avoidance” provisions for both the buyer and seller.

Question 6: Consider the following extract from Case 12 – 2 Mair v. Bank of Nova Scotia,
“To constitute an apparent alteration within the meaning of the Bills of Exchange Act it should be apparent upon inspection of the bill that its text has undergone a change. The document itself must show that some revision of the text has taken place and its appearance must be consistent with the revision having occurred after completion or issue, although it may also be consistent with the revision having occurred before completion.”

Using your knowledge from Weekly learnings – Financing International Business and with reference to the case above, explain where the burden lies for determining the validity of an endorsement if it is deemed ineffective under Common Law.

Answer

Q. 1 Role of the International Monetary Fund in the development of International Monetary/trading System
As mentioned by Coburn, (2019, p.781) with regards to the case scenario of business law assignment, the International Monetary Fund focuses on the expansion and balanced growth of global trade. The promotion of exchange stability helps to enhance the growth of international trade throughout the globe. As opined by Subramanian and De Neve, (2017, p.6423), financial stability and reducing poverty based on providing loans are encouraged by the international monetary fund. In this context, Bejar and Moraes, (2016, p.41) has stated that voting power is the most important matter in the case of the decision-making process of IMF. The development of international trade helps to enhance the employment opportunities of member nations of the IMF. It ensures the economic growth and the quality of life of a member nation is developed. Financial assistance is the most important role of the International Monetary Fund in the case of developing international trading systems. As depicted by Medhora, (2017, p.245), the IMF has a direct role in the case of developing international trade systems through effective financial assistance. The IMF provides help to various organisations on a national, global and regional basis. Based on suggesting different financial policies, the IMF provides help to the member nations to enhance international trade. As asserted by Medhora, (2019, p.331), correction of the balance of the payment system is an important role of IMF in the case of developing the growth of the International trading system. The reason is financial assistance to the underdeveloped or developing member nations helps to maintain steady growth of international trading systems.

Figure 1: Role of IMF in the development of the International Trading System
(Source: Developed by Author)

The exchange rate stabilisation is an important activity of the IMF for strengthening the performance of international trade. The exchange rate is stabilised for the international currency US dollar. In addition to that, the organisation focuses on the international monetary cooperation process for maintaining uniformity in the international trading system (WTO members review four regional trade agreements between developing countries, 2020). Loan plus advice has been provided by the management of the IMF under the economic crisis. For instance, in the current economic scenario, the IMF has adopted the step to overcome the issue of the global financial crisis by providing financial help. The IMF has made a significant contribution in the COVID 19 crisis and it has helped to maintain economic stability to some extent throughout the globe (WTO members review four regional trade agreements between developing countries, 2020). Hence, economic surveillance and monitoring is the most important role of the International Monetary Fund under the economic crisis. The flawless international trade has been ensured by the IMF and the economic growth is developed. Under the price control or inflation situation, the International Monetary Fund focuses on monetary help and it ensures the development of the economy. The conditional loan or structural adjustment has been provided by the International Monetary Fund under the economic crisis. Furthermore, technical assistance and economic training have been provided by the IMF under the complicated economic situation.

Q. 2 Relevance of WTO in 2020
Structure
The World Trade Organisation is an intergovernmental entity that focuses on the global rules of international trade. The key advantage of the organisation is WTO ensures the elimination of discriminatory tax policies and other regulations in international trade. The ministerial conference is the main body of WTO that controls the activities of Dispute Settlement Body, General Council and Trade Policy Review Body (WTO | Services: Annex on Financial Services, 2020). In addition to that, the general council governs the activities of the committee of Trade & development, Goods Council, Intellectual Property Council and Services Council.

Figure 2: Structure of the World Trade Organisation
(SourceWTO | Services: Part IV - Progressive Liberalization, 2020)

Decision-Making System
The WTO has a significant role in agricultural development throughout the globe during 2020 under the COVID-19 crisis. The Worldwide agricultural trading system development is a crucial decision in the case of WTO and it has enhanced the flawless supply of foods all over the world. The “Food Trade Policy'' of WTO during 2020 has strengthened the economic performance under the COVID 19 situation. The committee of WTO has made control over the global supply of cereals and it has developed the food grain controlling process. Almost member nations are benefited by the “Food Trade Policy'' of World Trade Organisation (WTO | Services: Annex on Financial Services, 2020). As the demand for essential products during the COVID 19 situation has been developed, the decision of the World Trade Organisation has helped the maintenance of economic stability under adverse situations. Furthermore, the reformation of the border taxation policies in the case of international trade is done by the World Trade Organisation. The Southern Common Market agreement has been reviewed by WTO for ensuring the development of international trade policies between Brazil, Argentina, Paraguay and Uruguay. Furthermore, the free trade agreement between ASEAN and the Republic of Korea is also reviewed by the World Trade Organisation and it has reduced the tariffs on imports and the international trade system of South Korea is strengthened. Hence, the effective economic policies of the World Trade Organisation have helped to enhance economic performance. The final decision in the World Trade Organisation is adopted by the Ministerial Body and after that, the decision has been implemented.

Dispute Settlement Process
According to the view of Ryu and Stone, (2018, p.301), the dispute resolution Process of WTO mainly focuses on three stages including Consultation Process, Adjudication by Panels and Implementation of the ruling. The consultation process is the preliminary area and in this stage, the interaction has been made with other parties for implementing a policy. The second stage is the judicial process of the World Trade Organisation. The policy has been verified by the General Council whether it is essential to apply practically or not. In the case of review of the agreement, the Trade Policy Review Committee has also an important role in addition to the General Council (World Trade Organization, 2017).

Q. 3 Explaining General Agreement on Trade on Services (GATS) in terms of the framework agreement
Annexes of GATS
The process of evaluating Domestic Regulations is considered by WTO according to the general agreement on Trade and Services. The reason it helps to enhance the quality of international trade among various countries (GATS Schedules, 2020). Furthermore, to protect investors, the agreement has considered the legal policy evaluation process. In addition to the evaluation of the domestic regulation, the dispute settlement is also an important matter to WTO and it has been mentioned in the GAT annexes. At last, the major role of WTO in international trade development is evaluation of banking and other financial activities. The consumer and mortgage credit evaluation is done by the management of WTO.

GATS schedules of Specific Commitments
As mentioned by Zanglet al., (2016, p.195), in the assistance to the financial policy development the IMF and WTO have a significant role. The reason loan plus advice can help a nation to ensure the international trade system. Furthermore, the review of policies in the economic development among various nations has been evaluated by the World Trade Organisation. Conducting the sustainability impact evaluation is another important norm that has been mentioned in the GATS schedules. Hence, international monetary cooperation is needed to be implemented according to the GATS schedules. Based on the agreement of GATS, the WTO always evaluates the international monetary cooperation process. According to the policy of GATS, it is essential to focus on the sector-specific recommendation for ensuring trade development. In addition to that safeguarding, the international regulatory policy is important as per GATS schedules and hence, WTO has an effective role to evaluate the process.

“Progressive Liberalisation”, a long term objective of GATS
PART IV of the article XIX has stated that progressive liberalisation is a process of step by step development through private ownership. The main focus has been made on the private ownership system as the private financial policy can enhance economic development (WTO | Services: Part IV - Progressive Liberalization, 2020). The government of a country has a limited power to strengthen the domestic economy and hence, progressive liberalisation can enhance the economic growth of different nations. The WTO policy is always developed based on the concept of progressive liberalisation and different developing nations including Asian countries and African countries have strongly focused on the progressive liberalisation process for enhancing the economic growth in the international market.

Specific Commitments regarding Progressive Liberalisation
Entering into the successive rounds of the negotiation process
In the agreement between different countries, the national policy objectives should be considered
The Progressive Liberalisation policy should be advanced in each round for ensuring the successful implementation

Table 1: Commitments
(Source:WTO | Services: Part IV - Progressive Liberalization, 2020)

Based on the above discussion, it can be stated that the progressive liberalisation policy is the realistic long term objective of GATS.

Q. 4 Concepts of Moral Rights
Differences in the Copyright Law of American Legal System and the European Civil Code

The concept of Moral Right has been developed for avoiding discrepancy between common law and civil law of the moral right system. The copyright law in the USA has been governed by Federal Statute based on the Copyright Act 1976 (Copyright Law in the United States, 2020). The lawfully protects the unauthorised copy of work and most important matter is no one can copy the written description fully (Copyright Law in the United States, 2020). In the case of EU countries also, the same rules have been followed however, the difference is identified in terms of legal definition. The legal definition of the copyright law of EU countries has widened the concept applicability. On the other hand, the applicability of copyright law is comparatively narrow in the case of the USA. The moral right of copyright law in the USA only focuses on the protection of visual arts as per Visual Arts Rights Act 1990.

On the other hand, in the case of the European Union, the copyright act is applicable to protect all types of works (The US Copyright Law and the Copyright Law of EU, 2017). In the case of the US, the term visual right has been used to explain paintings, drawings and sculptures. On the other side, the European copyright law mainly focuses on the European Directives (2001/29/EC) and the policy has been followed by Belgium, France and Germany strictly. The copyright law of Germany follows the rule of Copyright Act 1965 as well as EU directives. The online and digital regulations regarding the Copyright Act 1965 have been strictly followed by Germany (Copyright in Germany | Lexology, 2020). The Belgian Code Economic Law 2013 and Copyright Treaty 1996 are followed by the country Belgium (Copyright in Belgium | Lexology, 2020). Hence, in the case of copyright protection, three anatomies of laws are followed by Belgium and it has developed the quality of control. The French Copyright Law 2006 and EU directives both have been followed by France for protecting work (Copyright in France | Lexology 2020). Hence, the EU directives are common in the case of EU nations and that is strictly followed by Belgium, France and Germany.

Q. 5 CISG avoidance provisions for both buyer and sellers
The Shoe Seller’s Case:
Issue
The key focus of the case is the defendant has argued avoidance is the fundamental breach of contract. Hence, the ultimate issue is whether the breach of contract is really found or not. It can be defined based on the CISG provision for buyer and sellers.

Relevant Law
In this case, the plaintiff was the Italian Shoe Company and the defendant was German Shoe Buyer. Based on the CISG provision 81(1), 47(1) and 49(1), it has been found that the plaintiff did not make any issue in the delivery of goods. Article 53 to Article 59 has dealt with CISG provisions for buyers. On the other hand, the Article 64 and 72 have focused on CISG provision for sellers. The defendant could not defend the case In the Frankfurt Court. According to article 25 of CISG provisions, the avoidance is essential for ensuring the possibility of breach of contract. Based on this case the provisions of CISG are mentioned below.

Application of Law
CISG Provision for Buyer
According to article 53 of the CISG provisions, it has been identified that the general responsibility of a buyer is to ensure international sales transactions. The primary obligations of a buyer would be the obligations that are mentioned in the contract. The article 54 of the rules depict that a buyer can extend the payment of contract price beyond the abstraction of owing the money (CISG Provisions for Buyers, 2020). In this context, it is needed to be stated that the buyer has the responsibility to follow the formalities mentioned in the contract at the time of payment. According to article 55 when the price of the product is not mentioned in the agreement, the buyer can involve in the price determination process subsequently. The article 55 has focused on the intention of parties in the international transactions. From the analysis of the article, it is identified that article 55 is not applicable if the price is already mentioned in the agreement.

Article 56 has emphasized the standard of determining price and this is mandatory to follow if the price is set at the time of contract agreement between two parties. Article 57 is considered in some specific cases while the delivery places are not mentioned in the contract (CISG Provisions for Buyers, 2020). Except for the article, 57 other articles that are mentioned in the above are strictly followed and buyers need to consider rules and regulations of these articles. In the case of a cash sale, the buyer has the liability to mention the time of payment and in this case, Article 58 is needed to be implemented. The article 59 has been followed while the payment has been made by the buyer within the due date. In the case of payment within the due date, no affirmative actions are required from the seller’s perspective. This is why the article 59 has been implemented for enhancing the transparency in the payment process between buyer and seller.

CISG Provisions of Sellers
According to the provisions of article 64, the seller has the right to review the process while the breach of contract has occurred as a result of the buyer. In the case of instalment sale also, the seller has the obligation to evaluate the entire process (CISG Provisions for Sellers, 2020). The instalment sale-related information has been given in article 72 in detail. According to this article, the issue may arise regarding one single instalment sale including delay in the delivery of goods; however, in subsequent instalments, the problem cannot be accepted (CISG Provisions for Sellers, 2020). If the issue has been found in all the cases, the sale of goods contract agreement would be breached. The seller has to be transparent in terms of sale of goods and that would help to increase the chance of implementing the contract agreement successfully.

Conclusion
Based on the application of the above articles, a buyer can avoid the breach of contract or any dispute in the contract agreement. The decision of Shoe seller’s case based on the application of above articles depicts that plaintiff did not make any issue and the court could not provide assistance to the defendant.

Q. 6 Explaining the Burden for determining the validity of endorsement if the same is assumed ineffective under the Common Law.
Issues
Based on the case analysis of Mair vs. Bank of Nova Scotia, it can be stated that Mair has hired Hill providing help regarding architectural projects and the advance has been given of 6000 AUD to Hill. The amount has been paid in cheque and this case due to cheque alteration process, the amount is not received by Hill within prominent time (Bank of Nova Scotia Case, 2020). For this case, the question raised regarding the negotiable instrument policy. In the case of financing international business, the negotiable instrument policies are needed to be followed strictly.

Relevant Law
According to the Bills of Exchange Act 1909 in Australia, it is found that all types of negotiable instruments are considered under the Bills of Exchange Act (Bills of Exchange Act 1909, 2020). Based on the evaluation of this act, it is found that certainty to the payee regarding the payment is essential. Otherwise, the same would be considered as a violation of rules and the sufferer can appeal to the court. The endorsement has been considered as ineffective if the certainty cannot be provided to the payee. It can be considered as fraud and based on the case of Mair, it can be stated that the alteration of negotiable instruments is the violation of the bill of exchange Act 1909 in Australia. The act reveals that a bill or any negotiable instrument including cheque can be payable either to order or to bearer. The bill or other negotiable instruments are payable on-demand basis and hence, it is essential to focus on the payment on demand to the payee.

Application of Law
The validity of the bill is for a specific time and hence, it is essential to focus on the payment within a specific time. The case reveals that cheque is altered and this is why Hill could not get the payment on time. According to the view of Hedley and Hedley, (2020, p.73), the validity of negotiable instruments is the important matter in the case of financial transactions in the international business process. Continuing along the same line Goodman, (2018, p.25), has stated that the validity of negotiable instruments ensures that the payment would be made to the payee on time. Hence, based on the overall analysis of the essentiality of the validity of bills, it can be stated that the Bills of Exchange Act 1909 has a significant role to enhance the implementation of negotiable instruments. In the following cases, the payment can be made after the due date.
Holder in good faith and by mistake, the wrong date has been inserted in the cheque or other instrument
In the case of the wrong date inserted, if the bill subsequently come to the hands of a holder in due course

Conclusion
The overall discussion in the above states that the validity of negotiable instruments is the essential fact in the financial transactions and developing international trade. It is the burden of the payer if the endorsement is considered ineffective under the common law.

References
Bank of Nova Scotia Case 2020. Available at: https://lawaspect.com/bank-nova-scotia-case-2/ (Accessed: 3 October 2020).

Bejar, S. and Moraes, J.A., 2016. The International Monetary Fund, party system institutionalization, and protest in Latin America. Latin American Politics and Society, 58(2), pp.26-48. Bills of Exchange Act 1909 2020. Available at: https://www.legislation.gov.au/Details/C2012C00128 (Accessed: 3 October 2020).

CISG Provisions for Buyers 2020. Uncitral.org. Available at: https://www.uncitral.org/pdf/english/CISG25/Gabriel.pdf (Accessed: 3 October 2020).

CISG Provisions for Sellers 2020. Uncitral.org. Available at: https://www.uncitral.org/pdf/english/CISG25/Magnus.pdf (Accessed: 3 October 2020).

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Medhora, R.P., 2017. Monetary Unions, Regional Financial Arrangements, and Central Bank Swap Lines: Bypasses to the International Monetary Fund. AJIL Unbound, 111, pp.241-246.

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