International Business Law and Ethics - Case Study Example

Case One (900 words) The key corporate players in this case are Smith Pty Ltd., a computer software developer, Jones & Co. Ltd which is a big client of Smith Pty and a new subsidiary of Jones & Co. Ltd called Helping Hands Ltd. Two individuals are also involved in the case. One is the managing director of Smith Pty, John Smith, the other person is John Booth who was a manager at Jones & Co. and later became a director of Helping Hands Ltd. when it was created. Smith Pty is dedicated to selling software licenses to its clients for predetermined periods of time. The contract stipulates that the licenses can not to be utilized by any outside parties nor can they be re-licensed by the customers. The relationship between Mr. Smith and Mr. Booth was both a business relationship and a personal friendship. One evening the two friends were having dinner and Mr. Smith spoke with Mr. Booth in great detail about an innovate idea he had to create a new desktop. The primary legal violation in this case concerns violations of corporate intellectual property. The software licenses rented to Jones & Co. by Smith Pty were subject to illegal acts of piracy by an employee of Jones & Co. to then be utilized in a separate subsidiary of Jones & Co., Helping Hands, free of charge. Piracy is a very serious crime. Software piracy is the mislicensing, unauthorized reproduction of and illegal distribution of software that can occur for business or personal use (Microsoft, 2007). A secondary legal issue that occurred in this case was between Mr. Smith and Mr. Booth. Mr. Booth broke his moral rights of keeping their private conversation a secret. He robbed Mr. Smith of his original idea to then pass it off as his own to make a profit in a business venture without ever notifying or asking for permission from Mr. Smith to use his original idea. Smith Pty had a licensed software product which it rented to Jones Lty. Software copyright properties are literary work in many countries. Literary works are protected as of 2004 by law in 156 countries around the world (Copyright Clearance Center, 2005). The legal protection provided by the Berne Convention operates to benefit the creators or authors of the literary work. Article 9 of the Berne Convention stipulates that authors of literary works are protected by this Convention shall have the exclusive right of authorizing the reproduction of these works (Wipo). Another Act that protects companies in the United States from the illegal reproduction of its software merchandise is Bill Clinton’s Executive Order on computer piracy (13103) issued on September 30, 1998. The order specifically orders governmental agencies from getting involved in the act of privacy, but within its content it stipulates computer software is protected by federal copyright laws, which requires users of particular software to have a license authorizing such use (Bsagovernment, 1999). Another law which protects the intellectual properties of Smith Pty is the Trade Related Aspects of Intellectual Rights (TRIPS Agreement). Licensing agreements of software products are one of the many protections the TRIPS agreement covers. The secondary issue in this case was the idea Mr. Booth stole from Mr. Smith. One possible remedy Mr. Smith has to protect his rights is article 6bis of the Berne Convention which covers moral rights, specifically Mr. Smith right of attribution. The possible case Mr. Smith could have against Mr. Booth is somewhat weak. The first problem with his case is that Mr. Smith has no evidence of the alleged brainstorming session he realized with Mr. Booth ever occurring. He is basing his claim on hearsay. The moral rights protection could have protected him there was some type of record which evidenced that Mr. Booth stole his intellectual property and wrongly attributed to himself someone else’s idea, which in this case does not exist. The best proof which would hold in a court of law was if Mr. Smith had at some point in time registered his idea as a copyright, patent or some other sort of intellectual protection. The legal issue between Smith Pty and Jones & Co. is a clear violation of copyrights and intellectual property. The contract stipulated that the customer could not duplicate or charge anybody for the usage of the software. The person who committed the action of software piracy was an employee of the firm, it does not matter that he had switch jobs and moved to a subsidiary which ironically was owned by Jones & Co. Jones & Co. did not protect the intellectual property. The company did not have the proper safety measures in place to ensure piracy of the software would not occur since they were sharing their space with a different legal firm. Smith Pty can file a lawsuit against both Jones & Co. and Helping Hands for violation of Article 9 of the Berne Convention and violations of federal software copyright laws. Intellectual property such as patents and copyrights are intangible assets that are invaluable to the growth of any economy. A person or corporation that creates something innovative and original is entitled to exclusive rights over the invention and governments worldwide correctly recognize the rights of the authors of these intellectual creations. Smith Pty was the victim of infringement against its intellectual property which cause the company economic losses. The law protects such a company against devious characters that attempt to steal the intellectual property of others. References Bsagovernment.com (1999). Guidelines for Implementing Executive Order 13103 on Computer Software Piracy [online]. Federal CIO Council. Available from [Accessed 22 September 2007]. Copyright Clearance Center (2005). Copyrights Basics: What is Copyright Law? [online]. Available from [Accessed 22 September 2007]. Microsoft (2007). Are you Protected [online]. Available from [Accessed 23 September 2007]. WIPO. Berne Convention [online]. World Intellectual Property Organization. Available from [Accessed 22 September 2007]. Case 2 (857 words) Pegasus Publications Coy needed to purchase crosswords puzzles in country X, but they did know the market. They made an inquiry to a company called Confusing Crossword Ltd for advice on a vendor in the area. Confusing Crossword Puzzle recommended Read it Well Ltd to them, possibly because they have a 25% in this company even though they are separate legal entities. Pegasus started negotiations with Read it Well Ltd. to purchase 5,000 crossword puzzles from the Read it Well Ltd which were manufactured by Confusing Crossword Puzzle. The two companies entered into a contract agreement for the purchase and the seller, Read it Well Ltd, hired the shipping company called Read’em and Eat Limited under carriage paid to terms (CPT). During the delivery of the goods the truck carrying the goods was hijacked and half the merchandise was stolen. The original contract was written under Incoterms 2000. The main legal issue in this case is who is responsible for the merchandise that was stolen during the transport. The police notified Pegasus Publications Coy of the incident and asked them to pick the remaining merchandise since their name was in the bill of landing as the destination for the goods. The bill of landing is a document that serves the function of being a receipt of the delivery of some goods, a contract for their carriage and a document of title for the goods (Answers, 2007). The contract terms under Incoterms 2000, the CPT shipping status and the fact that the seller forgot to file the export paperwork are among the factors which determine who is liable for the lost merchandise in this case. Incoterms 2000 is set of rules and that help determined the responsibilities between a buyer and a seller in transactions involving the transfer of goods in which typically a carrier is involved. Once the final destination is determined, which is referred to as the frontier, the seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport not unloaded (Incoterms). There are other relevant incoterms related to this case. The buyer bears all risks of loss or damage to the goods from the time they have been delivered (Incoterms). The shipping terms of the contract between the buyer and seller are a relevant consideration in this case. The chosen terms were carriage paid to (CPT). This term implies the seller paid for the shipping costs and in doing so the buyer assumes risks of loss or damage to the goods, as well as any additional costs due to events occurring after the time the goods have been delivered to the carrier (Exporters, 2007). The CPT also stipulates that the goods must be clear for export by the seller. In this case the seller protected itself well in the terms both parties signed in the contract. Pegasus Publications Coy does not want to assumed liability for the loss of merchandise as a result of the theft that occurred while the goods were in road transit. Both the Incoterms 2000 and the ICP terms stipulate that the party responsible for any damages is the buyer once the merchandise has been transferred. So the important factor to determine is when the ownership of goods was transferred in this transaction. The ownership of goods which is represented by the bill of landing was transferred as soon as the merchandise was placed in the hands of the carrier. At that time the buyer became the legal owner. This is stipulated by both the ICP and Incoterms 2000. Pegasus Publication can attempt to fight this case in the court system based on the technicality that Read it Well Ltd did not comply with its responsibility of filing the proper export paperwork. The most likely scenario is that this would not make a difference in this case since it was not a determining factor for the actual loss of goods. If the loss of goods would have been as a direct consequence of the lack of export paperwork then Read it Well Ldt would be liable for the loss of goods due to its administrative incompetence. Another factor which points to Pegasus Publication as the loser in this case is that the Incoterms do not require the seller to put insurance on the goods, according to these contract terms the party responsible for insurance if they wanted to pay for it is the buyer. Bulk purchases of merchandise are transferred across national boundaries on a daily basis. There are millions of wholesale buyer / seller transactions occurring on a yearly basis across the over 200 country boundaries in the globe. The creation of contract terms to such as Incoterms 2000 help determine resolutions to business conflicts in the exchange of goods. In this case Pegasus Publications Coy was the unfortunate victim an outside party that hijacked the shipment of goods that belonged to them. The Incoterms 2000 terms and the shipping status of ICP determine that Pegasus is the party who must assumed the loss in this transaction since they became the legal owners of the goods since the moment the merchandise was in the hands of the carrier company. References Answers.com (2007). Business & Finance: Bill of Landing [online]. Thompson Gale. Available from [Accessed 22 September 2007]. Incoterms. Documents [online]. Incoterms 2000. Available from [Accessed September 23 2007]. Exporters.sg (2007). Commonly Used Shipping and Payment Terms [online]. Available from [Accessed 22 September 2007]. Case 3 (968 words) Bishop Ltd., located in country M, made an agreement with Roofer Ltd to purchase 50,000 grade one slate roofing tiles to be imported from country P. The agreement stipulates that the guarantee and form of payment for the merchandise is a letter of credit from My Bank. The contract was signed under CISG rules and the letter of credit is in conformity with Uniform Customs and Practices for Documentary Credit 600 (UCP). During the transportation of the goods the ship was hit by a storm which caused 2,000 tiles to be broken and 5,000 tiles to be damaged. Once the shipment arrived the Bishop found out about the damage caused by the storm and upon full inspection it discovered that 3,000 of the original 50,000 were grade three quality tiles, instead of grade one tiles as stipulated by the contract. Bishop Ltd placed a stop payment on the letter of credit and instructed the shipping company they would not accept the package delivered to them. My Bank is not paying the money to the seller of the merchandise as instructed by their client. There are various legal issues related to the case. My Bank is not paying the money owed to the seller. The letter of credit that they issued required the following four things: a bill of landing naming My Bank as the consignee, export documentation from country P, a certificate of authenticity to the quality of the slate and import tax clearances from country M. Upon receiving these documents the bank would have to pay the sum stipulated in the letter of credit, but in this case My Bank is refusing to disburse the money to Roofer Ltd. This is the root of the controversy in the case between these companies, lack of payment. A second legal issue between the companies in this scenario is whether the seller violated the terms of the contract under the negotiated CISG terms. My Bank is currently violating various articles of the Uniform Customs and Practices for Documentary Credit 600. Article 4 of the UCP stipulates that a credit line by nature is a separate transaction from the sale and the other contract from which it was based on (Ucp600, 2007). This means that irrelevant of the laws concerning what occurred during the transport and the disputes among the seller and buyer the Bank has to base its cash disbursement decision based on the law concerning letter of credits. Article 5 of the UCP states that the only criteria the bank must abide by in relation to the letter of credit is the required documentation stipulated in the letter of credit contract. Article 7 of the UCP says that provided the stipulated documents are presented to the nominated bank or the issuing bank and they constitute a complying presentation, the issuing bank must honor the credit line payment (Ucp600, 2007). The international laws related to the contract among the parties are the CISG terms. According to CIGS term 4.1 a general breach of contract giving the buyer the right to avoid the contract or to ask for substitute goods presupposes that the defect has a serious importance to the buyer (Pace Law School, 2005). In cases where are defects in the goods purchased the seller has the right to replace the defective goods as long as the time it takes to replace the damage property does not interfere in a serious way with the general operations of the buyer. In this case the biggest issue is the order the buyer gave to the band of stopping payment on the line of credit and the bank’s compliance to that order. My Bank has absolutely no legal right to stop payment on the line of credits. The only criterion to perform such an action is a lack of the required documentation in the letter of credit contract. In this case all the paperwork is in order, thus My Bank must immediately give the money to Roofer Ltd. The letter of credit is a binding payment contract that is irrevocable as long as the documentation is in order. My Bank is violating Act 5, 7 and Act 15 of the Uniform Customs and Practices for Documentary Credit 600. The Bank is confusing its letter of credit obligation with the terms of the buyer / seller contract which has absolutely nothing to do with its fiscal obligation of paying Roofer Ltd after the all the documentation was provided to My Bank. If Bishop Ltd wishes to start a legal battle with Roofer over the merchandise their best possible remedy are the CISG terms of the contract. My Bank must pay irrelevant of any legal dispute among the parties. If a dispute started a storm in deep see is a foreseeable event, thus a refusal of the shipment could not be made based on that premise. The fact that ten per cent of the shipment is not of the specified quality is not significant enough to stop the transaction. Roofers Ltd is obligated to replace the ten per cent of tiles three quality merchandise immediately. The losses during transport are the responsibility of one the two parties depending on when the contract stipulate the transferred of goods occurred. This case involved a dispute in a buyer and seller transaction in which the form of payment was a letter of credit. International laws protect the seller as far as payment for the goods when a letter of credit is utilized as long as the required documentation is in order. Bishop’s attempt to stop payment and My bank cooperation was a frivolous act which is not acceptable under international commercial law. The cash disbursement to Roofer Ltd has to given by My Bank instantly since they have no legal right to withhold the payment based on the Uniform Customs and Practices for Documentary Credit 600. References UCP 600 (2007). The Uniforms Customs and Practice for Documentary Credits, 2007 Revision. [online]. ICC Publication 600. Available from [Accessed 22 September 2007]. Pace Law School. CISG Database [online]. Available from [Accessed 23 September 2007]. Read More