Foreign Business Law in China - Essay Example

A contract is an agreement entered between two or more parties that are enforceable at law. An agreement which gives rise to a legal obligation is not a valid contract. Not all agreements are legally binding. For it to be binding, an offer should be made by a person and should be freely accepted. Each person entering the contract must promise or give something of value (consideration).There must also be an intention to create legal relations. Contracts can be written, oral or both depending with the situation. For instance an entrepreneur entering a contract to buy goods must be in writing so as to be legally binding and enforceable. An oral contract can be legally binding unless it is one of those that the law states them to be in writing and for easier proof (Bagley, 2011). The property in goods is said to be transferred from the seller to the buyer when he acquires the proprietary rights over the goods. Therefore, property in goods is different from possession of goods. The essence of a contract of sale is the transfer of property in goods from the seller to the buyer. The moment the property in goods passes to the buyer, he will take all the risk that follows and when the goods are damaged on its way to the buyer the risk of loss prima facie is in the person in whom the property is. After the buyer has obtained the goods he acquires possession of them and anything that may arise or any default will be up to him. There are two essential elements for transfer of property (Emerson, 2008). 1) The goods must be ascertained to enable them to pass from the seller to the buyer. This implies that where there is a contract for the sale of unascertained goods, no property in goods is transferred to the buyer. 2) Intention to pass the property in goods must be there. The entrepreneur purchasing the goods with regard to the delivery of the fabric from India may enter in the following contracts. Free alongside Ship (FAS).The seller is required to deliver the goods alongside the ship or rail named in the contract and should notify the buyer that the goods have been delivered. In this type of the contract, the property in goods passes to the buyer when the seller delivers the goods alongside the ship or rail as agreed (Bagley, 2011). Free On Board (FOB). In this type of the contract, the seller is required to deliver the goods on board the ship named on the contract. The seller then bears all the expenses including shipment of goods, insurance and any expense that may arise. Even if the goods are lost on transit, the buyer is liable to pay the price and property in goods shall not pass if the seller reserves the right of disposal. Cost Insurance and Freight contracts (CIF). This is a type of contract where the price includes cost, insurance and freight charges. The seller is required to insure the goods, deliver them to the shipping company and send the bill of lading and insurance policy to the bank. The property in goods passes to the buyer upon the delivery of documents. EX-ship contracts. Under this type of contract, the seller has to deliver the goods to the buyer at the port of destination. In these contracts the property in goods does not pass until there is actual delivery of the goods. The goods remain to be at the risk of the seller who has the obligation to insure the goods so as to protect his interest (Bagley, 2011). The carriers Act in India contemplates that the carrier must carry the goods of the consignor for higher and not free of charge for it to be termed as a common carrier. This implies that the entrepreneur will have to be provided a common carrier for his fabrics. This implies that the freight chargeable by him is upon him and there should be accommodation on his conveyance. Seller has to insure the fabrics so as to protect his interest (Potter, 2008). When the property in goods has passed to the entrepreneur, he has the right to examine if the fabric imported is in conformity of the contract. He has also the obligation to pay the price of the fabric in accordance with the terms of the contract of sell. Furthermore he or she should have obtained a license to enable him import the fabric from India. This is with the effect that he chose to use the carrier for transporting the fabric. In entering the contract there must be an offer and acceptance by both parties. This is for it to be able to form a legal intention. The offer may be an invitation to treat in that the entrepreneur may just want the goods to checked and create awareness of the available product. First when importing the fabric from India, regulation, charges and other restrictions may apply to the textile exports. An export license is needed in order for the goods to be exported from India. He or she may consult the European Union and the Export Control Organization for further guidance on the goods being exported (Liuzzo, 2013). The organization will stipulate to him the conditions to be met on such contracts. In entering a contract with china for the production of shirts, first the entrepreneur needs to get the registration, certification and licensing requirements. This is because products produced in China must be registered, certified and licensed by the relevant Chinese authority before they can be sold in China. The entrepreneur should check the regulations with the state Administration and the relevant authority of the fabric industry. The entrepreneur should also check the certification and Accreditation Administration. Furthermore, the entrepreneur should take into consideration on intellectual property protection. The Chinese law offers a comprehensive protection of patents,trademarks,trade secrets and copyrights however there has been a wide spread of violation and ineffective enforcement of law. In addition the entrepreneur should advice the company making the shirts for him to create and implement a practical and effective action plan on every discrepancy. This can be done by reviewing the company’s product portfolio and taking action to register the patents and marks that have not been properly registered in China (Emerson, 2008). For the entrepreneur to be in possession of the goods so that he can sell them to countries like Canada, he or she needs to know the legal aspect of trading the goods while in China. For instance he needs to be in touch with the foreign trade corporations i.e. import-export companies and agencies, export licence, certificate of origin and commodity inspection. Furthermore he will have to pay the customs Duties and value added tax for the commodity. In addition to this, he should obtain the sales of goods contracts, technology import contracts, tradelaw, and carriage of goods by sea contracts (Bahrain, 2011). This in return would result to the letters of credit that would be issued by China administration. Furthermore the entrepreneur would need to obtain contract negotiation and performance by the countries that he needs to export the goods to. After the contract has been signed, the products being the T-shirts that have been processed need to be provided transportation and insurance to cover any default that may arise. The products would then be inspected by the relevant authorities and resolution of any discrepancies that may be having been folded from the products would be put into consideration. The entrepreneur needs to have trust and fiduciary representation for the products because of their exports as default may arise in the process of shipping (Potter, 2008). Moreover, when contracting a business in China, he should comply with the customs and tariffs available. After all this, he needs to get the export permits so that the goods may be exported to Canada, France and USA. The Export management company in China handles export operations for the domestic company. This simply implies that the company will help the entrepreneur in hiring dealers, distributors and representatives to the countries where the textile will be exported. Furthermore it will aid the entrepreneur in marketing promotions, arranging shipping and also it may help in financing. The company may take the title of the goods if the entrepreneur doesn’t mind and becomes its own distributor. In exporting goods to Canada, textiles or garments that are over 50years old and worth more than 1200 dollars need an export license as antiques or rather works of art (Usa, 2008). The license is issued by Council Export Licensing Unit. For Canada to import such textile, requirements such as Consumer Product Safety commission for flammability. The entrepreneur should ensure that the T-shirts have labels indicating the country of origin which is China or if this is not feasible including yarn, thread or wool, should be packed in such a way the the country of origin is discernable to the purchasers of the import country (Emerson,2009). This is because determining country of origin for such products including blouses made in Italy from Chinese silk can be very complicated. He should have the contractual obligations of the contract that he is taking. This implies that for any loss that may be incurred should not be placed upon any other person or the exporting company. This entails that the contractual capacity to enter into such a contract should be of great essence to the entrepreneur (Emerson, 2009) Moreover, the entrepreneur should know the contractual terms for the Canada, USA and France. This would help him analyze the market and to be sure of the terms and conditions to be applied in each of the country. He or she should have the consent and intention to create legal relation with those countries so as in case of anything the government of China may help in case of any crises. Furthermore in entering such contracts with other countries the entrepreneur should be able to observe the market strategies and his role in ensuring that the textile which are his goods are ascertained so that the property in goods can pass to the other people (Emerson, 2004). The entrepreneur would be forced to cater for the expenses of the shipment of the T-shirts to the countries. In addition to this the goods which are the t-shirts need to be insured so as to meet the losses that he or she may incur. This implies that he may enter into Free on Board contracts for shipment. The trade offices in Canada are able to offer some support in making contracts especially business ones with them. Before any good can be imported the conditions that are imposed by the federal and provincial governments need to be met and fulfilled (Liuzzo, 2013). The contract for selling the T-shirts must be permitted by virtue of the Export and imports permit which control imports of textile and clothing. The goods will be subjected to custom duty in the time of importation. Many contracts in China are too vague to allow for action by the courts. The Chinese courts are good in enforcing simple and clear contracts where the penalty requires little analysis. So the entrepreneur will be very lucky to obtain the contracts compared to foreign investors who want the contract with China. There are very many constraints associated when entering into contracts with Canada which the entrepreneur should meet so as to enable him sell the T-shirts (Emerson, 2008). References Bahrain. (2011). Bahrain: Business Law Handbook. Illinois: Lulu.com. Bagley, C. (2011). The Entrepreneurs Guide to Business Law. New York: Cengage Learning;. Emerson, R. W. (2004). Business Law. New York: Barrons Educational Series. Emerson, R. W. (2009). Business Law. New York: Barrons Educational Series. Emerson, W.R. (2008). Business Law(Barrons Business Review Series). New York: Barrons Educational series. Liuzzo,L.A. (2013). Essentials of Business Law. New York: Wikes university,McGraw-Hill publishers Potter, P. B. (2008). Foreign Business Law in China. New York: Pitman B. Potter. Usa, I. (2008). China Business Law Handbook (World Business Law Handbook Library). New York: International Business Publications, . Read More