EXAM QUESTION TEMPLATE

Essay:
• You recently graduated from law school and have passed the bar and are admitted to
practice law. Your former roommate has become an entrepreneur and has been
successfully operating her business for a number of years. She believes that the
company is sufficiently large enough to require full-time in-house law support and
asks you to be the General Counsel and you accept. As General Counsel, you
encounter and must advise the company on a number of legal issues. In particular, the
company is developing new items as part of a new product line that it plans to take to
market. The new product line is a cloud-based software solution that allows customers
to track usage and location of heavy construction machinery. The CEO would like to
ensure that the intellectual property rights of the new product are adequately
protected. What do you tell her?

MC/TF

1. Which of the following would NOT be considered a “third party” that could present
increased Foreign Corrupt Practices Act (FCPA) compliance risk for a company?

1. Lawyers hired to represent the company in litigation pending in a court in

Thailand
2. A sales agent hired to help the company to increase its sales in Vietnam
3. An auditor hired by the company to review its internal accounting practices
in India
4. A consultant hired to represent the company in obtaining permits required for a
planned new office in China

1. True or False, the US Department of Justice recently amended the Sentencing

Guidelines to clarify the criteria for evaluation of effective corporate ethics and
compliance programs?

1. True
2. False
1. international business law and practice
(1) what is international law?
① The body of rules that has been accepted as such by the international community
② Actually there is no real law, just consists of rules that countries agree to follow[treaties,
the parties are countries, not private companies or person]
③ Has no global authority for enforcement (European Union is an exception)
(2) Public international law: governs the conduct of nations with nations&individuals
(3) Private international law
① international business law
(4) source of international law
① international treaties-bilateral, plurilateral or multilateral
1) self-executing: has a domestic law effect
2) non-self-executing: requires legislative action[through passage of legislation by both
Houses of Congress, combined with either the President's signature or a
congressional override of a Presidential veto.]
② international conventions-multilateral
③ customary international law: Ethics, Social Responsibility, and Codes of Conduct
(5) International business law
① factors driving uniformity
1) Accelerating forces of free trade
2) Need for nations to cooperate, including in enforcement
3) Intergovernmental organizations
4) International tribunals
5) Roles of private industry organizations and trade associations
② factors influencing differences
③ crimes
④ Extraterritorial Reach of Domestic Law
1) Antitrust
2) Data Privacy
3) FCPA
4) Export Controls
⑤ Courts
1) International Court of Justice: cases brought by nations against other nations; no
individuals; Enforcing judgments by world opinion[联合国机构]
2) International Criminal Court: to prosecute individuals for the international crimes of
genocide, crimes against humanity, and war crimes[根据多边《罗马公约》于 2002 年
成立，唯一一个有管辖权起诉犯有灭绝种族罪、危害人类罪、战争罪和侵略罪的个人
的常设国际法院]
⑥ Forms
1) trade: import[from a foreign seller]&export[to a foreign buyer] goods and services
a. export can be direct(customer), indirect(intermediaries)
b. exports can be sold by independent foreign sales representatives&foreign
distributors
2) licensing the intellectual property
 a. patents, trademarks, copyrights, trade secrets
b. licensing agreements: contracts by which the holder of intellectual property will
grant certain rights in that property to another party in return for consideration
c. International Franchising: uses an agreement to license, control, and protect the
use of the franchisor’s patents, trademarks, copyrights, or business know-how
in return for royalties, fees, or commissions
3) foreign direct investment
a. direct investment transfer of capital, people, and technology in form of
subsidiary or JV or can be purchase of existing business (M&A)
b. form:
a) Foreign branch
b) Foreign subsidiary
c) Joint Venture
d) Local Participation

points: 1) different methods of exporting(direct, through agency, through distributor)

⑦ common risks
1) Distance and Logistics
a. Payment or Credit Risk
b. Supplier Risk
c. Property or Marine Risk
2) Language and Cultural Barriers
3) Cross-Border Trade Controls
a. Export controls
 b. Sanctions
c. Tariffs
d. Non-tariff barriers
4) Currency Risk
a. Exchange Rate Risk
b. Currency Controls
5) Political Risk
a. Nationalization: transfer of private sector firms to government ownership and
control
b. Expropriation: the taking by a government of privately owned assets with some
compensation
c. Confiscation: expropriation without payment or compensation
⑧ Important third-party roles
1) Customs Brokers: help navigate changing regulations and understand import
specifics related to particular commodities.
2) Freight Forwarders: an intermediary that moves cargo from its original point to final
destination[shipping business]
3) Government Agencies
4) International “Agents” and Distributors
5) IBFT lawyers
2. Culture in international business and law
(1) important cultural aspects of international business
① create communication problems
② difficult to understand each other’s behavior
③ influence the form and substance of the deal
(2) Impacts:
① negotiation: Business negotiations can be significantly influence by culture.
② contracts
③ interpretation
(3) ways to mitigate possible cultural barriers
3. WTO
(1) What are the key free trade principles of the WTO/international trading system
① National treatment
② Nondiscrimination/MFNZ 最惠国待遇
4. EU
(1) membership: 6 original member states, currently 27 member states
(2) Key institutions
① European Council: defines the general political direction
② European Commission: proposes and enforces legislation&implement policies
③ Council of Ministers: adopt EU laws and coordinates EU policies
④ European Parliament:
⑤ European Central Bank
⑥ European Courts
(3) European Union Laws
 ① How laws are made?
1) European Commission drafts the initial legislative proposal[EU citizens, interest
group, experts develop ideas/proposals]
2) The European Parliament reviews the proposals and decides
3) The Council of the European Union reviews the proposals and decides[decisions on
new legislation are taken jointly by the Council and the Parliament]
② Regulations and Directives
1) A "regulation" is a binding legislative act. It must be applied in its entirety across the
EU.
2) A "directive" is a legislative act that sets out a goal that all EU countries must
achieve. However, it is up to the individual countries to devise their own laws on
how to reach these goals.
3) A "decision" is binding on those to whom it is addressed (e.g. an EU country or an
individual company) and is directly applicable.
4) A "recommendation" is not binding.
5) An "opinion" is an instrument that allows the institutions to make a statement in a
non-binding fashion, in other words without imposing any legal obligation on
those to whom it is addressed.
③ Key legal principles
1) Primacy of European Union Law
a. Where there is conflict between EU law and the law of Member States, EU law
will prevail
2) Direct Applicability
a. Direct applicability references whether an EU law needs a national parliament to
enact legislation to make it law in a Member State.
b. EU treaties and EU regulations are directly applicable. They do not need any
other acts of parliament in the Member State to become law.
c. EU directives are not directly applicable. Directives, in essence, tell Member
States to do something, so when passed they need a piece of legislation to
introduce them into national law
d. Direct effect refers to whether individuals can rely on EU law in domestic
courts. There are two types of direct effect --vertical(against member state)
and horizontal(against another individual).
(4) Four freedom
(5) Some European organizations not the EU
(6) UK withdraw voluntarily from the EU
5. Agreements & Contractual Terms
(1) examples of international agreements/contracts
① Sale of goods
② Sale of services
③ Agency agreement
④ Contract manufacturing agreement
⑤ Distribution agreement
⑥ IP licensing agreement
 ⑦ Franchise agreement
⑧ Transport agreement
⑨ Acquisition agreement
⑩ Finance agreement
⑪ Purchase order
(2) key terms in international business agreements
① Choice of Law: Refers to rules by which courts determine which jurisdiction’s law
applies to a particular case
1) Absent a choice of law clause, generally the court will apply the law of the state,
country or jurisdiction that has the closest relationship to the transaction
2) 5 factors
3) EU Regulation 593/2008
a. Art. 1Exclusion examples
b. Art. 3Freedom to contract
c. Art. 4In absence of a choice of law: sale of goods, services, land or tenancy,
franchise, distribution contract, sales of goods by auction
4) US Federal Rules of Civil Procedure, Rule 44.1
5) When may a court choose not to enforce a choice of law agreed by the parties?
6) What some key considerations in determining choice of law?
a. Which law is best for the interpretation of the contract? Pick a more established
jurisdiction with a large number of commercial law precedents
b. Where are the parties are based? Pick a jurisdiction where the party with a
higher likelihood of enforcement (i.e. being sued) is based.
c. Where will the contract be performed? The most relevant legal system tends to
be the one where the contract will be performed
② Choice of Forum
1) Clause in which parties indicate where disputes will be handed
2) key aspects of a Choice of Forum Clause
a. Exclusive/Non-Exclusive
b. Nature of Dispute Resolution
③ Nonperformance, Force Majeure, Hardship
1) the primary nonperformance for seller[tender of delivery] and buyer[payment]
2) Liquidated Damages clauses
3) Force Majeure: Frees both parties from liability or obligation when an extraordinary
event or circumstance beyond the control of the parties, such as a war, strike, riot,
crime, or an event described by the legal term act of God (hurricane, flood,
earthquake, volcanic eruption, etc.),
4) Hardship: like commercial impracticability
④ Notice
⑤ corrupt practices and other compliance provisions
6. Import law&Export controls
(1) Import
① why important?
1) Gives consumers access to foreign (and possibly, less expensive, goods)
2) Provides government a revenue source
3) Allow governments to track and analyze international trade statistics
② what is import duty?
1) customs duty/a tax collected on imports
2) “ad valorem”-the import duty charged is a percentage of the value of the goods being
imported
3) Tariffs are the only acceptable impediment to trade under the WTO system[MFN]
4) Dutiable status[the legal status of an imported good at the time of entry], determined
by
a. Product classification(by common and commercial meaning&by use)
a) international recognized numerical coding system: The Harmonized
Commodity Description and Coding System (HS)
b) The U.S. Harmonized Tariff Schedule (HTSUS)
b. Customs value
a) Tariff Engineering: free to engineer its product in order to take advantage of
the tariff laws
b) Dutiable value equals transaction value or price actually paid or payable for
goods when sold for export plus other items (packing costs, selling
commissions, assists, etc.)
c) Does not include freight and marine insurance
d) Found on the commercial invoice
e) must be reported at time of entry
c. Country of origin
a) the general rule: if an item is wholly grown, produced, or manufactured in
one country, then that country is the country of origin
b) WTO Agreement on Rules of Origin
c) United States Customs and Border Protection (CBP)
d) can determines:
 i. Normal tariff rate
ii. Preferential tariff rate or increased rate
iii. Antidumping or countervailing duties
iv. Quota, embargo, or other trade restrictions
v. Labeling and statistical information
e) Certain imports can receive preferential duty status(FTA)
i. The Tariff-Shift Rule: shows that non-originating inputs (raw materials)
have been sufficiently changed in to allow them to qualify for a
preferential tariff
ii. The Regional Value Content: shows a minimum percentage of value of
the finished product was added in the preferred country
f) Marketing and Labeling of Exports-Customs marking rules
i. indicate name of country of origin to ultimate purchaser
ii. Items not requiring marks-incapable of being marked
iii. CBP oversees enforcement of marking rules for products coming from
outside the U.S.
iv. Federal Trade Commission (FTC)/Made in USA rule
i) all or virtually all of the materials, processing or component parts
are made in the U.S. and that their final assembly or processing
took place there
ii) very high standard, Only negligible foreign content allowed
g) Foreign Trade Zones
i. Goods may be imported without being subjected to tariffs until goods
are released into the stream of commerce
h) CBP is responsible for securing our borders from terrorist threats,
collecting tariff revenue, etc.
i. There is a tension between securing borders and allow free flow of
commerce into and out of the United States
ii. CBP is divided the U.S. into seven regions, then further divided into
districts [Customs offices are located at ports of entry to U.S.]
i) The Formal Entry: administrative process required for the importation of
goods into the customs territory of a country
i. officially entered when:
i) arrived at U.S. port of entry
ii) delivery is authorized by Customs after inspection and release
ii. Estimated duties have been paid or customs bond posted
iii. Required Documentation: Documents must be filed within 15 days
i) Proof of the right to make entry (a bill of lading, air waybill, or
carrier’s certificate)
ii) The commercial invoice obtained from the seller
iii) Packing slips to identify the contents of cartons
iv) Other documents required by special regulations (e.g., certificate
of origin, quota visa, textile declaration)
iv. Payment of Duties
 j) Liquidation and Protest
i. Liquidation: final computation and payment of duty, within one year of
entry
ii. Protesting Liquidations: within 90 days
k) Enforcement and Penalties
i. crimes: Smuggling of certain items, prior disclosure
ii. Aggravating and Mitigating Circumstances
iii. Enforced and Informed Compliance
iv. Reasonable Care Checklist
l) Binding Rulings
i. Should be submitted in writing
m) Judicial review
i. Judicial review of formal rulemaking
ii. Judicial Review of Binding Rulings
i) Review is by the U.S. Court of International Trade and US Court
of Appeals for the Federal Circuit
(2) Export
① Trade Controls: are primarily tools used by governments to achieve political, security,
and economic objectives.
1) Approaches to Trade Controls:
a. multilateral: Wassenaar Arrangement&United Nations
b. unilateral: United States Embargoes&Arab League Embargo of Israel
2) Types of Trade Controls
a. Export Controls: Require governmental approval prior to export
b. Economic Sanctions: placed by one country or a group of countries on another
country or group of countries
② US Export Controls
1) administration: Bureau of Industry & Security (BIS)
2) regulation: Export Administration Regulations (EAR)
3) Penalties: civil, criminal, seizure of forfeiture of goods, loss of export privileges,
reputational harm
4) Key Exceptions and De Minimus
a. Temporary Imports, Exports, and Re-exports
b. Gift Parcels and Humanitarian Donations
c. Baggage
d. Shipments of Limited Value
e. Encryption
5) Key Questions
a. What are you exporting?
a) Commerce Control List Categories
b) Commerce Control List Product Groups
c) Export Control Classification Number
d) EAR99 items generally consist of low-technology consumer goods and do
not generally require a license
 b. Where are you exporting?
a) Check the Country List to Determine if a License is Required for Export
b) Key Reasons for Control: Chemical and Biological Weapons, Nuclear Non-
Proliferation, etc.
c. Who will receive your item?
a) Know Your Customer
b) Embargoed Countries
c) Denied Persons and Entities List
d) Deemed Export
d. What will your item be used for?
a) Prohibited if in Support of Proliferation
i. Nuclear
ii. Chemical
iii. Biological
iv. Missile
6) US Defense Trade Controls
a. regulation:
a) Directorate of Defense Trade Controls (DDTC)
b) International Trade in Arms Regulations (ITAR)
c) Penalties: civil, criminal, loss of export privileges, reputational harm
b. ITAR
a) Export of all US-origin defense articles
b) A defense article is any item that has been specifically designed or
modified for a military use
c) Applies to transfers of technical data related to defense articles to nonUS
persons
c. A license is required for export of defense articles to virtually all destinations;
Export of defense articles is prohibited to virtually all destinations including
Belarus, China, Cote d’Ivoire, Russia, Venezuela, and about 20 others
d. US Embargoes
a) administration: Office of Foreign Assets Control (OFAC)
b) Penalties: civil, criminal, loss of export privileges, reputational harm
c) OFAC Regulations
i. Comprehensive Embargoes
ii. Targeted Embargoes
iii. Freezing of Assets
iv. Restriction on Entry into the United States
d) OFAC Regulations apply to US persons:
i. US citizens, regardless of location
ii. US companies
iii. Any person in the US, regardless of nationality
iv. May also cover: Non-US persons directing or involved in prohibited
conduct by a US person
e) Specially Designated Nationals(SDN)
 f) Facilitation: Embargoes prohibit a US person from facilitating any
transaction that a US party could not conduct
7) Watch Out for “Red Flags”
a. The customer or its address is similar to one of the parties found on a prohibited
persons/entities list.
b. The customer is reluctant to offer information about the item’s end-use.
c. The product's capabilities do not fit the buyer's line of business.
d. The item ordered is incompatible with the technical level of the country to
which it is being shipped.
e. The customer is willing to pay cash for a very expensive item when the terms of
sale would normally call for financing.
f. The customer is military entity.
g. Customer is unfamiliar with the product's performance characteristics but still
wants the product.
h. Customer declines routine installation, training, or maintenance services.
i. Delivery dates are vague or destination is unusual.
j. A freight forwarding firm is listed as the product's final destination.
k. The shipping route is abnormal for the product and destination.
l. Buyer is evasive or unclear about whether the purchased product is for domestic
US use, for export, or for reexport.
8) Use Caution in Merger & Acquisition Activity
a. Understand successor liability
b. Complete appropriate due diligence
c. Obtain proper reps and warranties and indemnity
d. Don’t be afraid to slow or stop the deal
7. International Sale of Goods
(1) The Law of Sales
① UCC Created in 1951, incorporated into individual state laws
② How does the UCC become law?
1) Once enacted by a state, the UCC is codified into the state's code of statutes
③ Harmonization of International Sales Law
1) Efforts of UNCITRAL (United Nations Commission on International Trade Law) led
to the adoption of the Convention on Contracts for International Sale of Goods
(CISG) in 1960
2) CISG has become the basis for a widely accepted body of international sales law
④ CISG: a multilateral treaty that establishes a uniform legal framework for international
commerce. It is also known as the Vienna Convention.[been ratified by 95 countries,
representing two-thirds of world trade.]
1) When will the CISG apply?
a. Art. 1
a) contracts of sale of goods, between parties whose places of business are in
different countries
b) when the States are Contracting States; or[countries that have ratified the
CISG]
 c) the rules of private international law lead to the application of the law of a
Contracting State[United States has not applied this subsection]
b. Art. 6: Parties may opt out of the CISG
a) Has an important effect on agreements as many parties choose to opt out
b) Results in the application of the law selected in the choice of law provision
or under conflict of laws principles
c. Arts. 2-3 and 5: Exclusions from CISG
a) Consumer goods
b) Goods bought at an auction
c) Stocks, securities, money
d) Vessels, aircraft, ships
e) Preponderant part for labor or services
f) Death or personal injury liability
2) Validity and Enforcement of International Sales Contracts
a. Art. 4: CISG does not provide rules
a) Determining a contract’s validity
b) Whether a party has legal capacity, or
c) Whether fraud or misrepresentation has occurred
d) Also, consideration is not mentioned and is not required under the CISG
b. Effect of Illegality
a) Agreements that violate the laws of a nation are void and unenforceable
c. The Writing Requirement
a) UCC requires contracts for the sale of goods of $500 or more to be in
writing BUT
b) CISG does not require contracts be in writing
d. Contract Interpretation
a) Parole Evidence and Common Law: under UCC, if contract is final written
expression, then parole evidence is not admissible to contradict
b) Parole Evidence under CISG: court may consider all relevant
circumstances (Art. 8)
e. Customs, Practices, and Trade Usages
a) UCC: Allows past customs, practices and trade usages to fill in the gaps
b) CISG: application of customs, practices and trade usages limited (Art. 9)
i. to those which parties agree to or have established or
ii. past dealings or usages that the parties ought to have known are
observed in trade or industry
f. Offer
a) Art. 14: Is offer if the proposal shows intention to be bound and is
“sufficiently definite”
b) Public Offers: presumption that an advertisement is not an offer unless
there is clear evidence of the contrary
c) Open Price Terms: Both UCC and CISG allow filling in an open price term
d) Firm Offers: Under CISG, firm offers are valid, even if oral; under the
UCC, as between merchants, if offer is signed and in writing, it may not
 be revoked for up to 3 months
e) Pro Forma Invoice: formal document addressed to a specific buyer to sell
goods according to certain terms and conditions = meet the requirements
in order to be offer
g. Acceptance
a) Under CISG, may be any form of statement or conduct that indicates
offeree’s intentions to be bound
b) Party may accept by sending goods or payment (Article 18), if this is
accepted in the trade or was a practice with the parties
c) Silence Not Acceptance: unless there is an established practice or if that
was the term of the acceptance
d) At what point is Acceptance effective
i. Common law: acceptance effective upon dispatch
ii. CISG: acceptance is effective when it reaches offeror (Article 16).
Thus an acceptance can be withdrawn if it overtakes the acceptance,
subject to exceptions
h. Standard Business Forms and Contract Modifications
a) Purchase Order
b) Order Confirmation
c) Terms and Conditions (or General Conditions of Sale)
d) Battle of the Forms
i. under UCC
i) Written confirmation is acceptance, even though additional terms,
unless acceptance is conditional on assent
ii) Merchants-additional terms become part of the contract unless:
ii. under CISG (Art. 19)
i) Acceptance containing new terms that do not materially alter
become part of the contract unless there is a prompt objection
ii) If new terms materially alter, then it is rejection of the offer and is
a counteroffer (not a contract without the new terms)
3) Performance of Contracts
a. Performance of Seller: primary responsibility is to deliver conforming goods
a) Implied Warranties
i. UCC: creates specific implied warranties on goods
ii. CISG[Art. 35]: seller must deliver goods that are of the quantity,
quality, and description required by the contract[conforming goods]
i) Goods fit for a particular purpose
ii) Goods fit for purpose as would be ordinarily used
iii) Possess qualities held out by Seller to the Buyer as a sample
iv) Contained or packaged in usual manner
iii. CISG: Conformance to laws and regulation in Buyer’s country: each
country sets technical standards for product design and performance
b. Performance of Buyer, Inspection, and Notice of Nonconformity
a) Buyer must inspect goods within as short as period as possible under the
 circumstances
b) Buyer must give notice of nonconformity as soon as practicable
4) Remedies for Breach of Contract
a. Fundamental Breach (Arts. 49, 64)
a) A breach that results in one Party being substantially deprived of what he is
entitled to expect under the contract, UNLESS:
i. The breaching party could not foresee the circumstances, AND
ii. A reasonable person would not have foreseen the result
iii. Aggrieved party may avoid/terminate the agreement
b. CISG remedies include
a) Seller’s right to remedy or cure
i. Seller has the right to cure or remedy, and the buyer cannot avoid
performance until the time for performance expires
ii. Nachfrist Period (“the period after”)
i) Gives parties additional time to perform, as long as there is no
“unreasonable delay” or “unreasonable inconvenience”
ii) If seller asks for additional time and the buyer does not respond,
the seller may have the additional time. CISG tries to keep
parties in their contract.
iii) Does not apply to fundamental breach
b) Price reduction
i. If there is only a partial shipment or goods are nonconforming, buyer
may adjust price
ii. Can be used whether or not breach is fundamental
c) Money damages
i. May include compensatory damages, measured by difference between
contract price and current market price of substitute
ii. May include consequential damages for lost profits, if foreseeable
(Art. 74)
d) Specific performance
i. Under CISG, is available if:
i) buyer has not resorted to another remedy,
ii) seller failed to deliver conforming goods,
iii) buyer gave timely notice to the seller,
iv) buyer made a timely request that the seller provide substitute
goods
v) Court may grant Specific Performance without regard to whether
money damages are inadequate
e) Anticipatory breach
i. Either party may:
i) suspend performance when one Party clearly sees the other party
will not perform
ii) avoid performance (assumes that breaching party can never
perform)
 iii) Avoidance of installment contracts
5) Excuses for Nonperformance
a. Impossibility of Performance
a) Supervening illegality
b. Frustration of Purpose (rare)
c. Commercial Impracticability
a) Extreme hardship, Difficulty or Unreasonable Expense
b) Unforeseen Events
c) Shortages and Market Price Fluctuations
d. CISG Exemptions for Impediments Beyond Control:
a) A party is not liable for failure to perform if:
i. (1) due to an impediment beyond control
ii. (2) impediment was not reasonably foreseeable at the time of contract
signing,
iii. (3) the impediment was unavoidable and could not be overcome, and
iv. (4) notice was given to the other party of the impediment and its effect
⑤ the role of CISG: the gap filler, Art. 7(2)
Questions concerning matters governed by this Convention which are not expressly settled
in it are to be settled in conformity with the general principles on which it is based or, in the
absence of such principles, in conformity with the law applicable by virtue of the rules of
private international law.

8. Incoterms and Documentary Contracts & Letters of Credit

(1) The Documentary Sale
① Definition: Possession and ownership of goods is transferred to buyer through
negotiation and delivery of a negotiable document of title issued by an ocean carrier
② This is defined in the contract between the Buyer and Seller, often employing the use of
Incoterms
(2) Incoterms
① What are Incoterms(International Commercial Terms)?
1) First formulated by the ICC standardized guideline in 1936
2) A set of established terms that parties in different countries (and different legal
environments) use for structuring the logistical elements of selling and buying
goods
3) The emphasis is on delineating (in a sales transaction of tangible goods) the risks and
costs between the seller and the buyer via determining a specific place and time for
delivery of the goods
4) For decades, the ICC just revised Incoterms as needed (as in early 80’s replacing C
& F with CFR ) but has been on a 10-year cycle since 1990 with 2000 and 2010
revisions. 2020 version came into effect on January 1, 2020
② Why are Incoterms® relevant?
1) Provides a clear, universal set of standards for multi-lingual, multi-cultural, “multi-
legal” usage -- very practical and based on business practices (not legal principles
and abstract ideas)
 2) Specifies which party -- either the seller or the buyer -- has the obligation (to arrange
and cover any costs) for (transport) carriage, (cargo) insurance, and (trade)
compliance
3) Establishes a set of rules that are designed for both domestic and international
transactions
③ How are Incoterms different than the CISG?
1) content:
a. CISG stands for the United Nations Convention on Contracts for the
International Sale of Goods, which is a treaty that sets out rules governing
contracts for the sale of goods between parties located in different countries. It
provides a framework for the formation of contracts, the obligations and rights
of the parties, and the remedies available in case of breach. The CISG is
focused specifically on the sale of goods and does not cover services,
intellectual property, or real estate
a) Sets out rules for contract formation and the rights/obligations of buyers
and sellers of goods-Akin to Article 2 of the UCC in domestic sales
i. Significant differences between CISG and UCC Article 2[PPT lecture
9]
b. Incoterms (short for International Commercial Terms) are a set of standardised
trade terms developed by the International Chamber of Commerce (ICC).
They provide a universal language for international trade and help define the
obligations and responsibilities of buyers and sellers in international contracts.
Incoterms cover a wide range of issues, including the delivery of goods,
transfer of risk, and payment obligations, and are designed to clarify the
responsibilities of the parties involved in an international transaction.
2) how to function
a. CISG: if in the contract, the parties don’t write the choice of law clauses, if the
parties whose places of business are in Contracting States, can be gap filler for
something not written in the contract
a) CISG automatically becomes the governing law of a sales contract between
parties residing in the US and any other signatory country unless
expressly excluded
i. It does not preempt private contract terms
ii. Fills gaps and provides avenues for resolution of disputes
b. Incoterms: only applicable when written in the contract, Incoterms® must be
included in a contract or purchase order to have effect
3) application scope
a. CISG: must be contracting states, or the rules of private international law lead to
the application of the law of a Contracting State
b. Incoterms: no need to sign the treaty, just can cite it in the contract
④ What Incoterms® Rules Don’t Do?
1) By themselves, Incoterms® are not law and do NOT automatically apply to every
sales transaction of tangible goods
2) The parties must specify that their transaction is subject to Incoterms
 3) If silent, for cross border transactions, the (USA) default may be the UCC or, in
some instances or the UN Convention on the Sale of Goods (CISG) to which the
USA is a party
4) By themselves, Incoterms® do NOT address transfer of legal title of the goods
5) Rather, title passage is usually addressed in the sales/purchase contract or, if not, by
default it is addressed by sovereign (local) law
6) FYI . . . in most transactions, passage of legal ownership from the seller to the buyer
usually requires two events: Delivery + Payment = Title Transfer
7) By themselves, Incoterms® do not specify how goods are to be packed for shipment
or how the goods are to be loaded and stowed onto transport equipment (as in a
container, on a truck, rail car, aircraft, ocean vessel, etc.)
8) Incoterms are not Payment Terms (although payment timing is commonly tied to the
event of delivery): Payment Terms + Incoterms® = Terms of Sale
⑤ What do Incoterms address?
1) Transfer of risk
2) Carriage of goods
3) Insurance
4) Export/import licenses, clearance, and duty payment
5) Packing and marking
6) Nature of transactional documents
7) Checking operations and quality of the goods
8) Notice that arrangements have been made
⑥ Rules for Any Mode(s) of Transport
1) EXW (EX Works . . . at a named place of delivery)
a. seller makes goods available at its premises
b. appropriate for any form of transport — rail, road, air, sea, inland waterway, or
multi-modal
c. carriage to be arranged by buyer
d. risk transfers from seller to buyer when goods are placed at disposal of the buyer
e. cost transfers from seller to buyer when goods are placed at disposal of the buyer
2) FCA (Free CArrier . . . at a named place of delivery)
a. seller hands over goods, cleared for export, to the first carrier (named by the
buyer) at the named place
b. appropriate for any form of transport — rail, road, air, sea, inland waterway, or
multi-modal (this term, not FOB, is the one that typically should be used for
container shipments)
c. carriage (onward from the named place) to be arranged by buyer, or by seller on
buyer’s behalf
d. risk transfers from seller to buyer when goods have been delivered to the carrier
at the named place
e. cost transfers from seller to buyer when goods have been delivered to the carrier
at the named place
3) CPT (Carriage Paid To . . . named place of destination)
a. appropriate for any form of transport — rail, road, air, sea, inland waterway, or
multi-modal
b. carriage to be arranged by seller and paid by seller
c. risk transfers from seller to buyer when goods have been delivered to the carrier
(any form of transport)
d. cost transfers from seller to buyer at port of destination
4) CIP (Carriage and Insurance Paid to . . . named place of destination)
a. appropriate for any form of transport — rail, road, air, sea, inland waterway, or
multi-modal
b. carriage to be arranged by seller and paid by seller
c. risk transfers from seller to buyer when goods have been delivered to the carrier
(any form of transport)
d. seller is responsible for procuring insurance against buyer’s risk of loss or
damage to goods during carriage
e. cost transfers from seller to buyer at port of destination
5) DAT (Delivered At Terminal . . . named terminal at port or place of destination)
a. seller pays for carriage to the terminal, except for costs related to import
clearance
b. appropriate for any form of transport — rail, road, air, sea, inland waterway, or
multi-modal
c. carriage to be arranged by seller and paid by seller
d. risk transfers from seller to buyer when goods are placed at the disposal of buyer
once unloaded from the arriving means of transport at the named port terminal
or place of destination
 e. cost transfers from seller to buyer once unloaded from the arriving means of
transport at the named port terminal or place of destination
6) DAP (Delivered At Place . . . named place of destination)
a. seller pays for the carriage to the named place, except for costs related to import
clearance, and assumes all risks prior to the point that the goods are ready for
unloading by the buyer
b. appropriate for any form of transport — rail, road, air, sea, inland waterway, or
multi-modal
c. carriage to be arranged by seller and paid by seller
d. risk transfers from seller to buyer when goods are placed at the disposal of buyer
on
e. the arriving means of transport at the named port terminal or place of destination
f. cost transfers from seller to buyer when goods are placed at the disposal of buyer
on the arriving means of transport at the named port terminal or place of
destination
7) DDP (Delivered Duty Paid . . . named place of destination)
a. seller is responsible for delivering the goods to the named place in the country of
the
b. buyer, and pays all costs in bringing the goods there, including import duties and
taxes
c. appropriate for any form of transport — rail, road, air, sea, inland waterway, or
multi-modal
d. carriage to be arranged by seller
e. risk transfers from seller to buyer when goods are placed at the disposal of buyer
at named place of destination
f. cost transfers from seller to buyer when goods are placed at the disposal of buyer
at named place of destination
g. seller delivers goods to buyer cleared for import, with duties paid, but not
unloaded from any arriving means of transport at named place of destination
8) FAS (Free Alongside Ship . . . at named port of shipment)
a. seller must place the goods alongside the ship at named port
b. typically used for heavy-lift or bulk cargo
c. appropriate only for sea (or inland waterway) transport
d. seller is responsible for clearing goods for export
e. carriage to be arranged by buyer, or by seller on buyer’s behalf
f. carriage to be paid by buyer
g. risk transfers from seller to buyer when goods have been placed alongside the
ship
h. cost transfers from seller to buyer when goods have been placed alongside the
ship
9) FOB (Free On Board . . . at named port of shipment)
a. seller must load the goods on board the vessel nominated by buyer
b. appropriate only for sea (or inland waterway) transport (not suitable for
multimodal
 c. sea transport in containers)
d. seller is responsible for clearing goods for export
e. carriage to be arranged by the buyer and paid by buyer
f. risk transfers from seller to buyer when goods are placed on board [In earlier
versions of Incoterms®, the FOB term focused on the point at which the
goods had “passed the ship’s rail”. The idea of goods “passing the ship’s rail”
is outdated now, even for goods transported by ocean liner, but it does provide
a fairly clear visual image. We can easily picture the goods being physically
carried up a ramp (or suspended in a net lifted by a crane) from the pier onto
the ship; at some specific point in time they pass over the imaginary vertical
plane (perpendicular to the ship’s deck) that extends skyward from the rail of
the ship. In the 2010 version of Incoterms®, this notion of “passing the ship’s
rail” seems to have become a thing of the past]
g. cost transfers from seller to buyer when goods are placed on board
10) CFR (Cost and FReight . . . to named port of destination)
a. appropriate only for sea (or inland waterway) transport
b. carriage to be arranged by seller and paid by seller
c. seller is responsible for clearing goods for export
d. risk transfers from seller to buyer when goods are placed on board
e. cost transfers from seller to buyer at port of destination
11) CIF (Cost, Insurance and Freight . . . to named port of destination)
a. same as CFR except seller must also procure and pay for insurance
b. appropriate only for sea (or inland waterway) transport
c. carriage to be arranged by seller and paid by seller
d. seller is responsible for clearing goods for export
e. risk transfers from seller to buyer when goods are placed on board
f. seller is responsible for procuring marine insurance against buyer’s risk of loss
or damage to goods during carriage
g. cost transfers from seller to buyer at port of destination
(3) International Transactions Risks
① International business often takes place in three categories of relationship
1) affiliated parties (subsidiaries of parent)-typically do not require contractual
arrangements or external financing
2) unaffiliated unknown parties
3) unaffiliated known parties-unaffiliated parties do require contractual arrangements as
well as some type of external financing
② financial commercial risks of an international transaction
1) Foreign Exchange Exposure:
a. Importing (Accounts Payable)-Problem if the foreign currency strengthens
b. Exporting (Accounts Receivable)-Problem if the foreign currency weakens
2) Risk of Default/Payment Risk
a. Not receiving goods ordered/paid for!
b. Not receiving payments for goods shipped/sold!
③ How do you manage credit risk?
 1) Open Account
2) Commercial Letter of Credit
3) Cash in Advance
(4) Letter of Credits
① A Letter of Credit may be required in a contract, but operates as a separate legal
agreement
② Documentary Commercial Letter-self liquidating - A letter of credit issued to support the
movement of merchandise supported by shipping/commercial documents presented by
the beneficiary to the Issuing Bank or Confirming Bank for payment or acceptance
③ Financing in a Documentary Transaction
1) In a Documentary Transaction, the exporter and the importer banks facilitate the
export sale by exchanging shipping documents for payment
2) The banks involved, however, do not verify that the documents are accurate and do
not guarantee payment as they do with Letters of Credit
3) Documentary Transactions are only recommended for established trade relationships
in economically and politically stable markets
④ Elements of a Documentary Sale
1) The Contract: description of goods (quantity, grade, quality, technical details,
payment instructions)
2) Price (do they include shipping charges insurance fees), and
3) Documents regarding shipping and delivery instructions. These include:
a. Bills of lading (B/L)-is issued to the exporter by a common carrier transporting
the merchandise
4) Commercial invoice-is issued by the exporter and contains a precise description of
the merchandise. Unit prices, financial terms of sale, and amount due from the
importer are indicated
5) More documents
a. Insurance documents- must be as specified in the contract of sale and must be
issued by insurance companies or their agents
b. Consular invoices-issued in the exporting country by the consulate of the
importing country to provide customs information and statistics for that
country and to help prevent false declarations of value
c. Packing lists-may be required so that the contents of containers can be
identified, either for customs purposes or for importer identification of the
contents of separate containers
d. The Document of Title
a) Negotiable Document of Title- evidences ownership of the goods it
represents. The possessor is entitled to possess the goods. e.g. dock
receipts, warehouse receipts and bills of lading
b) The carrier is the bailor (holder only, never the owner) of the goods.
Ownership of goods passes with the documents
c) Negotiable Documents of Title: transfers ownership of goods to “to the
order of” a particular person and effectively passes title to the goods
d) Constructive Delivery: occurs when ownership of goods is transferred by
 the paper documents which represent the goods
⑤ Letters of Credit
1) established procedures have arisen to finance international trade, with the Letter of
Credit being the most important instrument to manage international trade finance
risk
2) Basic principles
a. Banks’ obligations are independent of the buyer’s and seller’s obligations under
their sales contract
b. Banks pay only on presentation of documents and are not concerned with
performance of the underlying transaction
c. Doctrine of strict compliance-the documents must strictly comply with the
d. terms of the letter of credit. Non-conforming documents justify bank’s refusal to
pay
3) Basic relationship
4) functions
5) Uniform Customs and Practices for Documentary Credits- UCP
6) Types of Documentary Letters of Credit
a. Confirmed Letter of Credit- A letter of credit issued by one bank to which
another bank added its irrevocable confirmation to pay, thereby obligating
itself in the same manner as the opening bank
b. Irrevocable Letter of Credit - Letter of credit that cannot be changed or
cancelled without the consent of all parties involved. Almost all Letter of
Credits are irrevocable unless otherwise stated on Letter of Credit.
c. Negotiable. Letters of credit are usually negotiable.
d. straight negotiation (non-negotiable) if the issuing bank's payment obligation
extends only to the beneficiary of the credit.
7) Key Letter of Credit Terminology
a. Negotiate-Different from “negotiable”-Means to take action to verify that the
documents presented under an Letter of Credit conform to the requirements in
order to release funds to the seller.
b. Transferability-means LC permits the beneficiary to transfer all or some of the
rights and obligations under the credit to a second beneficiary.
c. Presentation - Presentation for acceptance or payment on a collection or letter of
credit.
d. Protest-Legal process of demanding payment of a negotiable item from the
maker who has refused to pay.
e. Maturity Date - The date on which negotiable instruments become due for
payment.
f. Expiry or Expiration Date-The latest date on which the draft and documents
drawn under a letter of credit must be presented to the negotiating, accepting,
paying, or issuing bank in order to effect payment. The issuing bank’s
obligation ceases on that date if the letter of credit is a “straight credit.” If the
letter of credit is a “negotiable credit,” the issuing bank must honor the credit,
provided the complying documents were submitted prior to the expiry (or
 expiration) date.
g. Discrepancy-Any deviation from the terms and conditions of a letter of credit or
from the documents presented under the letter of credit.
8) Standby Letter of Credit
a. A letter of credit that generally guarantees payment due for an unfulfilled
obligation on the part of the applicant or another party (similar to performance
bonds or guaranty)
b. Is payable upon presentation of required documentation, as well as a signed
statement or certification by the beneficiary that the applicant has failed in its
obligation
c. The party alleged to have not performed has no chance to rebut the claim prior
to payment; must litigate
d. US banks cannot issue commercial guaranties, but can issue Standby Letters of
Credit
9. Using Agents and Distributors
(1) third parties
① why need third parties?
1) cost savings, companies can pick up sales in markets where there is not sufficient
activity or justification to support a separate subsidiary or branch
2) market access
3) increased speed to market
4) local expertise
② third party in international business-agency
1) international agency agreement
2) benefits and risks by using international agent
3) key provisions:
a. Activities on behalf of the principal(Although the sales contract is clearly
between the principal and the customer, sometimes the principal requires that
its agent)
b. Exclusivity: a self-employed agent shall have sole, or exclusive, or sole and
exclusive trading rights in a particular territory, limit the scope of the agency
contract to certain categories of customers
c. Commission: paid commission on all sales emanating from his territory
d. Commission on orders received directly by the principal
a) The agent is entitled to commission if the transaction concerned is the
direct result of its efforts
b) cannot claim commission if a customer places an unsolicited order with the
principal, or if the order has been obtained by the principal himself or
other agents
c) An agreement may provide that the agent shall be entitled to commission
on all transactions emanating from his territory( exclusive agent for a
defined territory)
e. Reimbursement of the agent for expenses
a) The self-employed sales agent abroad who solicits orders for an exporter
 cannot claim his trading expenses from the principal, unless this was
expressly agreed upon in the contract
b) If the agent, with the approval of the principal, incurs liabilities in the
courts of the country where the customer resides, the agent is entitled to
be indemnified for any losses sustained or liabilities incurred
f. Termination: Payment of goodwill
a) weakness derives from the fact that its customers ‘belong to’ the principal
b) in many countries, public policy laws aim to protect the agent’s rights,
especially upon the termination of the contract.
g. Applicable law (and local mandatory law)
a) mandatory legal provisions of public policy
b) an agent may need a level of protection similar in scope and nature as that
granted to an employee
c) Such provisions are binding, meaning that the parties cannot ignore or
decide not to apply them
d) Before any discussion takes place between the parties, it is important to
check whether the foreseen agency contract will be impacted by such
laws.
4) primary compliance risk in international agency arrangements
a. Extra-territorial application of law
5) How to draft an agency agreements to mitigate compliance risk by contractual
provisions
a. Rep and warrant that agent is in compliance with anti-corruption law
b. Compliance with law, including FCPA and UK Antibribery Act (private bribery)
c. Annual certification to compliance
d. Audit right, including books and records
e. Indemnity
f. Termination
(2) International Distribution and Sales Agency Agreements
① benefit
1) cost effective ways for companies to improve their sales results
2) By relying on third parties to improve their distribution of goods and services
abroad, companies can pick up sales in markets where there is not sufficient
activity or justification to support a separate subsidiary or branch
3) the difference between Distribution Agreement and Sales Agency Agreement
a. Distribution Agreement: Intermediary takes title to the goods, bears credit risk,
and resells at a higher margin
b. Sales Agency Agreement: Intermediary is paid a commission only on actual
sales (typically a percentage of the sales price), does not take title to the
goods, and typically may not bind the principal
② Dealer Laws
1) designed to protect their locals from perceived aggressive conduct whereby locals
develop a market for a foreign principal and then, once the local market and
goodwill have been developed, are abruptly terminated or their agreements are
 allowed to expire
2) Dealer Laws protect local distributors and agents from termination without “just
cause” and mandate as a matter of public policy the payment of a “goodwill
indemnification payment”
3) In the EU, a bloc-wide Directive has been adopted for which each Member State has
adopted enabling legislation using the terms of the Directive as a minimum level of
protection for agents
4) It is typically very hard for a principal to show it had “just cause” in terminating an
agent and local courts are reluctant if not loathe to find “just cause”terminations
except in the most egregious circumstances
5) A failure to renew an agency contract is typically not deemed to be a “just cause”
termination and is usually actionable by the local agent, notwithstanding the
specific contract language
6) Principals that do not reach an agreement may be banned from exporting to the
market until the matter is resolved
③ the benefits of Arbitration
1) Neutral decision-maker and forum: arbitration provides a neutral decision-maker and
forum, avoiding risks associated with litigation in certain foreign jurisdictions,
especially emerging markets
2) Enforcement ability: arbitral awards are often much easier to enforce against assets
in foreign countries than court judgments (see e.g., 1958 United Nations
Convention on the Recognition and Enforcement of Foreign Arbitral Awards)
3) Specialist arbitrators: parties can chose arbitrators with expertise relevant to the
dispute and avoid judges with little experience/interest relevant to the dispute
4) Confidentiality: generally conducted in private, which provides protection to
reputation, client identity, and deal components
5) Speed: arbitration may be faster than litigation, with less discovery and limited rights
for appeal
④ Security Interests and Perfection
⑤ Notice
⑥ Key Provisions
1) Appointment and Relationship
2) Risk of Loss
3) Compliance with Laws
4) Termination
5) Limitation of Liability
6) Arbitration
10. International Intellectual Property &International Franchising
(1) International Intellectual Property
① Intellectual Property
1) Intangible rights protecting commercially valuable products of the human intellect,
including company and product branding, inventions, concepts, designs, know-
how, and authored works (software, articles, songs, etc.)
2) common forms: patents, trademarks, copyrights, trade secrets/know how
② The “Work” VS the IP “In the Work”
1) The “Work”: actual implementation (software program, hardware, book, etc.) in
which protectable intellectual property is reduced to practice
2) Example: Software program may be an implementation of an invention that is
patented, and the patent may cover other implementations as well
3) Analogy: Deed to real property gives ownership in the tract of land, and may permit
various types of uses/implementations on the land
③ Patents
1) definition
2) requirements for Patentability
a. useful: not just a starting point for future investigation with no known usefulness
now
b. Novel: not previously described in publication or known to others
c. Non-obvious: not just an obvious variation of known solution
3) types of patents: Utility, design, plant
4) how to obtain a patent
a. Process in the U.S.
b. Patent Protection
a) Until the patent issues, the invention is “patent pending” which serves for
notification but does not provide any enforceable rights
b) As with the other forms of IP protection, the Patent holder has the
responsibility for policing and enforcing the patent rights
c) Ownership: Inventor is owner, unless assigned
④ Trademarks
1) Definition
2) Purpose: To designate the source of goods or services. In effect, the trademark is the
commercial substitute for one’s signature
3) obtain trademarks
a. trademark rights arise when a mark is actually used in connection with a product
or service
b. common law rights
a) actual use of mark
b) first in time, first in right
c) rights are territorial
c. trademark registration
d. trademark notice
a) registered trademark
b) unregistered trademark
e. trademark term
⑤ copyrights
1) definition
2) purpose: The main purpose of a copyright is to give control regarding reproduction
of original works of authorship to the copyright holder
3) examples: books, movies, songs, sculptures, code
 4) not included: Ideas, methods, systems, concepts, and layouts (copyright protects only
the “expression” of the idea)
5) obtain copyright protection
a. copyright protection arise automatically at the time the work is fixed in any
tangible medium of expression
b. copyright registration
a) registration is not required for copyright protection
b) Registration is a prerequisite for bringing suit for copyright infringement
c) Registration Process: submit an exhibit of the work to the copyright office
along with identification of its title, author, date of creation, etc.
c. copyright ownership
a) the author of the work, unless it is a work made for hire or otherwise
assigned
b) works made for hire
c) copyright notice
i. three elements
i) copyright or
ii) year of publication- the distribution of copies of a work to the
public by sale or other transfer of ownership, or by rental, lease
or lending
iii) Name of copyright owner
ii. Notice can be used whether or not a copyright has been registered
iii. Inclusion of a proper copyright notice
d. copyright term
a) general term: the life of the author plus 70 years, unless it is a work made
for hire
b) 95 years from publication or 120 years from creation, whichever is shorter
⑥ Trade Secrets/Know How
1) definition
2) purpose: to keep information being used in the business that is not generally known
or ascertainable secret to maintain a competitive advantage over competitors
3) examples: Coca Cola formula, manufacturing processes, internal operational
procedures, customer lists
4) trade secret protection
a. information must be substantially secretive
b. secrecy must provide some competitive advantage
c. Information need not be inventive or non-obvious
5) Trade secrets do not protect against independent creation or discovery of information
by another
6) Term: as long as it is maintained secret
7) Trade secret protection
a. No registration or other external filing process
b. How to obtain Trade Secret Protection: implement sufficient procedures to
demonstrate that you intend to hold the information as a trade secret
 c. Examples:
a) Limit access to information
b) Restrict to need-to-know basis
c) Implement confidentiality agreements (NDAs)
d) Clearly label information as trade secret

⑦ International IP: WIPO World Intellectual Property Organization

1) Status: A specialized UN Agency
2) Member States: 193
3) Treaties administered: 24
4) Paris Convention: Industrial Property
a. protection scope: patents, trademarks, industrial designs, utility models (a kind
of "small-scale patent" provided for by the laws of some countries), service
marks, trade names (designations under which an industrial or commercial
activity is carried out), geographical indications (indications of source and
appellations of origin) and the repression of unfair competition
b. substantive provisions
a) national treatment (persons who are either national of or domiciled in a
state party to the Convention shall enjoy in all the other countries of the
Union, the advantages that their respective laws grant to nationals)
b) right of priority (an applicant from one contracting State shall be able to
use its first filing date (in one of the contracting States) as the effective
filing date in another contracting State, provided that the applicant files a
subsequent application within the allotted time)
c) common rules (for foreign parties, the application for a patent or the
registration of a trademark shall be determined by the member state in
accordance with their national law and not by the decision of the country
of origin or any other countries)
5) Berne System (Copyright)
6) PCT (Patent)
7) Madrid System (Trademarks)
8) EU Trademark
 a. Constitutes a unified trademark registration system in Europe, whereby one
registration provides protection in all Member States of the EU
9) International IP Protection: TRIPS
a. an international legal agreement between all the member nations of the World
Trade Organization
b. establishes minimum standards for the regulation by national governments of
different forms of intellectual property as applied to nationals of other WTO
member nations
c. specifies enforcement procedures, remedies, and dispute resolution procedures
10) IP Contractual Issues Might Arise in International Business
a. IP licenses
b. Assignments-employees, independent contractors
c. Non-disclosure agreements
d. Non-compete agreements
e. M&A agreements
f. Franchise agreements
(2) International Licensing of IP
① International Contract Manufacturing
1) definition: Business model in which a firm hires a contract manufacturer to produce
components or final products based on the hiring firm’s design (intellectual
property)
2) benefits
a. Cost Savings: Companies save on their capital costs because they do not have to
pay for a facility and the equipment needed for production. They can also save
on labor costs such as wages, training, and benefits. Some companies may
look to contract manufacture in low-cost countries, such as China, to benefit
from the low cost of labor.
b. Mutual Benefit to Contract Site: A contract between the manufacturer and the
company it is producing for may last several years. The manufacturer will
know that it will have a steady flow of business at least until that contract
expires.
c. Advanced Skills: Companies can take advantage of skills that they may not
possess, but the contract manufacturer does. The contract manufacturer is
likely to have relationships formed with raw material suppliers or methods of
efficiency within their production.
d. Quality: Contract Manufacturers are likely to have their own methods of quality
control in place that help them to detect counterfeit or damaged materials
early.
e. Focus: Companies can focus on their core competencies better if they can hand
off base production to an outside company.
f. Economies of Scale: Contract Manufacturers have multiple customers that they
produce for. Because they are servicing multiple customers, they can offer
reduced costs in acquiring raw materials by benefiting from economies of
scale. The more units there are in one shipment, the less expensive the price
 per unit will be.
3) risks
a. Lack of Control: When a company signs the contract allowing another company
to produce their product, they lose a significant amount of control over that
product. They can only suggest strategies to the contract manufacturer; they
cannot force them to implement those strategies.
b. Quality: When entering into a contract, companies must make sure that the
manufacturer’s standards are congruent with their own. They should evaluate
the methods in which they test products to make sure they are of good quality.
The company has to ensure the contract manufacturer has suppliers that also
meet these standards.
c. Intellectual Property Loss: When entering into a contract, a company is
divulging their formulas or technologies. This is why it is important that a
company not give out any of its core competencies to contract manufacturers.
It is very easy for an employee to download such information from a
computer and steal it. The recent increase in intellectual property loss has
corporate and government officials struggling to improve security. Usually, it
comes down to the integrity of the employees.
d. Outsourcing Risks: Although outsourcing to low-cost countries has become very
popular, it does bring along risks such as language barriers, cultural
differences, and long lead times. This could make the management of contract
manufacturers more difficult, expensive, and time-consuming.
e. Capacity Constraints: If a company does not make up a large portion of the
contract manufacturer’s business, they may find that they are de-prioritized
over other companies during high production periods. Thus, they may not
obtain the product they need when they need it.
f. Loss of Flexibility and Responsiveness: Without direct control over the
manufacturing facility, the company will lose some of its ability to respond to
disruptions in the supply chain. It may also hurt their ability to respond to
demand fluctuations, risking their customer service levels.
(3) International Franchising
① definition: a franchise is a contractual relationship whereby a franchisor licenses an
independent franchisee to distribute a specific product or service, or engage in a
prescribed method of doing business, using the franchisor’s trade or service mark
② What Does Franchising Look Like
1) To consumer, manifests itself in look-alike, gyms, restaurants, convenience stores,
service stations, hotels, automotive parts stores, etc.
2) To a lawyer, franchising includes individual unit ownership with clear legal
separation in entity and legal liability between franchisor and franchisee
3) To an economist, franchising is away to deliver a product or service in another
channel
③ Types of franchises
1) Product Distribution Franchise:
a. Franchisee simply sell the franchisor’s products and are supplier-dealer
 relationships
b. Franchisor licenses its trademark and logo to the franchisees, but typically does
not provide them with an entire system for running their business.
c. The industries where you most often find this type of franchising are soft drink
distributors and gas stations
2) Business Format Franchise
a. Includes not only the product, service, and trademark, but the entire business
format itself — a marketing strategy, operating manuals and standards, quality
control, and two-way communications
b. Franchisor licenses both the trademark and the system
a) System is broadly defined in most franchise agreements as a set of detailed
methods and procedures established by the for operation of the business
b) The rules of operation are reflected in the system standards found in
manuals, etc., issued to franchisees by the franchisor
c) Ultimate objective is to ensure that franchised locations are
indistinguishable to the consumer
④ Types of Franchising Arrangements
1) Single-Unit Franchise
a. An agreement where the franchisor grants a franchisee the rights to open and
operate ONE franchise unit (e.g., 7-Eleven)
b. Simplest and most common type of franchise
2) Multi-Unit Franchise
a. An agreement where the franchisor grants a franchisee the rights to open and
operate MORE THAN ONE unit (e.g., Marriott)
⑤ The Franchise Relationship
1) Franchisors consider franchising a means to widely and rapidly distribute a product,
service, or method of doing business without the significant capital investment and
risk connected to owning all levels of distribution
2) The franchisee, in turn, sees franchising as an opportunity to make money by joining
an established system of doing business, a system that features multiple locations,
a recognized brand, and uniform products, services, or business methods
3) Both parties rely on each other to succeed in this business marriage, but their
interests also often conflict
⑥ three elements of franchise
1) the license by the franchisor to the franchisee of a right to use a trade or service mark
2) the payment of a fee by the franchisee to the franchisor for that right
3) substantial control of the franchisee by the franchisor
⑦ Franchise Documents
1) Disclosure-Franchise Disclosure Documents (FDD)
a. The purpose of the FDD is to provide prospective franchisees with information
about the franchisor, the franchise system and the agreements they will need
to sign so that they can make an informed decision
b. In addition to the disclosure part of the document, the FDD includes the actual
franchise agreement as well as other agreements the franchisee will be
 required to sign, along with the franchisor’s financial statements
c. In the US, a franchisor cannot offer a franchise until the franchisor has presented
the prospective franchisee with a Disclosure Document 14 days before any
agreement to sell is finalized
2) Franchise Agreement
a. Is more specific than the FDD about applicable franchise terms and conditions
b. Includes specifics about:
a) the franchise system
b) use of IP and products
c) franchise territory
d) rights and obligations of the parties: standards, procedures, training,
assistance, advertising, oversight, etc.
e) term of the franchise
f) payments to made by the franchisee to the franchisor
g) termination and/or the right to transfer the franchise
c. The franchise agreement is the definitive legal, contractual, written document
that governs the relationship and specifies the terms of the franchise purchase
⑧ International Franchising: additional risks does an international franchise raise?
1) Franchising internationally is not a decision a franchisor should make lightly
2) Success in one area, region, state or country does not guarantee international success
where differences in language, demographics, politics, legal systems and culture,
as well as distance from franchisees, often cause strains on the human and financial
resources of the organization
3) It is important to conduct “due diligence” necessary for making the initial decision to
expand internationally
4) You should secure reliable local counsel, including franchise counsel
5) determining the right contractual structure can make or break a franchisor’s entry
into a particular market. The franchisor must examine
a. Resources available to commit to the market, including to support and oversee
the franchisee
b. Level of control necessary to establish a successful system
c. Training and distribution requirements of the system
d. Other local market and legal issues that may deter the franchisor from operating
without local assistance
⑨ Typical International Franchise Arrangements:
1) Direct Franchising
2) Area Development Agreements
3) Master Franchise Agreements
4) Joint Ventures (JV): In a JV, a franchisor allows a local party to own part of the entity
operating the franchise system in the target market (JV’s can be structured in many
different ways depending on the needs of the entities involved in the transaction)
⑩ Trademarks and IP Rights
1) There are fundamental differences between the various types of IP, both in terms of
protection and the means to achieve it
 2) Territoriality is the guiding principle of international IP law
3) Notwithstanding numerous positive developments in the areas of multi-country
harmonization and means to assist filing (especially in TM area), legal protection
for IP is on a national basis and varies greatly country to country, including laws,
regulations, systems, and enforcement
4) Thus, minus a few exceptions, rights must be acquired and protected on a piecemeal
basis; there are NO blanket or automatic global IP rights.
5) The value and success of most franchise systems are often largely based on IP:
trademarks, trade names, copyrights, trade secrets, and patents
6) This property often includes: names, symbols, designs, trade dress, advertising, and
other artistic creations, domain names, software, formulas, and inventions;
increasing app-based solutions (e.g., loyalty programs)
7) It is essential for a franchisor to legally protect IP rights in all current and future
markets
⑪ Impact of Other Local Laws
⑫ Dispute Resolution: choice of law, choice of forum, arbitration
⑬ Franchising and Compliance Issues: some compliance challenges when engaging in
international franchising
1) antitrust
2) financial
3) environmental
4) data privacy
5) labor&employment
6) anticorruption
7) records
8) conflicts of interest
9) intellectual property
11. International Business Dispute Resolution and Arbitration
(1) Factors when choosing the most appropriate dispute resolution process
① System of law that may apply: common law, civil law, Islamic law
② Time and cost
③ Confidentiality and privacy
④ Formality of the process
⑤ Finality of the outcome
⑥ Impact on relationships
(2) Methods of Alternative Dispute Resolution(ADR)
① Mediation
② Dispute Boards
③ Arbitration
(3) International Arbitration
① Consensual method of dispute resolution
② Neutral third-party tribunal
1) sole arbitrator
2) three arbitrators
 ③ Binding decision
1) New York Convention
2) limited avenues to challenge arbitral award
④ Administered by arbitral institution or ad hoc
⑤ Power to award costs (typically)
(4) Agreement to Arbitrate
① Standard ICC Arbitration Clause
② Additions and adaptations
1) number of arbitrators (ICC Arbitration Rules otherwise contain a presumption in
favor of a sole arbitrator)
2) place (city) of arbitration
3) language of arbitration
4) law applicable to the contract / merits
5) be careful to avoid ambiguity
6) consider any factors that impact enforceability or mandatory requirements at the
place of arbitration
(5) Advantages of International Arbitration
① Party Autonomy
1) choice of arbitral tribunal
2) decide on procedure to be followed
3) select counsel or other representatives
② Efficiency
1) time, cost, and complexity compared to litigation
③ Finality and Enforceability
1) guaranteed to reach a binding determination
2) potential for challenge on limited enumerated grounds
3) comparatively easy to enforce against assets in other foreign jurisdictions
④ Confidentiality (during proceedings)
(6) The Role of Courts in Relation to Arbitrations
① Courts’ role in initiating arbitration
1) Interpretation of the arbitration agreement (for example, as to scope of arbitration),
unless that power is delegated to arbitrator
2) Determining which parties are bound to the arbitration agreement
3) Enforcement of arbitration agreement
4) Stay of related litigation proceedings in court
5) Emergency conservatory measures (like attachment of property or bank account)
6) Appointment of arbitrator (rare)
② Courts’ role during arbitration
1) Courts rarely become involved during arbitration proceedings, and generally lack the
power to interfere with the arbitration
2) That said, courts have powers to support arbitration proceedings in several ways
a. Orders to preserve or to obtain evidence for the arbitration (including witness
testimony)
b. Compel a party’s compliance with the interlocutory order of an arbitrator
 c. Order a party to provide security for final award and judgment
③ Courts’ role after arbitration
1) In exceptional cases, courts may vacate or modify an award for grave violations of
due process or fairness
2) Jurisprudence firmly establishes that legal errors or erroneous factual conclusions are
not grounds for vacatur/modification
3) In nearly all cases, courts will render a judgment that conforms to the award (i.e.,
“confirmation”)
4) The court can enforce a judgment on an arbitral award in the same way it enforces
any other judgment
12. Foreign Corrupt Practices Act(FCPA)-Anti-Corruption Compliance
① FCPA was enacted for the purpose of making it unlawful for certain persons and entities
to:
1) make payments to foreign government officials
2) to assist in obtaining or retaining business
② Two key FCPA provisions
1) anti-bribery provisions
a. prohibit the willful use of any means or instrumentality of interstate commerce
corruptly in furtherance of any offer, payment, promise to pay, authorization
of the payment of money or anything of value to any person while knowing
that all or a portion of that money or thing of value will be directed to a
foreign government official to do or omit to do an act in violation of his or her
lawful duty, or to secure an improper business advantage in order to obtain or
retain business.
2) the books and records provisions
a. require all companies whose securities are listed in the United States to (a)make
and keep books and records, which in reasonable detail, accurately and fairly
reflect the transactions of the company; and (b) design and maintain as
adequate system of internal controls.
③ anti-bribery provisions
1) element: Willfully, Corruptly, Anything of Value, Foreign Government Official
(FGO), FGO Continued: State Owned or Controlled Entities, Obtaining or
Retaining Business
2) Affirmative Defenses
a. Local Law Defense: the payment was lawful under the foreign country’s written
laws and regulations
b. Reasonable and Bona Fide Expenditure
c. Extortion or Duress: payments made in response to imminent threats to health or
safety do not violate
d. Facilitating Payments: for “routine governmental action”, such as processing
visas, providing police protection or mail service
④ Accounting (Books and Records) Provisions
1) requires that issuers make and keep books and records, which in reasonable detail,
accurately and fairly reflect the transactions of the company
 a. Reasonable detail is defined as the level of detail that would satisfy prudent
officials in the conduct of their own affairs
b. Bribes are often concealed under the guise of legitimate payments
2) Internal Accounting Controls
a. The payment of bribes often occurs in companies that have weak internal
accounting control environments
b. requires issuers to devise and maintain a system of internal accounting controls
sufficient to provide reasonable assurances that...
⑤ Penalties
1) criminal
2) civil
⑥ Global Corruption: International Cooperation
1) the Transnational Anti-Corruption Partnership (TAP) program was established to the
support the U.S. Federal Bureau of Investigation’s (FBI) mission to lead global
anti-corruption efforts.
2) The International Anti-Corruption Coordination Centre (IACCC) was established in
2017 and allows the FBI to work with multiple enforcement partners investigating
corruption offenses.
3) To coordinate investigation efforts with foreign counterparts, the U.S. has several
formal and informal mechanisms for gathering information:
⑦ Effective Compliance Program Elements
1) Commitment from Senior Management
2) Code of Conduct and Compliance Policies and Procedures
3) Oversight, Autonomy and Resources
4) Risk Assessments
5) Training and Communication
6) Incentives and Disciplinary Measures
7) Third-Party Due Diligence Programs
8) M&A Due Diligence
9) Confidential Reporting and Internal Investigation
10) Continuous Monitoring and Periodic Testing
11) Remediation and Mitigation of Identified Risks and Misconduct
⑧ Spotlight on Compliance Programs- DOJ
1) Effectiveness of compliance programs has been an important topic of the DOJ over
the last year
2) Three fundamental questions to consider
3) Evaluation of compliance program effectiveness depends on a company’s risk profile
and solutions to mitigate identified risks.
4) Factors the DOJ considers include, but are not limited to: Company size, Industry,
Geographic footprint, Regulatory landscape
⑨ Third Party Risk Management
1) A well-designed program should apply risk-based due diligence to its thirdparty
relationships.
2) At a minimum, the program should assess...
13. Foreign Direct Investment
(1) Reasons for companies to go International
① Gain access to new customers
1) Offers potential for increased revenues
2) Particularly when domestic markets are mature or saturated
② Achieve lower costs and enhance firm’s competitiveness
1) Domestic sales volume is not large enough to fully capture economies of scale
③ To capitalize on its core competencies
1) A firm may be able to leverage its competencies in foreign countries as well as its
domestic market
④ To spread business risk across a wider market base
1) Spread business risk by operating in a number of countries rather than depending on
its domestic market entirely
(2) Primary Issues in International Expansion
① Cost
② Control
③ Risk
④ Return
⑤ Resource allocation
⑥ Security
⑦ Legal Environment
(3) Foreign Direct Investment (FDI)
① definition: The management control of productive assets in the foreign market place
through whole or part ownership bearing the primary risk of loss
② how can you accomplish it?
1) Greenfield
2) M&A
3) Joint Venture
③ How might an FDI differ from a domestic investment?
1) Different legal system (e.g. civil law; EU)
2) Culture- different consumer tastes; forms of business dress; foods
3) Different language
4) Different approach to contracts
5) Different backgrounds of lawyers, judges, notaries
6) Different structures/forms of business
7) Different attitudes toward corruption
8) Different constitutional system
9) Different administrative system
10) Approaches toward nationalism-national treatment
11) Different approach to workers/ rights
12) Different currency
13) Different view of boycott laws
14) Different geopolitical attitudes
15) Rules on taxation, competition, harassment
 16) Living conditions and cost of operating a business
④ What are Advantages of FDI?
1) Control of resources/capabilities
2) Integration/coordination of activities across countries
3) Acquisitions-rapid entry
4) Greenfield-state of art and potential government finance or incentives
5) Attractiveness of host country
a. Low wages, lower corporate tax, government subsidies
⑤ What are Disadvantages of FDI?
1) Substantial investment-financial exposure
2) Problems of integration/coordination of acquisitions
3) Greenfield-time consuming and unpredictable cost
4) Political and economic risk exposure
⑥ Risks When Engaging in FDI
1) Discrimination
2) Political
3) Legal
4) Financial/Currency/Tax
⑦ Advantages: M&A
1) portfolio diversification[分散投资]
2) favorable regulatory environment
3) cost synergies[成本协同效益]
4) scale efficiencies
5) acquiring intellectual property
6) access to new talent
7) adding distribution networks
8) adding production capacity
9) securing new product technology
10) growth in new geographic markets
⑧ Risks: M&A
1) tax law
2) regulatory
3) political stability
4) culture and talent
5) business risk
⑨ Important Considerations with FDI
1) Cultural norms
2) Level of economic/technology development
3) Degree of infrastructure development
4) “Local content” requirements
a. Local content requirements are a type of trade protection mechanism that
depends on the law to create requirements for international companies and
forces them to produce or rent a certain amount of goods and services
domestically.
 5) Maturity of rule of law and governmental institutions
6) Language
7) Education
8) Religious beliefs and customs
⑩ Deciding to How to Engage in FDI- Where to establish?
1) Largely question of business objectives and strategy
2) Risk assessment - business, financial, political, and legal
3) Evaluation of future prospects
⑪ Determine Corporate Structure
1) Liaison office: Small, limited to promotional work, low impact; may be offered with
assistance from agent or distributor
2) Branch: A branch is part of the same company, set up in the international
location[different between branch and subsidiary]
3) Subsidiary: A subsidiary is a separate company which is controlled more than 50%
by the parent company. A wholly-owned subsidiary is also a separate legal entity,
albeit wholly-owned by the parent.
4) Joint Venture
⑫ Greenfield
1) De novo investment-form new entity,select location, build on greenfield
⑬ M&A
1) M&A Process
2) ACQUISITIONS
a. ASSET ACQUISITIONS
a) Buyer acquires some or all of target’s assets and may assume certain
specified liabilities of target.
b) Generally requires more formalities and documents than stock acquisitions
and mergers because it requires a transfer of each asset and liability from
target.
c) Buyer does not waste money on unwanted assets and there is less risk of
buyer assuming unknown or undisclosed liabilities, but the transaction is
more complex because buyer has to spend time identifying the assets and
liabilities it wishes to acquire and assume.
b. STOCK ACQUISITIONS
a) Buyer acquires all of the outstanding stock of target directly from target's
stockholders.
b) Fewer formalities and documents than asset acquisitions and generally
simpler than merger transactions.
c) Preferred by sellers because they are not left with any contingent liabilities
and receive better tax treatment when selling stock as opposed to assets.
3) Successor Liability
a. definition: Successor liability arises when the acquiring company is liable and
responsible for the obligations of the target company such as its contractual
obligations
b. The general rule is that an asset acquisition cuts off successor liability, while a
 stock acquisition or merger results in the successor entity assuming the
liabilities of the target company.
4) ACQUISITION TIMELINE
a. PRELIMINARY AGREEMENTS
a) Confidentiality Agreement
i. Basic restrictions applicable to buyer:
i) Restriction on use of confidential info
ii) Restriction on disclosure of confidential info
b) LETTER OF INTENT
i. Contents
i) Price
a. Form of consideration
b. Purchase price adjustments (working capital,
escrows/holdbacks)
c. Earnouts
d. Options
ii) Form of transaction
iii) Key Closing Conditions
a. Diligence
b. Board and stockholder approvals
c. Regulatory (e.g., Antitrust, CFIUS)
d. Third party consents (customers, licensors)
iv) Exclusivity
v) Binding v. Non-Binding provisions
b. Risk Assessment
a) How does the company do business?
i. Sales agents
ii. Distributors
iii. Other third parties
b) Categories of Risks to Assess
i. Legal:
i) Possible successor liability for the prior acts of the acquired
company
ii. Compliance:
i) Potential continuation of inappropriate pre-acquisition conduct
ii) Ongoing legal and reputational exposure
iii. Financial:
i) Value of the acquisition
ii) Timely completion of the transaction
c. Due Diligence
a) Practical Due Diligence Advice
i. Early telephone interview of (or informal kickoff meeting with)
relevant management at target
ii. Comprehensive document and information production (data room)
 iii. Coordination and cooperation between lawyers, accountants and
consultants
iv. No substitute for in-person interviews at the office/facilities of target
company
v. Careful attention to privilege protection
vi. Be mindful of data privacy
b) Evaluating the Target’s Compliance Program
i. Tone at the top
ii. Effective (or even existence of) risk assessment
iii. Appropriate standards, policies and processes
iv. Adequate communication, training, and awareness
v. Sufficient monitoring and auditing to detect noncompliance
vi. Hotline-review all submissions in last number of years
vii. Compliance officer independence and resources
viii. Effective investigation(s) of alleged corruption
c) Completing the Diligence Process
i. Synthesize and analyze the information and documents collected
ii. Conduct thorough interviews of relevant individuals
i) Set the proper tone: Non-confrontational but comprehensive and
probing
iii. Follow up on problematic issues
iv. Assess whether additional measures are necessary, including full-
fledged internal investigation or self-disclosure
v. Document conclusions and actions taken
vi. Make sure that any risks are appropriately addressed in the
purchase/sales agreement
vii. Incorporate findings into ongoing approach and remediation that is
tied to the eventual post-close integration process
d. Compliance Risk Mitigation and Agreement
a) Disclosure to Authorities
b) Structuring Separate Entities
i. Confines risk but does not eliminate need for disclosure
ii. Stock/asset purchase distinction not dispositive
c) Representations & Warranties / Indemnities / Escrow
d) Interim Covenants/ Closing Conditions
e) Termination Rights
f) Modification / Termination of Management Employment Agreements
g) Abandonment
e. ACQUISITION AGREEMENT
a) REPRESENTATIONS
i. Functions of representations and warranties
i) Basis for exercising walk rights
ii) Basis for exercising post-closing indemnification rights in private
company acquisitions
 iii) Basis for eliciting useful information from target to use in
integration
f. DISCLOSURE SCHEDULE
g. Post-Acquisition Due Diligence and Integration
a) Forensic accounting analysis
b) Further interviews and document review
c) Integration with acquiring company
i. E.g., financials, labor and employment, Code of Conduct, policies and
procedures, training, hotline, include third parties
d) Implementation of risk assessment/mitigation and appropriate accounting
controls(COSO, SoX)
e) Evaluate risks/benefits of disclosure of any compliance findings to
DOJ/SEC
⑭ Joint Ventures
1) definition: Normally a type of “partnership” arrangement respecting ownership and
management of a particular business/project for particular objectives
2) In US laws of general partnerships generally applicable, except that scope of
partnership authority will be limited to the JV objectives/purposes and will
terminate upon expiry of completion of objectives and/or agreed expiration period.
But, in other countries, may be a matter of specific JV statute or other laws
(corporate and/or agency laws)
3) Types of JV
a. Equity JV
a) Entities set up and contribute capital and other resources to a separate entity
for a specific purpose(s)
b) Form can be any form of business permitted under applicable law and host
country: local version of Partnership, Limited Partnership, Corporation,
LLC
c) The JV Agreement will be the operative agreement: e.g., a detailed
partnership agreement, an LLC Operating Agreement, Corporate
articles/bylaws/shareholder agreement
b. Contractual JV
a) In reality all JVs are rooted in some form of contract(s)
b) But here, means the entities do not specifically set up a separate business
form for the JV but agrees to business cooperation through a complex,
negotiated agreement setting out reciprocal rights and obligations
c. International:
a) Can be numerous variations of the equity and contractual JV
b) Can be more than 2 parties, but normally 2
c) Normally a foreign investing party and a local “partner”
d) Normally a separate corporate or other entity will be set upoften controlled
by the party in the foreign jurisdiction
e) important to determine whether an adequate legal infrastructure and rule of
law culture exists in the host country to support the venture
 d. JV process
a) Negotiating a JV
i. Key steps:
i) Obtain detailed information on project generally and specifically
in context of home country/region
ii) Engage in strategic planning— examining how fits into the
parties’ overall goals
iii) Assess all relevant business, legal, political, cultural risks/factors
and protective options available
iv) Select good local legal counsel and other local advisers
v) Select the right local partner(s) (due diligence)
ii. Important JV Issues
i) Structure
ii) Liability
iii) Legal Infrastructure and Rule of Law Environment
iv) Availability of BIT, FTA and/or Double Tax Treaty
v) Taxation
vi) Funding and Capitalization
vii) Management and Control, including employment and labor
issues
viii) Intellectual Property
ix) Dispute Resolution
x) Compliance with Applicable Law
xi) Exit: Transferability and Termination
iii. Lawyers in JVs
i) Role of Lawyer(s): Counsel (in-house-outside), local foreign
counsel, special counsel (if needed), counsel of local partner,
counsel of any financing parties, possibly host country
government counsel
ii) Role may depend on culture of the respective countries culture,
wishes of parties
iii) Key “team” player, due diligence orchestration,
planning/structure, risk prevention/mitigation negotiation,
drafting, legal opinion rendering, follow-up
b) The JV Agreement
i. No one size fits all
ii. JV Agreement - one who controls the drafts, controls the deal
iii. Don’t forget about related agreements, e.g., licenses, employment
contracts, financing contracts, construction contracts, real property-
related contracts, purchase and supply contracts, etc.
⑮ Bilateral Investment Treaties
1) BITs establish the terms and conditions for private investments made by individuals
and business entities from one sovereign state in another sovereign state
2) BITs are often negotiated as part of a larger trade agreement between the contracting
 states
a. sets up “rules of the road” for foreign investment in each other’s countries
b. gives investors better access to foreign markets—and on fairer terms
3) BITs grant investors from a contracting state certain guarantees, including:
a. fair and equitable treatment (national treatment; MFN)
b. protection from expropriation (with certain exceptions) and fair compensation
c. free transfer of funds (without delay and using a market rate of exchange)
d. recourse to arbitration to resolve disputes (e.g., International Center for the
Settlement of Investment Disputes)
4) BITs are generally based on national model treaties
a. Draft International Convention on Investments Abroad (the Abs-Shawcross
Convention) and OECD 1967
b. Draft Convention on the Protection of Foreign Property
c. US Model Treaty
 ⑯
2.the world trading system
3.the essential of international business agreements
4.import/export
5.licensing of intellectual property
6.foreign direct investment
7.dispute resolution
8.corporate compliance and anti-corruption law