Question

As the vice president of finance for a company producing and selling electronic switchboards, you are considering a foreign investment to build a plant to assemble electronic components. A source in China advises you that a town near Shenzhen may be an excellent location for a new plant. Chinese are well educated and willing to work for reasonable wages. Projected construction costs are acceptable. Both rail lines and airports are nearby, and the current Chinese government seems politically stable. The town even has a technical college that will be an excellent source for skilled employees. The plant will ship most of the finished electronic components back to the United States.

Do you know everything you need to make an investment decision?

If not, what else do you need to know about investment in foreign countries?

What does it mean to say that law is the foundation of the private enterprise system?

Three years ago the Darden Corporation bought a thousand acres of land that borders the Potowac River in Washam County. While waiting on development opportunities, Darden cut timber to help repay the mortgage loan it took out to buy the land. On March 2, the Washam County Commission proposed an ordinance to establish a 250-foot-wide greenway along the south side of the Potowac that will effectively ban both development and timbering on nearly 80 acres of Darden’s land. The same day in an unrelated accident a Darden truck ran over a hunter who was hunting without permission on the company’s land. Darden immediately contacted an attorney in Washam City.

What is the law?

What does it mean to say that Darden has “property” in the land? That the hunter has “property” in himself?

What sources of law will the attorney have to understand in order to advise Darden about the proposed greenway?

The company’s potential responsibility to the hunter?

Answer 1

Question 1

Do you know everything you need to make an investment decision?

- No, you lack essential information serious to understanding the risk and likely chance of victory if your company invests in Russia. How will your investment profits be taxed, how will the state protect your resources, will the state expropriate your investment, is there adequate enforcement of contracts? Law is the foundation of private enterprise in the modern nation because if law and its enforcement is inadequate, the risks of doing business are too great.

If not, what else do you need to know about investment in foreign countries?

You need to comprehend whether or not the country has legal institutions favorable to successful business investment such as whether the country has sufficiently imposed legal barriers that will protect what you need, comprising the actions you must take, in order to do business successfully.

What does it mean to say that law is the foundation of the private enterprise system?

It means that the private market in modern nations depends on the state’s protection of privately owned resources (property system) through the adequate enforcement of resource exchanges (contract), criminal laws against theft and fraud, and compensation for wrongful injuries to resources (tort law). Just compensation for state expropriation of an owner’s resources is also a necessary foundation to give incentive for maximum investment and production in private enterprise.

Question 2

What is law?

Law : a law is a set of rules laid down by the state and enforced by the government.

What does it mean to say that Darden has “property” in the land? That the hunter has “property” in himself?

Property : is the legitimate right that permits you to except others from your assets. It stops others from taking your possessions. Darden has “property” in the land. It permits Darden to do whatsoever it needs with its asset, the land they have title over. The hunter has property in himself through his ideas and his free communication of them.

What sources of law will the attorney have to understand in order to advise Darden about the proposed greenway?

Sources of law : the lawyer of Darden need to go through the U.S Constitution and Amendments for the owner’s right to property. They should also look into local decrees. The advocate should look into the misdeed for intruding on private property in the case of the hunter.