Chapter 5

acceptance

- 2nd step in the formation of a contract - After an offer has been made by one of the parties, the contract is formed if the other party accepts the terms of the offer. - Under the Convention on Contracts for the International Sale of Goods (CISG), the second party must completely agree with all the terms presented in the offer; otherwise, it is a rejection of the offer. - Under the U.S. Uniform Commerce Code (UCC), however, the second party is considered to have accepted the offer if it generally agrees with its terms, even if it wants amendments to the quantity of the goods purchased, the delivery dates, and so on.

evergreen contract

- A contract that, by design or by default, does not have a specific term of appointment. - If a contract lapses but both parties continue acting as if the contract were still in place, the contract then can be considered this

arbitration panel

- A group of (generally) three who are empowered by the parties involved in a contract dispute to reach a decision on the facts of the dispute and whose decision is binding on all parties. - Generally, each of the parties chooses one, and the third is chosen by a neutral party.

advertising

- A marketing term that includes all of the techniques that a firm uses to promote its products by using communication media, such as television, radio, and print. - In advertising, the company retains total control over the content of the communication

mediation

- A process by which the parties to a contract can attempt to settle a dispute, generally involving a third, independent party who can suggest a compromise solution, acceptable to all concerned. - is often preferred over litigation, which is an expensive and time-consuming process in which all judicial rules must be followed and which cannot offer compromise solutions.

arbitration

- A process by which the parties to a contract can settle a dispute, involving a panel who will follow most of the rules of a court of law, but will render a decision in a short period of time. - In an international contract dispute, they will follow the laws specified in the "Choice of Law" clause. - tends to be much cheaper than litigation

litigation

- A process by which the parties to a contract can settle a dispute, involving the courts of the country chosen in the "Choice of Forum" clause of an international contract. - is considered a "last resort" option, when mediation fails and when the parties in dispute cannot agree to arbitration.

registration

- A process whereby an agent or a distributor has to notify the government of the importing country that it has entered into an agency agreement or a distributorship agreement with a foreign manufacturer.

force majeure

- An event beyond the control of any of the parties in an agreement that prevents one of the parties from fulfilling its commitment. - The affected party is then not considered to be in breach of the contract

Patent

- An intangible good (intellectual property) that an individual or a firm can own. - protects the rights to a process, material, or design.

trademark

- An intangible good (intellectual property) that an individual or a firm can own. - represents the rights to a commercial name or slogan.

rejection

- An intermediary step in the formation of a contract. - After an offer has been made by one of the parties, the other party may not agree with all of the terms of the offer and may want to modify them. - Under the Convention on Contracts for the International Sale of Goods (CISG), this response is construed as a rejection of the original offer, to which a counteroffer can be made

counteroffer

- An intermediary step in the formation of a contract. - After an offer has been made by one of the parties, the other party may not agree with all of the terms of the offer and may want to modify them. - Under the Convention on Contracts for the International Sale of Goods (CISG), this response is construed as counteroffer. - Under the U.S. Uniform Commerce Code (UCC), however, it is an acceptance of the offer

facilities and activities

- In a contract between a principal and an agent or distributor, a clause that spells out what specific facilities each will maintain (retail store, warehouse, repair facilities) and what specific activities each will engage in (trade show participation, after-sale service, promotion)

breach

- In the event that one of the parties to a contract does not meet its obligation, that party can be found to have broken the terms of the contract, - If the party did not fulfill its obligations because of an event beyond its control, the nonperformance can be excused under the force majeure clause.

copyright

- Ownership of an intangible good (intellectual property) by an individual or a firm. - can be held on a work of art, a musical piece, or a written article.

full signatory

- The acceptance of a treaty by a state. - It signs it to indicate that it agrees with its premises, without further ratification

good faith

- The assumption that both parties signing an agreement want to enter that agreement and have no ulterior motives. - Almost all contracts have a clause specifying this

corporate accounts

- The customers to which the agent or distributor is not allowed to sell. - These accounts are handled directly by the exporter

simple signatory

- The first step in the acceptance of a treaty by a state. - It signs it to indicate that it agrees with its premises, but it will need to ratify it before it is bound by it.

offer

- The initial step in the formation of a contract. - When one of the parties to a potential sale contacts the other party, it does so with an offer to enter into a contract. - Under the Convention on Contracts for the International Sale of Goods (CISG), the offer made by one of the parties is valid until its stated expiration date. - Under the U.S. Uniform Commercial Code (UCC), however, can be withdrawn at any time before its expiration date, without prejudice.

contract language

- The language in which a contract is written. - If the contract exists in other languages, those versions are considered translations, and not the original contract

ownership of customers' list

- The list of the customers of a particular company is considered a business asset. - A contract between a principal and a distributor spells out which of the two parties owns that asset.

ratification

- The process by which a state fully accepts to be bound by an international treaty. - It makes it part of its national legislation by having its Congress vote on it.

contract law

- The set of a country's laws that govern relationships and disputes between the parties that have signed a contract. - dictates that the courts must settle the dispute by using the terms of the contract

lex mercatoria

- The sum total of all the international agreements, international conventions, and other international trade customs that complement the domestic laws of any given country and to which all international trade transactions are subject. - Since some countries are signatories of some treaties but not of others, the complexity associated in determining which elements of Lex Mercatoria apply to a given transaction can be substantial

termination for "Just cause"

- The unilateral decision, by one of the parties to a contract, to end a contract before its term of appointment expires, because the other party has not met some of the terms of the contract that it had agreed to perform. - The term is also used when one party decides to not renew the contract because the preset criteria for renewal have not been met.

termination for "convenience"

- The unilateral decision, by one of the parties to a contract, to end a contract before its term of appointment expires, for reasons unrelated to the performance of the contract by the other party(ies). - The term is also used when one party decides not to renew the contract even if the preset criteria for renewal have been met by the other party(ies).

labor law

- a set of a country's laws that govern relationships and disputes between employers and employees; - it assumes that one of the parties (employee) needs to be protected from the other (employer). - can be used in settling disputes between exporters and agents, at the discretion of the courts in the country in which the agent is located, regardless of the terms of the contract between the exporter and the agent. - on occasion, can be used to settle disputes between exporters and distributors.

competing lines

- are products manufactured by a company other than the principal that compete with the products manufactured by the principal

Convention on Contracts for the International Sale of Goods

A United Nations' treaty that acts as international sales law.

distribution contracts

Agreements between exporters and intermediaries that can take the form of either agency or distributorship agreements

exclusive representative

An agent or a distributor that has been granted the right to be the sole representative of the exporter in a given territory.

Vienna Convention

Another name for the Convention on Contracts for the International Sale of Goods.

confidentiality

In a contract between two parties, the promise by each of the parties to not divulge what it has learned about the other party's customers, manufacturing processes, and business practices.

choice of forum

The court in which disputes regarding the contracts will be resolved.

territory

The geographical area in which the agent or distributor is restricted/expected to sell.

term of appointment

The initial duration of the distribution contract, and the duration of its eventual renewal periods.

customers' list

The list of the customers to which the agent or distributor sells the principal's products.

choice of law

The national laws that govern the terms of the contract.

scope of appointment

The scope [products, territory, customers] to which the contract applies.

Uniform Commercial Code

The set of federal laws that govern commercial contracts in the United States.

Copyrights, patents, and trademarks

are protected by governments, preventing non-owners from using intellectual property without authorization