International Business Transactions, Australian Consumer Law - Assignment Example

INTERNATIONAL BUSINESS TRANSACTION Name University Professor Date of Submission Legal issues involved Conducting international business involves the development of market entry strategies which are both sustainable and valid for the business. While globalisation of operations might be undertaken utilising different approaches, many of the simple approaches involve legal elements made through agreement. Global expansion might be a valid business approach which organisations can utilise in seeking to enhance the global presence in different regions. The risks associated with such investments, however, can be effectively mitigated through the utilisation of contractual agreements between a franchisor and other businesses. Business agreements present the international market entry approach with the least business risks associated to it. The aspect of reducing business risks and costs associated with expansion result in many global businesses opting for trading agreements, in the form of licenses and franchises to achieve globalisation. Within the context of the case mentioned above, various legal aspects are essential considerations in establishing the validity of the business. The businesses included agreements made and which were broken midway through the period of the agreement. The legal issues arising within the scenario described result from the breach of contractual agreements made between different parties. Business agreements are governed by contracts which must be adhered to and breach of the contractual terms could result in legal action being undertaken upon the breaching party. The franchising code defines the business agreements which could be identified as franchises, including the identification of factors which qualify a business agreement to become a franchise agreement. Within the provisions of this code, this agreement can be written, verbal or even implied. Licenses which comply with the franchising code can be defined as franchises, irrespective of the form of agreement which might have been made. These agreements remain subject to the franchising code of conduct. The business approaches which were taken in the two scenarios were franchises since the companies were utilising the trade names. Within the Australian legal framework, the franchising code of conduct remains the statute which could be utilised in handling the issues arising from the breach of these business agreements. The franchising code of conduct has been established and included within the CCA in seeking to enhance the existing relationships between franchisors and franchisee, conducting business within Australia. The code of conducts describes the various elements which must be present in a franchising agreement between different parties. This code is a mandatory requirements for all business or parties entering into any form of business agreement, falling within the class of a franchise. The element of business franchise includes the trademark and the business operation methodologies, accompanied with business support and assistance. The franchise is perceived as part of a business license agreement between two parties conducting business. The contractual agreements are also governed by the Australian Consumer Law, which makes provision regarding many elements of business contacts and agreement. Within the context of the ACL, there are provisions of simple, rules which govern the agreements and which are easy to comprehend as might be necessary. Issues arising from franchising agreements are settled in the court although the enforcement of the regulations occurs under the Australian Competition & Consumer Commission (ACCC)1. The commission has been mandated by the Australian statutory law, which created the code to enforce the code. The state and territory consumer protections agencies existing within the country are also involved in the enforcement and settlement of issues arising in relation to this code. ASIC remains a side-lined organisation which is involved on relevant matters only. Legal issues regarding the breach of the various provisions of the ACL regulations are handled by the Australian federal court, which is mandated by law to determine all cases regarding contraventions of the act. The ACL also sets regulations within the context of the law related to the penalties which are charged to individuals and organisation breaching the law. The provision of the legislations are aimed at monitoring the conduct of trading activities occurring between various organisations and seeking to ensure consumer protection within Australian territory2. Franchising issues are investigated by the ACCC which is mandated to make recommendations for the courts to make decisions regarding the matter being reviewed. Within the context of a franchising agreement, there is an increased element of control within the business aspects of the franchisee by the franchisor. The franchisor should be allowed to perform their responsibilities without interference by the franchisee. Any form of interference by either party on the other party’s responsibility could amount to a breach of the contract. Within the context of these agreements, it becomes essential for the parties to set out clearly, the responsibilities of each part towards actualisation of the business venture. Advise to SI and SOMA Franchising agreements are upheld by businesses in seeking to ensure that the involved parties maintain business operations. The franchising code of conducts is one of the provisions of the CCA which governs the conduct of parties involved in a franchising agreements3. This conducts provides a description of the approach through which the contract might be terminated. The breach of contract by the franchisee could amount to a reason for terminating the contracts. In terminating the contract, SI breached the franchising code as there is need for an informed consent when seeking to terminate contracts of this nature. The code stipulates clearly the procedures which must be followed in seeking to terminate the contracts and reasons which might cause a termination of the contract4. SI breached these provisions since there was not breach of contract by SOMA neither was there an informed consent to terminate contract from SOMA. The termination of such contractual agreements can only occur if there is breach on the part of the franchisee which harms the business operations of the franchisor, or when there is an agreement between the involved parties to terminate the contractual terms. As defence in a court, SI might consider the inability to support operations by SOMA as a special circumstance which could have resulted in the termination of the contract, existing between the two organisations. The franchising code require the involved parties to share crucial business information amongst themselves in seeking to ensure smooth business operations. The conditions which must be disclosed are also clearly stipulated within the context of the code. This however remains information limited and directly related to the particular franchise. This include the location and other elements related to the agreement under negotiation. Business agreements which might be existing between the franchisor and other organisations are not essential elements of disclosure within the provisions of the franchising code. SI did not breach the franchising code on failing to disclose the business agreements which existed between the organisation and Elite. If this business operations where being conducted within the region where SOMA would be conducting its businesses, this could have amounted to a breach of contract, as a franchisor cannot be allowed to operate two franchises within the same region. The competition and Consumer Act provide for the various requirements which must be ascertained before franchising agreements can be reached between organisations. While it might not have been necessary for SI to disclose an existing business operations between the organisation and other business entities, these operations should not be allowed to affect the operation of the new franchise. The element of control which is provided by the law is supposed to be implemented in accordance o the agreement made between the parties. SI was supposed to support the operations of SOMA during the entire period of the contract, the difficulties which the organisation experienced, however could have been communicated to SOMA in order for a consent to be reached between the two firms in seeking to adopt and implement an approach for terminating the contract. The control and support which the franchisor provides must be clearly stipulated in the developed marketing plan for the business operations5. The establishment of these essential components would enable investigating authorities to effectively conduct investigations into aspects of breach of contracts, in seeking to provide redress within the context of the scenario. As an international organisation running businesses across different regions, SI can utilise the financial benefits gained within other regions to support operations in a different country. Difficulties experienced within any regions therefore, could have detrimental effects on the business operations of the entire organisation. While there are many provisions within the CCA which seeks to govern business agreements, the franchising code of conduct remains the sole provision providing support into the franchising agreements. In seeking to terminate agreements, the code provides a stipulations of the factors which are allowed for undertaking such approaches. This seeks to ensure protection of franchising agreements made by different organisations. While the franchisor has significant control of the parameters of the contract, a breach of the contractual agreements can also occur on the part of the franchisor making the franchisor the wrong party. Hi-Tech v SI Within the context of Hi-tech, there is a strong case which can be launched on SI regarding the franchising code and breach of the existing regulations. Within the context of the franchising code of conduct the legal provisions only allow one franchise to be operated in Australia6. This provision can be utilised by Hi-Tech since SI was already in franchise agreement contract before making an agreement with Hi-Tech. the operation of two franchises by the same company amounts to a breach of the fair trade provisions which require the organisation to disclose some business information regarding the region where the contact will be applied. There is need for the franchisor to inform the franchisee about any existing business opportunities within the country, which SI did not inform Hi-Tech. There are various approaches which SI can undertake in seeking to get favourable remedies when seeking redress for the matter. The organisation can opt for compensation for the losses incurred as a result, of the termination of the contact. Since entering into the franchising agreement, the organisation incurred various operational costs in seeking to streamline operations according to the requirements stipulated by SI. Within this context Hi-tech would have to present factual information regarding the costs incurred by the organisation while conducting business activities on behalf of SI. This remedy seeks to protect the franchisee for the fraudulent operations of the franchiser in ensuring the liability for breaching contractual agreements are transferred to the defaulting party. Injunctions can also be enforced under the under the trade practices act. This refers to situation when the franchisor becomes restricted from conducting similar undertaking within the region or country. The argument could be based on the prevalence of failed franchising contracts involving SI which resulted from poor management of operations; consequently resulting the in incapacitation of SI to support the operations of franchisees. As an organisation which has been involved in other disputed and breaches of the code, Hi-tech can utilise this base for establishing a string case seeking favourable remedy from the courts7. This would be based on the establishment of fundamental reasons for franchising by the franchisor in support of the breach of franchising agreement. Within this argument, the franchisee does not need to prove the knowledge of the existing breaches of the franchising code of conduct by the franchisor. Corrective advertising is another remedy which hi-tech can get for the court regarding the termination of the agreement. The TPA has provisions for undertaking the remedial actions in seeking to protect franchisee from fraudulent operations conducted by franchisers. This involves court decisions being made through ordering for the provision of information about SI regarding existing and future franchisee in order to enable other businesses which might be involved in similar agreements with SI. The argument could be based on the contravention of the TPA. This becomes an essential provisions which should be contained in disclosure documents for future contractual agreements involving SI. This corrective advertising remedy provides a permanent solution to similar agreement being made between SI and other organisation. Injunctions create a significant limitation of the operations which an organisation can undertake in relation to the issues leading to the development of legislative issues. The obligations of SI to Hi-tech include the disclosure of business information which might potentially affect the franchise operations. The breach of the TPA provisions regarding the franchising code of conduct commonly occurs through the failures to meet the obligatory requirements by the franchiser. This commonly brings financial implications upon the franchisee for which the liability becomes directed to the franchiser8. In the determination of the breach and other related factors, a consideration of the various franchising requirements remain essential. These provisions are aimed at ensuring that the franchiser becomes compelled to perform their obligations without failure. Failure of these obligation would become considered as breach of the franchising code of conduct. Policy and legal considerations There are various policy considerations which should be considered when organisations are seeking to enter into the international market. While companies might be operating within the same industry, countries and regions have different regulations regarding the same operations. There is need to consider the policies and legal aspects surrounding the business operation within the region. This will enhance the organisation seeking global operations to understand the legal requirements for establishing businesses within the desire regions9. This would in turn eliminate the existing problems which might arise as a result of breaching of laws within that region. The organisation reputation can be enhanced through the consideration of such factors. A consideration of the business environment also remains essential in seeking to understand the market situation. This would result in the organisations adopting a globalisation approach which fit perfectly within the desired market, consequently eliminating the possibilities of failures. The capabilities of the business with which partnerships are being established should also be put into consideration. These factors are essential in estimating the possibility of failure and success based on the experience of the organisations. The assessment of the market conditions can be essential in the decision making process reading the globalisation approach which the organisation can undertake. Since there are different approaches which can be utilised to achieve global recognition, it remain best to make evaluation of the markets to determine the best approaches. In seeking expansion through other global markets even through distributions, the company should consider intellectual property rights considerations within the country. These service marks are essential in the determination of the market potential for an emerging market to achieve growth. Stability of the regulations and governmental regulations remain another essential legal element which organisation must consider carefully. Many foreign governments might not be positively receptive to foreign investment and might impose regulation aimed at creating barriers, while providing advantages to the local companies. Market penetration within these settings becomes essential aspects as the organisations seek to achieve significant growth within a short duration of time. Based on the observations and analysis of the company, it would be best to avoid new negotiation with other international organisation. The continued operation within the same region remain significantly difficult became of the impeding law suits involving SI. Instead of focusing of the development of new contract the organisation should embark on ventures aimed at establishing the reputation of the organisation in a different manner in order to improve the business relationships. Adoption of a different globalisation strategy through different forms of approaches might not be the best move following the experiences with the franchising law suits. The outcomes of these law suits might include corrective advertising which could adversely hurt the company image to the society. In seeking to avoid such occurrences, the organisation should not get involved in negotiations of nay manner within the county. The company should consider quitting the Australian market and implementing the globalisation strategy elsewhere around the world. Read More