Question

Your company is entering into a contract with an overseas company. Without further information, name two (2) legal, two (2) ethical, and two (2) contractual considerations you would likely include in your deliberations.

Answer 1

The two main legal considerations that a company must consider while entering into a contract with an overseas company include export and import laws (trade restrictions) and labor laws. A company must understand the legal procedures pertaining to export and import while entering into a contract. Some countries serve as tax haven attracting international investors to establish their business. Hence an analysis of export and import legal procedures is a necessary legal requirement. Employment and labor laws pertaining to the country of the overseas company is another legal consideration as employees are required for the daily operations. Hence while entering into a contract, labor and employment laws must be studied.
The two main ethical considerations that a company must consider while entering into a contract with an overseas company include culture and language. Cultural differences determine the success or failure of an overseas contract. The product that is sold as a result of the contract with an overseas company must cater to the tastes and preferences of the local market. This will add more value to the contract and ensure success. Language differences are crucial as they have a direct impact on the advertising and marketing activities of the company in selling their product overseas.
The two main contractual considerations that a company must consider while entering into a contract with an overseas company include security and transport considerations. Security of products and payments must be ensured in an overseas contract. Guarantee bonds issued by respective banks are to be processed while performing overseas money transactions to ensure security. Transport is another vital consideration to ensure that products reach on time without any defects. The mode of transportation (Air, Road, Sea or a combination) is finalized in the contract. Insurance for goods in transit also plays a major role in the transport of goods in an overseas contract.