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Addressing International and Legal Ethics

In: Business and Management

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Addressing International Legal and Ethical Issues Paper
De’Shawn Shinette, Sr. University of Phoenix
BUS 415: Business Law
James Zaccaria
March 16, 2008

Introduction Any solid relationship should begin with a period of introduction, or courtship. The same can be said when a global negotiation venture with a prospective foreign nation business partner has started. The need to know about the culture, background, structure, and goals of the parties involved is important (Negotiation Leadership, 2008). It might be wise to spend the money to hire an experienced consultant, or professional third party to look into the potential partner’s past. In this report two companies (CadMex and Gentura) are attempting a business venture. Before they can move forward a few issues need to be addressed in a memo. Initially an explanation why Gentura might be in breach of contract with CadMex will be given. Next, a discussion of what remedies are available will to be conducted. From there, a recommendation will be made on how the Gentura situation will be handled. An analysis for selecting the proper forum and venue for dispute resolution will be included. Finally, an analysis of the situation from an ethical standpoint will be done in order to support ones recommendation. I. Breach of Contract Breach of a contract between two parties can bring about severe legal issues. Substantial performance occurs when there has been a minor breach of contract (Bereznicki-Korol, Clarke & Yates, 2005). In other words, when a party to a contract renders performance that deviates only slightly from complete performance; a minor breach occurs. In the case with the two companies stated above, an explanation as to why Gentura would be in breach of its contract must be given. Given the fact that Candore is in the midst of a viral epidemic, the company is forced to subsidize ViroBlax which a drug used to treat the epidemic. In turn, this was a minor breach of the original contract. Since Gentura is unable to meet the demand CadMex had to negotiate for sublicensing with local pharmaceutical companies in order to meet the demand for ViroBlax. Though this was a minor breach; both companies needed to come together in order fight the epidemic. II. Remedies When a contract is breached, alternatives to settling the dispute between two parties should be available. Settling of a dispute is considered a remedy. In the case with CadMex and Gentura a few remedies were available to amend the situation. CadMex could take legal action against Gentura but that would have a severe impact on business relations with the two companies which isn’t needed at this time (University of Phoenix, 2007). Another remedy would be for CadMex to take no legal action, but claim compensation from Gentura. This is a good idea however; it would hit CadMex financially a pose a strain on its resources (University of Phoenix, 2007). Finally, CadMex could take no legal action and obtain marketing rights of another drug that Gentura makes. Getting worldwide marketing rights for another is a good idea. CadMex would be able to recoup its losses from the drug ViroBlax (University of Phoenix, 2007). All options are good and bad in one way or another. Moving forward, a recommendation on the situation will be given.
III. Recommendation Complete performance of a contract is what should be done when two parties inter into a business venture. A recommendation must be made to settle the issue with both companies. A few remedies were provided above for them to work out their problems. The first was to sue Gentura but doing so would damage the business relationship between the two companies. The second remedy was to take no legal action and claim compensation from Gentura. However, doing so would be costly to CadMex. Finally, CadMex could take no legal action and obtain marketing rights for Gentura’s manufacturing of another drug. Recommendation to choose this option is a good idea because it helps CadMex get back a great deal if not all the money which it lost in this situation. Again, the original contract may have been breached but room for maneuvering is available for both parties to maintain their business agreement and make money.
IV. Forum and Venue Selecting the proper forum and venue is essential when negotiating a contract in international business. CadMex had a few different approaches to consider when negotiating a contract with Gentura. Under the Choice-of-Law clause CadMex could choose Contracts for International Sale of Goods (CSIG). This would be a fine choice but Candore isn’t a signatory of the United Nations Convention on Contracts for International Sale of Goods. This means that CSIG wouldn’t be able to bind Gentura legally to its contract with CadMex. If CadMex chose to go with Candorean Regulations for Technology Import Contracts (CRTIC), doing so would be good because the CRTIC explicitly states the criteria which a foreign company must fulfill for technology transfer to a Candorean company (University of Phoenix, 2007). Along with choosing a good law to abide by CadMex must look at which forum it will use in order to settle disputes. Considering international arbitration which is binding would be a good choice because reaching an agreement out of court is much quicker and less expensive. The agreement also must be legal binding instead of nonbinding simply because if it were nonbinding, that would defeat the purpose of the forum in the first place. Choosing local laws is another option. The problem here is that since Candore is new to international trade, its courts have no experience in settling international disputes involving trade agreements. The last option would be to go through U.S. Courts. This would be good but when one considers a country with an unstable political system, CadMex may be unable to enforce this option if the government of Candore intervenes. Choosing international arbitration which is binding would be best for CadMex.
V. Ethical Implications Business Ethics is the application of general ethical ideas to business behavior (Ethics in Business, 2008). A business should not try to make up its own definition of right and wrong, these values are already greatly instilled in business culture. Looking at CadMex and Gentura’s situation from an ethical standpoint is important. Considering that Candore had an epidemic which CadMex had the means to work out; the company could have stuck to its original contract and took Gentura to court for breaching its contract. This would bring about an ethical dilemma. Though both companies are legally bound to their contract with one another, the local company’s government must allow compulsory licensing for generic versions of a drug which is needed to treat an epidemic in the country. If CadMex ignores this situation and pursues legal action for breach of contract, ethically this is wrong. The company knows that it could do something to help but would rather not. Morally this is wrong. Never will it be considered wrong to help someone in need. In this case, CadMex did the right thing ethically by allowing Gentura to go outside of their contract in order to help the Candorean people. Renegotiating the contract between the two companies enabled Gentura to help its people and maintain good business relations with CadMex. The same can be said about CadMex. CadMex was able to obtain marketing rights for Gentura’s manufacturing of another drug; recouping the money which was initially lost in the beginning of this situation.

Conclusion When conducting business internationally, both companies need to be mindful of the details that go into the contract which they are pursuing. In examining the case with CadMex and Gentura, both parties entered a contract with one another. A memorandum needed to be prepared explaining in detail why Gentura would be in breach of its contract with CadMex. Entering into a contract the two companies were later faced with an epidemic which meant that Gentura would have a slight breach in the contract. Since they were faced with this issue, both companies needed to explore what remedies were available to amend the situations which they were faced with. After renegotiating the contract, Gentura was able to sublicense the manufacture of ViroMax which was a drug used to treat the epidemic. From there in the agreement CadMex would be able to obtain marketing rights to a drug later manufactured by Gentura from which a recommendation was made to choose this option. Selecting the Candorean Regulations for Technology Import Contracts (CRTIC) along with international arbitration which is binding would be a good advantage for its forum and venue because CRTIC explicitly states the criteria which a foreign company must fulfill for technology transfer to a Candorean company. Another benefit would be that reaching an agreement out of court is much quicker and less expensive. The ethical implication of this situation is that if CadMex opted to pursue legal action against Gentura instead of helping the Candorean people, this would portray CadMex as immoral and heartless; damaging the business relationship with Gentura. Though breaching a contract can potentially hurt the parties involved, maintaining an open mind and remaining flexible helps in working out potential problems.

References
Negotiation Leadership. (2008). The Solid Building Blocks of an International Agreement. Retrieved March 15, 2008, from http://www.negotiations.com/articles/international- business/
Bereznicki-Korol, T., Clarke, T. & Yates, R. (2005). Business Law in Canada (7th ed.). Toronto, Canada: Pearson.
University of Phoenix. (2007). Addressing International and Ethical Issues Simulation. Retrieved March 16, 2008, from University of Phoenix, Week Four, Resource. BUS415-Business Law Course Web site: http://mycampus.phoenix.edu/secure/resource/resource.asp
Ethics in Business. (2008). Business Ethics. Retrieved March 16, 2008, from

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