International Business law is a new aspect of law dealing with a wide scope of different practices in the global market and covers various jurisdictions. It covers all sorts of transactions between individuals and organizations. It covers all sorts of transactions relating to international commerce, economies, licensing, registration of intellectual properties and various internal factors of the companies too. The following assessment is based on the three different aspects of international business law namely, the law of contract, intellectual property rights, and corporate governance. The law of contracts deals with the rights of an individual whereas the law related to intellectual property rights deals with the rights of any person who either discover or invented a new thing and corporate governance governs the acts of the companies.
A. Ellie, who lives in Paris, emailed Memoona -an acquaintance who owns an art gallery in London- a picture of an old painting which was left to her by her grandmother, who also lived in London. Ellie is interested in selling the painting as soon as possible. Memoona thinks that it might be by Rembrandt but is not sure. Memoona offers £5,000 for the painting. Ellie, who will travel to London that week, sends a text message accepting Memoona’s offer, to be paid in exchange for the painting next week. The evening before the transaction occur, Ellie shows the painting to Herve, who is an art critic. He recognises the painting and assures this is a Rembrandt. It may be worth up to £500,000. The following day Ellie refuses to hand it over to Memoona for the agreed price.
a) State and discuss the specific legal issues in scenario 1a) that arise between Memoona and Ellie in the above transaction.
B) Memoona decided to put on an art exhibition at the gallery, to be held on the 2 nd of January 2022. She contracted with Eric Suppliers Ltd to install a new heating system, and to paint the entrance hall in the gallery, at a total cost of £10,000. Both works had to be completed by 27 th December 2021. Eric completed the installation work by 26 th December 2021 but could not complete the painting until the 1 st January, 2022.
As a result of Eric using the wrong type of paint, horrific toxic smells emanated through the main hall of the gallery. Memoona became furious, anxious, and extremely disappointed when she realised that it would be very difficult to hold the exhibition at her gallery. She phoned another gallery to find out if the exhibition could be held there instead.
She received no reply. She could have held the exhibition in the gallery basement but due to space restrictions there that would have meant she could have only accommodated some 50 guests (as opposed to the original 200 invited guests). Instead, she decided to cancel the whole exhibition.
Answer
1. The legal issue in the given scenario is whether Ellie can refuse to hand over the painting to Memoona at $ 5000. Another legal issue is whether there exists any legal contract between the parties that is being breached by Ellie. The law of contract is a common law regulated by the Supply of Goods to Consumers Regulations 2002. The contract is referred to as a legal contractual relationship binding two parties. Common law has listed three basic requirements to be fulfilled for the formulation of the contract (Allen & Overy, 2023). For an enforceable contract certain requirements needs to be followed such as offer and acceptance, and an intention to bind a person legally will succeed after valid consideration. Offer refers to the willingness to buy or sell any specific good. In the case of G Percy Trentham Ltd v. Archital Luxfer Ltd, (1993) the court stated that the parties must have a clear intention to form legal relations and for that, there must be a clear follow of the offer from one party to another. However, an offer is different from an invitation to treat. In the case of Partridge v. Crittenden , (1968) it was held that an advertisement is a form of an invitation to treat rather than an offer to purchase. Similarly, in the landmark judgment of Carlill v. Carbolic Smoke Ball Company , (1893) it was held that any advertisement advertising extra benefits to the consumers is a part of selling techniques that constitute an invitation to treat rather than an offer to buy. The major difference between an offer and an invitation to treat is the intention of the person to create a legal relationship (Adams, 2016). However, the offer and invitation to treat are subject to a counter offer which in turn is also considered as the rejection of the original offer. Any person can make an offer to buy the product at any price however, that offer is regarded as a counteroffer. A counteroffer is considered a rejection of the offer as per the case of Hyde v. Wrench UK, 1840 .
There are numerous ways by which an offer can be terminated such as revocation, rejection, failure to accept on time, death, and loss of a condition. Revocation refers to the process of terminating the offer at any time before the acceptance unless the agreement is fulfilled by consideration. Revocation will be fulfilled when the offer is communicated by any means such as postal, or mail. The Uniform Electronic Transaction Act (UETA) states that mail can be used for communication between parties and if the mail is received in the mailbox of the offeree it is said to be effectively communicated, read, and accepted by the offeree. According to provisions of the UETA, the mail is considered an effective means of communication as per the UETA, when the mail reaches the system of the other party it is said to be effectively communicated. According to the judgment in the case of Goldbororough Mort v. Quinn, (1910) the offeror has a choice to keep the offer open for a stipulated time whereas he is not bound to keep the promise. To bind himself under the promise to sell the product after some time, the offeree must have paid some consideration in return. Otherwise, the person after sending the notice of revocation to the offeree can revoke his offer to sell ( Dickinson v Dodds, (1876) 2 Ch D 463). Whereas the legal contract will only be considered executed after the acceptance of the offer followed by the payment or consideration. The acceptance delivered through the use of mail is considered a valid acceptance as per the postal rule still, the contract cannot be said to be legally binding if the consideration is not paid. In the case of Routledge v. Grant (1828) , it was held that any person could withdraw the offer at any time before the acceptance is made and the consideration is paid. In the above scenario, there was a valid offer and acceptance by Ellie and Memoona through the way of letters and text messages.s. However, in the given scenario Ellie who wants to sell the painting is sure about whether it is of Rembrandt or not. therefore, she is not sure about the actual price of the painting. Moreover, Memoona who intended to buy the painting is also unsure about the painting being of Rembrandt and hence, they both agreed on the consideration of $5000 for the painting. However, after some time, Ellie got to know that the painting is of Rembrandt and is worth $500,000 and therefore, refused to sell it to Memoona. Here, Ellie can refuse to sell the painting because both parties was unaware of the worth of the painting and out of an honest painting they contracted at a consideration of $5000 whereas, Ellie was not having any malice intention or Ellie did not falsely represent the painting to Memmona. It was a mistake therefore, she cannot be sued and she has the right to refuse to sell the painting.
2. The legal issue arising in the scenario is, whether can Memoona refuse to pay Eric for the defective painting. Next, is there proper discharge of the contract by the fulfilment and performance of the task? Discharge of contract is referred to as the end of any legal contractual relationship. Discharge of the contract terminates all the rights and obligations granted to another person under the contract. Discharge can take place due to the fulfilment of the contract conditions, refusal to fulfil the contract, or any breach of the condition. Discharge can be of many types such as discharge of contract by performance, by agreement, by frustration, and by breach of contract (Lawble, 2023). Discharge by performance refers to the termination of the contract after the duties assigned are fulfilled and there is no obligation left on the other party. If the obligations are not fulfilled exactly then, the contract is not said to be performed. Therefore, the person contracting then has the right to claim compensation for the breach of the contract. In the case of Re Moore & Co. and Landauer & Co , an agreement was made relating to the purchase of 3000 tins of fruits packed in 30 tins, however, when the consignment arrived it was observed that the food was packed in 24 tins only.
Therefore, the court observed that the consignment could be rejected based on the breach of the contract because the breach was not microscopic but it was huge. Next, in the case of Sumper v. Hedges , Sumper was assigned the task of building two houses but he failed to construct the houses within the given time. Hedges then have to complete the construction by himself and refused to pay Sumper. The court stated that Hedge was not liable to pay the fee of construction. Therefore, after the analysis of the above-mentioned case laws and relevant laws, it can be said that Memoona can refuse to pay the amount for the defective painting because the painting was incomplete moreover, it was a wrong paint which emanated a horrific smell all over the hall. However, Memoona had to pay for the part performance of the contract i.e., the installation of the heating system for Eric.
3. The specific legal issue in this scenario is whether Memoona can sue Eric for the loss of income that she suffered due to the cancellation of the exhibition. Whenever any party has not fulfilled the requirements of the contract then he is liable to pay compensation also known as damage to the other party who might have suffered due to his non-fulfilment of the terms of the contract. Under the common law, the court has laid down three theories according to which the damages can be awarded to any person (Cavalieri and Salvatore, 2018). These theories are expectation loss, restitution loss, and reliance loss. The purpose of awarding the damages to any person is to provide compensation in case of breach of contract. There are two ways according to which the court decides whether compensation should be awarded to any person or not. These two ways are by assessing the remoteness of the damage, and by establishing the quantum of damage. In the case of Hadley v. Baxendale , the defendant made a contract to carry the mill shaft from Gloucester to London for the claimant, however, there was a slight delay by the defendant to carry the shaft due to the claimant faced a delay in constructing another shaft at the mill which resulted in the loss of the profit. The court stated that the defendant was not liable for the loss which the claimant suffered because the defendant was never told of the purpose of carrying the shaft within that time.
However, there is a case of negligence too in which one person can claim negligence due to the negligent act of another person. Such as in the case of Donoghue v. Stevenson , when Mrs Donoghue’s friend brought a bottle of ginger beer which was made up of a dark opaque glass from a cafe in Scotland that contained the dead remains of a snail in it. Which eventually caused several gastric problems for Mrs Donoghue. In this case, it was observed that Stevenson knows that the bottle is made up of opaque glass and hence, he will be able to discover its content until it is poured into another container. therefore, Stevenson was observed to be negligent in his act of maintaining the quality of the product. Therefore, after the analysis of various case laws, it can be said that if Memoona sued Eric for the loss of income of $500,000, she will not likely to succeed in the case as Eric was never aware of the loss that Memoona can suffer due to his non-performance of the correct painting on time.
Hiades Ltd, a UK based company, has developed a very innovative technological solution that unifies all the operative and administrative systems with an easy-to-use interface adapted to all pilotage requirements. The software is being used by several European Port Authorities. In Europe, software is usually copyrighted, but Hiades would like to expand to the USA. However, in the meantime, Hiades found that their software is being used by some companies without any license.
Answer
1. Intellectual property is known as the creative or unique work of any person that can be treated as the physical property of any person. Intellectual protection is mainly categorized as trademarks, copyright, patents, and design rights (UK copyright service,2022). The different types of software protection are Copyright, patent, and trademark. Copyright gives an author the specific right to protect and prohibits others from using his work in an unauthentic manner. Copyright is mainly for artistic and literary work. Literary work included a lot of creative creations of an author such as poetry, manuscript, website, lyrics, newsletters, commercial documents, newsletters, and computer program/software. Other works such as plays, choreography, sound recordings, photography, painting, magazines, films, and cable programs can also be copyrighted. Copyright prohibits the unauthorized use of the work and grants the right to the owner to take action against infringement. Copyright can be protected by Hiades by registering his software under the Copyright, Design and Patents Act 1988. This registration helps the owner to protect their creative invention at a worldwide level. There are various international agreements also that protect the copyright of the individual’s works as the Berne Convention established in 1886 (British Library,2023). Patents are granted in case of discovery or invention and the UK government protects the legal right of the person who makes new, inventions. The person to be granted a patent must possess something new, innovative, and useful for the industry. A trademark is used to protect the name and symbol of any product. Therefore, a registered trademark is used to protect the identity of the product. Registered design help to protect the right of the owner concerning the appearance, physical shape, configuration, and decoration of the product. The different types of protection available for the software to Hiaden are copyright, patent, trademark, and registered design (Bainbridge, 2018). The best software protection available to Hiaden worldwide is Copyright. Copyright is an automated right in UKand no one needs to apply for the registration of copyright. One can be granted copyright protection automatically in the UK after proving that the work is original and their creation. However, copyright work can be protected worldwide through various international agreements such as Berne Convention. After getting copyright the work is protected for 50 years in the case of written, artistic, or dramatic work. In the case of photography, the copyright is protected for 25 years (Government of UK, 2023).
2. The various intellectual property principles are newness, uniqueness, and useful for society, the person should be its owner. Copyright protects the right of the owner in case of his original work such as literary, music, or software being used by any other person. Copyright would not be granted unless the work fulfils all the requirements mentioned under the provisions of sec 153 of the act such as it should not be published anywhere in the country, it should be new, innovative, and helpful for the community. Copyright provides three types of rights to the owner including proprietary or economic rights, moral rights, and royalty rights. Proprietary or economic rights prevent the owner from being commercially exploited. It prevents the usage of the copyrighted product by any third party. The moral right gives the right to future use of the product and prevents it from deteriorating. Right to royalty is exercised in case of resale. This gives an artist the right to ask for payment before giving any person access to use the creative work of the owner. The various principles of intellectual property law are economic principles, principles of justice, principles of culture, and social principles (Sitanggang, n.d). The principle of culture refers to the work, or invention of the owner having to be in the field of science, literature, and art and it should aim at improving the lives of humans. Social principles are the rights of society. It means that innovation should be for the benefit of society. Economic principles state that the work is attached to the owner and the owner has all sorts of monetary rights over the innovation. The principle of justice puts the owner of the creation in such a state that he should be protected in case of exploitation. Therefore, in the given scenario, Hiades is being protected under the privileged right granted by the copyright or IP law. Hiades has invented such software which is new in the market and is very useful for the community. The software is copyrighted and it is being used by European port authorities, however, it is also used by an unauthorised person or a company that is not granted the license. Therefore, according to the principles of Intellectual property, Hiades should be prevented from unauthenticated access to his invention to protect Hiades’s economic and moral rights.
Death Star Group, Ltd is a multinational company operating in the aerospace industry. While the company considers the carbon intensity of their business to be low, they have been publishing greenhouse gas emissions data for a number of years to meet regulatory requirements. At the last AGM, shareholders filed a resolution requesting that Death Star Group, Ltd disclose more information on the risks of climate change to their business and the financial impacts associated with these risks in the next annual report.
As other companies in the aerospace sector have not disclosed this information, the company is concerned that publishing these figures will draw negative attention to the business, as they may be perceived to be more vulnerable in the market. The reporting team have also expressed concerns over the quality of the information you currently have available, as the company have not undertaken a specific climate risk assessment.
a. State and discuss the specific legal issues that arise in the above scenario. Advice Death Star Group, Ltd about the convenience of disclosing the risk and financial impact information investors are requesting alongside its legal and reputational implications.
Answer
The legal issue in the scenario is should Death Star Group, Ltd disclose the information related to the risk of climate change to their business and what can be the impact of publishing the risk and financial information on the company. Corporate culture refers to the belief and behaviour influenced by national trends, culture, tradition, and company size and product. These beliefs determine how the company's employees and management should act and interact with others. An organization’s culture and strategy are influenced by some social responsibilities such as sustainable development. Sustainable development is referred to as the common objective of both the present and future (Rendtrorff, 2019). It aims at preserving natural resources for future generations (Brundtland report, 1987). The concept of sustainable development has been further developed into “the triple bottom line” idea focusing upon the society, economy, and environment. According to the triple bottom line, a company should evaluate its economic development concerning its impact on the environment. Corporate governance refers to the procedure through which companies are governed. It refers to the set of procedures relating to accountability towards shareholders and stakeholders. Good corporate governance implies proper compliance with the codes formed to contribute to the economy, environment, and legal environment of the business. The United Kingdom has framed its set of rules for the companies listed under the London Stock Exchange for corporate governance under its company law. The listed companies are, therefore, required to disclose the information on whether they comply with the code or not. Private companies are also encouraged to comply with the code of governance, however, there is no strict rule for the disclosure of the information. The Code of corporate governance 2018 is divided into five different sections that are a division of responsibilities, risk control, remuneration, leadership, and succession and evaluation (UK Corporate Governance Code, 2018). According to section 172 of the companies act 2006, integrity, transparency, and accountability are considered as very essential for good governance (Financial Reporting Council,2023). According to the provision the directors have the duty to act in such a manner that they promote the benefits of the shareholders, stakeholders, and company. Transparency plays an important role in the good governance of the company. To maximize transparency, the company should always explain to its stakeholders the methods adopted to achieve the desired goals. Such is the case of the new installation of any machine in the company, the company should provide information on its effect on the environment in the AGM and should realize that information in the public to promote transparency and the interest of the stakeholders in the company. This code of governance adopts a principle-based approach by provisioning a list of best practices that can promote the working of the company in the market. The principle-based approach is more beneficial for the company as compared to the rule-based approach because the rule-based approach provides a rigid scope to the company and implies to follows a set of rigid guidelines.
There are various general duties mentioned under sections 171 to 177 of the Companies Act 2006 which consist of the duty to act within powers, the duty to promote the success of the company, the duty to exercise reasonable care, the duty to avoid conflicts, the duty not accept benefits from a third party, and duty to declare the interest. Corporate governance and compliance with the code of governance prevent the company from external factors such as environmental, social, and governance. These factors are commonly known as ESG. A complete assessment of these factors prevents the company's financial future prospects. Therefore, in the given scenario Death Star Group, Ltd should publish the risk and financial information in their strategic report as this will increase the transparency of the company and would increase the trust of the shareholders and stakeholders in the company. This publishing by the Company will promote the duty of success. Moreover, in the case of a quoted company, the publication of the strategic report is mandatory and it should contain the recent future development of the company, and the information relating to the environmental impact of the company’s operation. The Death Star group might be deteriorating the environment and publishing the information might affect the long-term profits. However, as per the direction stated in the AGM if the company publics the information about greenhouse gas emissions, it will increase transparency and the trust of the stakeholders in the company. Moreover, the company state that non-financial reporting can help in measuring, analyzing, and communicating the exact impact of the factors such as social, economic, environmental, and governmental factors on the business, and no company discloses. Furthermore, the Corporate Sustainability Report Directive adopted by the commission on 21 April 2021, all companies either large scale or small scale must provide a piece of detailed information regarding the EU sustainability report standards and should make it publicly available.
The above scenarios were based on the different aspects of the law of contract, intellectual property laws, and corporate governance. The above analysis of the various scenarios shows that a valid contract only takes place after the offer and acceptance along with the fulfilment of valid consideration. Furthermore, it is analysed that the customer carries certain rights related to refund and replacement of the goods in case of defect. Moreover, it shows that the person carries rights to protect their new invention and discoveries under the Intellectual property law after showing that their discovery or invention is new and getting it registered. Next, the company needs to carry out good governance and should maintain transparency in its business to promote the trust of the stakeholders and shareholders.
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