MGT608 Business Law and International Contexts Case Study Sample

MGT608 Business Law and International Contexts

Context

Australian businesses may wish to expand their operations and enter new markets in other countries. Making contracts is fundamental to business practice and this assessment allows students to reflect on the types of contracts a business may enter and to consider what the law relating to contracts is in the country they seek to do business.

This assessment builds on Assessment one (1) where research was conducted on the legal system of a chosen country.

Instructions

Assume that you are the director of an Australian company that does business in a number of overseas countries. Your company has decided that there is an opportunity to do business in the country that you researched in Assessment 1 (chosen country).

Your task is to prepare a written document appropriately referenced, that address the following matters:

1. State the nature of business your company is involved in. Be as creative as possible. For example, you may decide that you are a manufacturer who wishes to export goods to the chosen country. Alternatively, your company may provide services which can be offered in the chosen country or your company may wish to import goods and/services from the chosen country.

2. Explain in as much details as possible the business opportunity that has arisen for the company.Making contracts is fundamental to business practice. Your company will need to make contracts in the scenario country. Please ensure you

• Identify the types of contracts that your business would need to enter in order to do business successfully in the scenario country. Explain why these contracts are necessary.

• Identify and explain the sources of contract law in the chosen country.

• Identify and explain the legal requirements for the creation of a valid contract in the chosen country.

• Explain the remedies for breach of contract in chosen country.

• Discuss whether it would be necessary to appoint an agent in the chosen country and an explanation for your decision.

• Identify whether Australia has a Free Trade Agreement with chosen country and explain the implications of this.

• Identify any specific regulations that apply in the chosen country based on the nature of your company’s business.

Solution

Introduction 

Globalization has provided opportunities to organizations to expand their business activities in different markets and add value to the present market position. To ensure the proper utilization of the globalization effect, it is also important for organizations to evaluate the trading relationship between foreign countries and host countries so that the risk of potential conflict can be reduced. As per the MBA Assignment Expert On the other hand, it is also necessary for businesses to gather information about the relevant rules and regulations in the foreign market that will help in avoiding any type of complication in business performance. Premium cars are an Australian based automotive organization that has decided to export automobile products and different automotive parts to the local market of Japan and enhance the business outcome. The organization is selling a different range of cars that range from premium to luxury. Affordability rate of their cars is high, enabling the organization to reach 350 million revenue generations. Japan is one of the important markets for automobile companies but the rate of competition is high in the country. Therefore, instead of opening an organizational facility in the country, Premium cars has decided to export advanced automobile parts in the market that will minimize the risk in business and add advantage to the overall financial outcome. On the other hand, to establish a successful business venture, it is also important for the automobile organization to gather information about different types of law that can influence their business practice. The report will shed light on the importance of involving legal requirements that enable the organization to conduct their business in Japan in a successful manner. In addition to this, it will also evaluate the decision of involving a trading agent with the organization to buy and sell automobile parts to the customers directly. 

Discussion

Identify the type of contracts

Different types of contracts have been practiced in Japan that mainly apply to employees. Three main employee contract laws have been introduced such as Sei-sha-in to form permanent contact with employees. Employers mainly focus on developing permanent contact with the employees as it is stable in nature and less risky in comparison to other contracts. Keiyaku sha-in refer to the short and specific term contracts with employees and it provide opportunity to the employer to hire workers based on the need of the business. This type of contract mainly forms for 3, 6 or 12 months based on the requirement of the business (Sono et al. 2018). In this type of contract, employers hold a minimum amount of obligation towards the employees. Lastly, there is Haken sha-in, which refers to the outsourced or temporary employees and they mainly work as personnel for a very short term period.

Premium cars need to know about the different types of contract before starting employing workers for the organizational function. The organization is also responsible for knowing the advantages and disadvantages of the different types of contract so that they can involve personnel based on the needs of their business.

Identification and explanation of the source of contract law 

Contract law is an integral part of Japan's regulatory system and the Japanese contract law is one of the influential models of law in the East Asian jurisdiction. The Japanese contract law needs to be seen in the context of private law and to understand the importance of the Japanese contract law, it is necessary to put focus on the Pandectist civil law system where rules of the private law system are interconnected. Civil law in Japan has mainly used the 3 important status of the fundamental law and the basic rule of the contract has been described in the Civil code. On the other hand, special rules related to merchandise are described in the Commercial code. Different types of special laws have been formed for the protection of customers and regulate the business conduction of operators (Lexology.com, 2022). In the particular section of the article 526 of Civil code, reflect that contract form between two parties who are situated in long distance shall be accepted upon the dispatch of the notice of acceptance. Under this type of rule, a contract will be formed without the reach of the acceptance. On the other hand, it also provides an opportunity to the parties who do not want to bear such risk can mention a definitive time limit for the acceptance of the offer.

Identify and explain the legal requirements for the creation of a valid contract in Japan

The basic binding of a contract requires involvement of four key elements such as offering, consideration, acceptance and intention to develop legal relations. It is important for an organization to fulfill the legal criteria of valid contract formation. One of the basic requirements of valid contract formation is the legal promise that must be mutually exchanged between involved parties. Two important elements in the Japanese contract are consideration and mutual acceptance. In the case of Japan, there is essentially no requirement of documents to form contracts with each other and to enter into the legal agreement. Japanese mainly followed traditional approaches that require an agreement and an offering that can match acceptance. After an offer becomes active, Japanese Civil code restricts the revocability (Tamaruya, 2020). On the other hand, the offeree's acceptance becomes active after the dispatch. It has been seen that the Japanese contract has no doctrine consideration and it has eschewed formal requirements due to the prerequisite of the enforceability of the contract. An important feature of Japanese contract law is the strong duty of negotiation that performs in good faith.

Explain the remedies for breach of contract in Japan

The Civil code has provided three different types of remedies upon breaching any type of contract in Japan. The primary remedy is the right to performance under contract (“riko seikyu ken”) in which an obligee only needs to prove the non-performance on the due date. While principle remedy is the right to performance, secondary remedies refer to the damages. On the other hand, seeking performance does not disallow the obligee to seek damage simultaneously. The next remedy is the Right to Damages (“son gaibaisho seikyu ken”) that allow the obligee to recover the damage under the Japanese Civil code law (Karaiskos, 2018). The right to damage remedy is also available at the time of contact rescinded. In this type case, oblige may obtain the damage as a form of substitute or in the conjunction of other contracts. Right to Rescission (“kaijo ken”) remedy is available to the obligee in terms of non-performance of the contract. When a contract is revoked, both the involved parties are invoked for their contractual duties. The revoked contact does not seem to have existed from the beginning. However, after the revoke of the contract, any party gains any type of benefit from other parties, they have lost the right to retain it and need to give it back (Young et al. 2002). After losing the right of retain, the parties need to give back any type of money or property that they gain under the agreement.

Importance of appointing an agent in Japan

Appointing an agent is of utmost importance in international business expansion so as to carry forward the intermediaries of products and services in the international chain. Premium cars need to appoint a tradeagent who can work as import-export agent so as to buy items from the firm and sell directly to the customers (Drieghe&Potjomkina, 2019). They prepare necessary documents to carry on the overseas business of car manufacturing and distribution inventories to likely succeed in the Japan market. Tracking and coordinating shipments of products along with the compilation of data associated with importing or exporting items are necessary to minimize the risks in business. While exporting different automobile parts, the trade agent of Premium cars needs to obtain a license to establish a successful business venture in Japan and optimize a different range of cars that includes premium cars as well as luxurious ones. A sales agent also needs to be appointed in Premium cars in the Japan market to act on the behalf of the overseas market and attract potential customers. It is crucial to appoint a sales agent in the car manufacturing company not only to have solid relationships with potential buyers but also to exploit opportunities in the new trade market (Cremona, 2018). The agent can also avoid training, recruitment and payroll costs by appointing Australian employees in the Japan market that can reduce their operations constraint while entering an overseas market. Using an agent for Premium cars in Japan can allow them to maintain more control over financial matters and brand proposition compared to that of intermediary options by using a distributor. Therefore, appointing an agent is necessary in Japan to influence a strong business practice over car manufacturing and automobile parts in a successful manner.

Identification and implications of Free trade agreement in Australia with Japan

Free trade agreement is an international agreement between two or more nations to reduce challenges in exports and imports of goods and services. Australia has a free trade agreement with Japan through The Japan-Australia Economic Partnership Agreement (JAEPA) that allows them to improve market access in goods and services through substantial improvement in investment protections (dfat.gov.au, 2022). By providing valuable preferential access in Japan through Australia's exporters, Japan supports positive growth in the economy through two-way investment measures. The agreement between Australia and Japan helps to bring their economies and societies even closer and strengthen their relationship for many years. A major implication of free trade agreement policy is outsourcing of products or services through international context that might add advantage to Premium cars in Japan for a short-term period. Implementation of JAEPA in Premium cars is effective to receive preferential access or enter duty-free environment during imports and exports of automobile parts. The organization can utilize JAEPA agreement to provide enhanced protections in their automobile parts and impart certainty for bilateral investments. An extended benefit of Premium cars in the Japan market is full-time enjoyment of customers on lower prices of automobiles and automobile accessories by gaining a greater choice on high quality products. Application of free trade agreement policy in the organization can enable immediate tariff elimination and reduced levies for polarity on Australian products (Bhagwati, 2021). Premium cars can gain guaranteed cross-border access to Japan while providing portfolio management services and investment advice. 

Regulations of the organization to be followed in Japan

Premium car is a popular Australian based automotive organization that has decided to export advanced automotive parts in Japan. Based on the nature of their business, Premium cars need to implement different regulations while opening their new business venture in the Japan market. For instance, Foreign Exchange and Foreign Trade Act (FEFTA) needs to be practiced by Premium cars to enable proper expansion of foreign transactions and maintain peace or security in Japan (cas.go.jp, 2022). It is of utmost importance to ensure equilibrium of international balance of trade in the Japan market to coordinate foreign transactions and contribute to the sound development of the Japanese economy. In accordance with the FEFTA act, Premium cars need to measure "foreign currency" and "means of payment" by offering a legal promise of valid contract formation in Japan. On the contrary, Premium cars need to assess the Ministry of Economy, Trade and Industry (METI) policy to develop Japan's economy and promote economic vitality (meti.go.jp, 2022). This is crucial to secure a stable and efficient supply chain across international borders of Australia and Japan along with the proper utilization of resources and capabilities. Application of METI regulations is beneficial for Premium cars in the Japan market so as to promote free international trade from the Australian market regarding the acquisition of automobile parts and services. Therefore, the automobile organization needs to follow such legal interventions to enhance their business outcomes in automobile manufacturing and selling in the international market. 

Conclusion 

From the above analysis, it can be summarized that Premium Cars need to form contracts with the other party only after gathering important information about their activities. Once the legal contract has been formed between the parties, there is no possibility to withdraw unless both of the parties agree to revoke the contract. Multiple types of contract have been found under the Japanese Civil code that needs to be understood before involving employees within the organizational activities. On the other hand, the legal system has also defined different type remedies upon the breaching of contract. Mainly 3 types of remedies have been evaluated in the report that will allow the organization the negative effect of breaking legal binding. Premium Cars also need to appoint trading agents within their activities in overseas functions so that they can guide the organization on importing and exporting activities. It can be concluded from the above that appointing a trade and sales agent in Premium cars in Japan is effective to carry out the ongoing tasks of import and export services from Australia. Application of free trade agreement through JAEPA is crucial to support positive growth in the automobile organization in Japan during the overseas operations of import and export. It is beneficial not only for maintaining a healthy relationship between the stakeholders of two countries but also to increase the affordability rate of their cars that is already high in the former market. 

Reference list

Bhagwati, J. N. (2021). Free trade today. In Free Trade Today. Princeton University Press. Retrieved on 30 October 2022 Retrieved from: https://www.degruyter.com/document/doi/10.1515/9781400824342/html?lang=en

cas.go.jp, (2022). Foreign Exchange and Foreign Trade Act Act No. 228 of ( December 1, 1949) FEFTA Retrieved on 30 October 2022 Retrieved from: https://www.cas.go.jp/jp/seisaku/hourei/data/FTA.pdf

Cremona, M. (2018). Shaping EU trade policy post-Lisbon: opinion 2/15 of 16 may 2017: ECJ, 16 may 2017, opinion 2/15 free trade agreement with Singapore. European constitutional law review, 14(1), 231-259. Retrieved on 30 October 2022 Retrieved from: https://www.cambridge.org/core/journals/european-constitutional-law-review/article/abs/shaping-eu-trade-policy-postlisbon-opinion-215-of-16-may-2017/F04F045C4F26BF07455E207C25E6E9A3

Drieghe, L., &Potjomkina, D. (2019). EU's value-based approach in trade policy:(free) trade for all?.Global Affairs, 5(1), 63-72. Retrieved on 30 October 2022 Retrieved from: https://www.tandfonline.com/doi/abs/10.1080/23340460.2019.1584539

Karaiskos, A. (2018). Civil Code Reform in Japan: Is the New Regulation of Standard Contract Terms a Desirable One?. In The Future of the Commercial Contract in Scholarship and Law Reform (pp. 73-98). Springer, Cham. Retrieved on: 25.10.2022, from: https://link.springer.com/chapter/10.1007/978-3-319-95969-6_4 

Tamaruya, M. (2020). The Transformation of Japanese Trust Law and Practice: Historical Contexts and Future Challenges. Asia-Pacific Trusts Law: Theory and Practice in Context, Hart Publishing, Forthcoming. Retrieved on: 25.10.2022, from: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3802222 

Young, M. K., Kato, M., & Fujimoto, A. (2002). Japanese Attitudes Towards Contracts: An Empirical Wrinkle in the Debate. Geo. Wash. Int'l L. Rev., 34, 789. Retrieved on: 25.10.2022, from: https://heinonline.org/HOL/LandingPage?handle=hein.journals/gwilr34&div=31&id=&page=