Commercial Transactions
Commerce
Defined by the Business dictionary as being the exchange of money for goods or services
Products transported from place to place
Improve the standards of living for a country's citizens
Involves politics, economics, technology, culture, society, and the legal system.
Stone age
In his barbarian state man's wants are so few and simple. Limited to his physical existence such as food clothing and shelter.
Egypt
After the conquests of Alexander the great, the port of Alexandria became the great commercial metropolis of the world and Greek merchants settled there in large numbers
Middle age
Commerce developed in Europe through the trading of luxury goods
Industrial revolution
Production efficacy improved with inventions such as the steam engine which reduced the time it took to manufacture products as well as prices.
Impact of e-commerce is today's business world
A complex system of companies tries to maximize its profits by offering products and services to the market at the lowest production cost.
Commercial Transactions
What is a commercial transaction?
An interaction between two parties in which goods and services or something of value is exchanged for remuneration.
Truthful representation
Contact provisions
Governed by law
Commercial Transactions
Financial transactions
Is initiated by an authorized person
It belongs to a business, not to the owner
It is a monetary event
It affects the financial position of the business
Is supported by a source document
Classification of business transactions
Cash: cash is paid or received immediately when the transaction occurs.
Ex. you sell some goods to Mr. John for $50 and Mr. John immediately pays $50 cash for the goods purchased
Credit: payment or receipt of cash is not made immediately at the time when the transaction occurs but postponed to a future date
Ex. You sell some goods to Mr.X for $150. Mr.X requests that you receive the payment of $150 next month. You agree Mr.X takes the goods to his home for use.
Internal: exchange from one department to another in the same company that changes something in the accounting equation.
Ex. Realizing the loss of assets caused by fire.
External: an outsider or external party is involved
EX. purchase of goods from suppliers. Sales of goods to customers
International Commercial Law
Definition
Body of applicable rules, principles, and customary practices that govern cross-border commercial activities and transactions of private parties.
Works by setting laws and regulations for others to follow.
It aims to provide the regulations required to execute international transactions involving more than one nation.
Sources
Foreign Law Domestic law of a country other than your own. | International Law Rules are established by custom or treaty and recognized by nations as binding on their relations with one another. | ||
Constitutions A body of fundamental principles or established precedents according to which a state is governed | Foreign statues A written law passed by a legislative body from another nation | Treaties A formal agreement, contract, or other written instrument that establishes obligations between nations. | INT. Tribunal decisions Decisions of a court or other decision-making body may or may not be the final outcome of the matter. |
Commercial activities abroad
International business is an essential part of a growing global economy
This connectedness of markets and people has produced global value chains
Trade growth
Global gross domestic product (GDP)
Employment
Why do we need international laws?
To regulate business across borders (business, entity formation and funding intellectual property protection, dispute resolution, and international trade policy)
To protect against the exploitation of a thriving economy or the oppression of a more vulnerable nation
Trade agreements provide rules that assimilate and support fair and lawful trade between countries and make transactions easier.
Why is international trade so important?
To increase revenue, broadening a customer base, and ensure a longer product lifespan
Getting benefits from currency exchange fluctuations
Gain excess to a wider pool of potential employees
Licensing
The company standardizes its products and has full scholarship rights
Importing and exporting
Allows citizens of different countries to enjoy a rich array of goods and services
Outsourcing
Hiring a party outside the company to perform services or create goods traditionally performed by in-house staff.
Offshoring
Relocating a business a portion of a business operations to a different geographic location
Franchising
Parent organization confers the right to conduct business using its brand name and products to another overseas company.
Joint ventures
Two or more businesses decide to combine their resources to fulfill an enumerated goal.
International agreements
An agreement between two countries is called a “bilateral”
Countries bound by international agreements are generally referred to as “states parties”
An agreement between several countries is “multilateral”
A treaty can be called a “convention, a protocol, a pact, an accord, etc.”
International agreements are formal understandings of commitments between two or more countries.
Examples
Geneva protocol
Bansthe use of biological weapons and toxic gases in war and formed the basis for both biological and chemical weapons conventions
International Health Regulations (IHR)
Prevent protect against and provide a public health response to the international spread of disease
International Plant Protection Convention (IPPC)
concerned with preventing the introduction and spread of pests to plants and plant products
Proliferation security initiative
The global effort that aims to stop the trafficking of weapons of mass destruction, their delivery systems, and related materials
Structure
Part 1
Sphere of application and general provisions (Act1-3)
Part 2
Formation of the contract (Act 14-24)
Part 3
scale of goods (Act 25-88)
Part 4
Final provisions (Act 88-101)