Legal Environment in International

Business
You work for a French company that is looking to expand its business operations into new
markets. Specifically, your company produces high-end, organic packaged food products
for sale to consumers (e.g., at supermarkets, grocery stores, etc.). Your company also
prides itself on its use of ethical business practices (e.g., enforcing high labor standards,
environmental protection, etc.). When consumers see your company’s name on a product,
they know it is a high quality, organic product from a company with high social responsibility
standards. The fact that the products are “French” is also important as it makes the food
products more desirable for many consumers. The company is also famous for its unique
packaging designs. The firm uses plant-based packaging materials as an alternative to
plastic packaging for consumer goods and its employees have created a unique, innovative,
and efficient manufacturing process for the packaging materials. Currently all production
takes place in France, and all sales take place in Europe, but the firm would like to enter
new markets to take advantage of the growing demand for its products.

a) One target market for the firm is Canada. What is an appropriate strategy for your firm to
enter the Canadian market and why? Based on your chosen strategy, what are the
potential legal risks that your company will face once it begins operating in Canada? (e.g.,
court system, IP concerns, dealing with the government, dealing with business partners,
etc.)

Ans: Based on the reading above I would suggest that I would choose a strategy of
entering an Canadian Market would be Strategic Partnership with a Canadian
based company with the same values that strives towards organic food and have a
high social responsibility standards in the market so that would leverage the
company's strengths in high-quality organic products, ethical business practices, and
unique packaging designs.

Based on the chosen strategy of Strategic Partnerships in Canada to expand in the

new market the Potential risk the company might face once it began operating in
Canada are:

Intellectual Property (IP) Concerns: In a strategic partnership, the sharing of

proprietary information or jointly developing intellectual property (IP) can expose the
company to risks.. The company shall use tools like as non-disclosure and
confidentiality agreements stating clearly who can have access to the information
and what information is to be disclosed and what not under the trade secret laws or
clearly mentioning of the of ownership rights, partners may avoid infringement claims
or battles over IP right.

Contractual Disputes: These kind of strategic partnership highly depend on

Contracts and agreements. Therefore clearly defining the terms , responsibility and
the performance of each company becomes highly crucial for the partnership that it
can help to safeguard the interest while entering into a new market and also
reducing the risk for going in legal actions while impacts the partnership that disrupts
the entry and also damaging reputation of the company which holds it value in
ethical business practices.

Regulatory Compliance: Expanding into a new market requires careful consideration

of regulatory requirements and compliance with local laws and standards. Getting
the necessary licenses and permits, and making sure its adheres to production and
packaging standards, are essential steps for the company, particularly given its focus
on unique packaging designs. By conducting a thorough research and taking advices
from legal experts who is familiar with the Canadian market, the company can
navigate legal regulatory complexities effectively. Aligning packaging designs with
the country's standards will help the company's commitment to compliance and
reinforces its reputation as a socially responsible business. Proactively addressing
regulatory compliance will not only ensures legal compliance but also omproves
consumer trust and confidence in the company's products.

b) A firm in Brazil approaches your company and proposes to be an exclusive distributor for
South American markets. Specifically, they propose that they simply purchase goods from
your firm, and then resell them in South America. Assuming this is an attractive option, what
could go wrong and what steps should you take to protect yourself in this context?

Ans: Absolutely, while the company thinks this is a very lucrative option to partner with a
Brazilian firm there are some things that might not work as they might thought it would be.
Some of the things that might go wrong in these are:

Limitation to Authority: When partnering with a Brazilian firm to resell products in

South America, there is a risk of limitations in authority. The company's unique
marketing, branding, and pricing strategies may not be fully followed to by the
Brazilian company. To reduce this risk, it's essential to establish clear guidelines and
standards for the Brazilian firm to follow. This includes ensuring that the partner
company understands and agrees to uphold the company's values, such as high
labor standards and environmental protection practices. Implementing clear
agreements that outline expectations and responsibilities can help mitigate the risk of
moving away from the company's established standards. Regular communication
and monitoring of the partner's activities can also help ensure compliance with the
company's policies and standards.

Intellectual Property Protection: Another potential issue is the breach of intellectual

property (IP) rights. As the products are being resold in South America by a Brazilian
company, there is a risk that the company's IP, including product formulas, packaging
designs, and branding elements, may be compromised. To safeguard against this
risk, it's crucial for the company to take adequate steps to protect its IP rights. This
may include registering trademarks and patents in relevant jurisdictions,
implementing strict confidentiality agreements with the Brazilian partner by signing
non disclosure agreements, and monitoring for any unauthorized use or replication of
the company's intellectual property. Additionally, educating the partner company
about the importance of IP protection and providing training on proper handling and
usage of proprietary information can help to reduce the risk of infringement. By
proactively addressing IP protection measures, the company can safeguard its
competitive advantage and preserve the integrity of its brand in the South American
market.
c) Furthermore, the Brazilian firm proposes a sale of goods contract, which includes the
following language:

Article 8 – Delivery delays.

The Seller shall not be held liable for damages caused to the Buyer by delays in delivery,
unless such delays be directly attributable to the Seller without justified cause.

Is this language ok? Why or why not?

Ans: No, This language is not “ok” according to me. It is because first there is lack of clarity
in the sentence and its language. The phrase "justified cause" lacks clarity and
specificity. Without a clear definition or elaboration, it leaves room for ambiguity and
misinterpretation. For instance, while force majeure events and unforeseen
circumstances beyond the Seller's control are mentioned as examples, they should
be explicitly listed within the contract to provide certainty to both parties. And also by
clearly defining what constitutes a justified cause for delays, the contract can ensure
that both parties have a clear understanding of the circumstances under which the
Seller would not be held liable. This clarity helps prevent disputes and promotes a
more transparent business relationship. Secondly, while the language aims to protect
the Seller from liability for delays beyond their control, it's equally important to
safeguard the interests of the Buyer. Fairness in the contract requires balancing the
rights and responsibilities of both parties. Including provisions for communication of
delays and remedies for the Buyer, such as extending the delivery timeline or
renegotiating terms, can help reduce the impact of delays on the Buyer. Additionally,
setting reasonable limits on the extent of delays beyond which the Buyer can take
action ensures that the Buyer's interests are even protected. By promoting fairness
and equitable treatment of both parties, the contract fosters trust and cooperation,
ultimately enhancing the overall business relationship.

Your firm then decides to target the Southeast Asian market. It approaches a potential
business partner in Malaysia that proposes to enter into a licensing agreement to use the
manufacturing process produce the products locally in SE Asia and avoid various
international trade restrictions. They propose a licensing contract which contains the
following language:

“Licensee will not do anything inconsistent with Licensor’s ownership of the trademark, or
similarly affect the value or goodwill pertaining thereto. Licensee agrees not to use the
trademark owned by Licensor in any matter that suggests the Licensor’s endorsement,
sponsorship, or recommendation of Licensee’s Product beyond what is authorized by this
Agreement. Upon Licensor’s request, Licensee shall supply, at no cost and with no
obligation to return, suitable specimens of its use of the trademark to verify Licensee’s
compliance with this License.”

Is this language ok? Why or why not?

Ans: Yes , According to me the language is okay because it protects the company’s
trademark right and at the same time it also make sure of the proper use of the license.
Protecting Trademark Rights: The language says that the Malaysian business
partner must respect the company's trademark. This is crucial for maintaining the
exclusivity and integrity of the company's brand identity. By exclusively mentioning
this requirement in the agreement, the company establishes its ownership of the
trademark and prevents unauthorized use by the partner. This not only protects the
company's brand reputation but also ensures that consumers associate the
trademark with the company's products or services, maintaining brand consistency
and loyalty.

Preventing Misrepresentation: The agreement limits the Malaysian company from

suggesting the licensor's endorsement, sponsorship, or recommendation of the
licensee's product beyond what is authorized. This provision is essential for
preventing misrepresentation, as it ensures that the Malaysian business partner
does not falsely imply an official association or approval by the company. By clearly
defining the scope of permitted use of the company's trademark and branding
elements, the agreement minimizes the risk of confusion among consumers and
potential legal disputes between the parties. It also maintains clarity in brand
association, reinforcing the company's reputation and credibility in the marketplace.

e) Finally, the contract proposed by the Malaysian firm includes a dispute resolution clause
which requires the parties to use Singapore Law and the Singapore International Arbitration
Center (“SIAC”) in case there is a dispute related to the contract. Is this an acceptable
proposition? Use information from our class discussions to help you.

Ans: The proposition made by the Malaysian firm for using Singapore law and the
Singapore International Arbitration Centre (SIAC) as the dispute resolution
mechanism according to me is an acceptable proposition due to :

Arbitration as a Preferred Method: Alternative dispute resolution (ADR), including

arbitration, offers several advantages over traditional litigation. These benefits
include high success rates, as parties are more likely to comply with arbitration
awards than court judgments, focus on business interests, as arbitrators can
consider commercial considerations in addition to legal principles when resolving
disputes, timeliness of decisions, as arbitration proceedings are typically faster than
court litigation, and reduction in costs, as arbitration can be more cost-effective than
protracted court proceedings. By incorporating ADR mechanisms like arbitration into
their contracts, parties can proactively address potential disputes and minimize the
risks associated with litigation.

International Dispute Resolution Challenges: Handling disputes, in business

transactions can be quite complex due to the involvement of parties from
jurisdictions. The challenges include dealing with systems potential obstacles in
enforcing judgments across borders and the possibility of facing litigation in multiple
jurisdictions at once. BY choosing SIAC can be advantageous as it is an arbitration
institution known for resolving international disputes. SIACs processes are tailored to
suit parties with backgrounds offering a fair and dependable platform, for addressing
cross border conflicts.
Maintaining Business Connections: While the main aim of resolving disputes,
through established methods is to settle disagreements between parties it's crucial to
think about how these processes affect the overall business relationship. BY
choosing arbitration shows a willingness from both sides to work together and
resolve issues in a less confrontational way when compared to traditional legal
battles. This approach can help in preserving the business connection by reducing
disruptions commonly seen in court cases. Furthermore arbitration decisions are
usually considered final and binding offering parties closure and assurance in settling
their conflicts, which can promote continued teamwork and partnership, between
them.