Business Law

6 Pages   |   1,584 Words

Describe the relevance of guarantees in the contractual design of international sales agreements, and the possible alternative contract clauses that may serve the same or similar purposes.

At the time of the contract design of the international sales agreements, a definite offer must be addressed to a person. The offer should contain within itself the details of the contract must be given e.g. price, quantity, etc. At the same time, the offer must be made specifically to a person. If the offer is not made specifically to a person, then the act will be merely considered as an invitation to make an offer. According to article 17 of CIGS (Contracts for the International Sales of Goods), the acceptance of the offer by the other party will act as a guarantee for the existence of the contract between the two parties. In the case of lack of specific details in the contract, the general rates or quantity of the products or services will be considered (United Nations Commission on International Trade Law, 2010). According to article 19 of the CIGS convention, any kind of acceptance to an offer that involves additional items and modifications that are opposite to the original terms of the offer, are considered to be the rejection to the original offer and the offer will cease to exist in this case. However, if the additional and different terms are included in the acceptance to an offer that do not change the existing terms of the offer, will not make the offer null and void (United Nations Commission on International Trade Law, 2010)

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Describe the legal problems and risks that business operators face when negotiating an international contract, with specific regard to the national court competent to adjudicate possible disputes (i.e. the forum) and to the laws applicable to the transaction.

There are many countries in which the national law states that the terms of the contract in terms of fulfilling the obligations can be changed in case of unusual and unexpected event. For example, according to 147th article of the constitution of Libya, in the case of an extraordinary and unforeseen event that results in fulfilling obligations extremely difficult for an entity which is under debt, to such an extent that the debtor has a chance to suffer from a lot of losses, the court has the right to reduce the obligation to such a level that it may seem reasonable for the debtor as well as for the creditor (Rayner, 1991). In the case of Germany, the contracts can be modified as well. However, in case of Germany, both the parties have to be agreed on the change of circumstance and the resultant step of changing the contract. But the German law also gives the option to the aggrieved party to withdraw from the contract if it becomes difficult to follow the contract or in case, when the other party to the contract is unable to accept the original terms of the contract in its original form (Zimmermann, 2002). In the case of Japan, the impossibility of fulfilling the contracts also includes the economic impossibility.

Employees of a Community-Scale Group of an undertaking decide to establish a European Work Council. In this respect, they ask the company they think to be the controlling undertaking to provide all information necessary to start the negotiation. However, the undertaking refuses given the that it is not the controlling undertaking. Is this refusal legitimate?

According to the Council Directive 94/45/EC, the main purpose of the establishment of the European Works Council is to ensure that the general procedures of transfer of information and consultations of employees in the undertakings or the groups of undertakings, that are operating at the transnational level, are being followed (Directive, C., 1994). In most of the cases, there is a blurness when it comes to the question about the right to negotiate for the EWC (European Works Council). Usually, the right of the final decision is owned by the employer. But there are conditions that the right of negotiation can go to the EWC. For example, in the case when it is written in the agreements that the consultation must take place in order to reach to come to an agreement, the EWC gets the right of negotiation. Therefore even if it is not decided that whether a ‘company’ is the controlling undertaking or not, EWC is bound to get the information that they wanted to get and they needs to be consulted in all the decision making processes in which the EWC is getting affected in any possible way. There must be the communication of the all the documents that clarify as well as explain all the information that is absolutely necessary for the purpose of initiating the negotiation (Hervey and Kenner, 2003).

A German Company with 1000 employees decides to merger with the Italian Company employing 1200 employees. The German company has a two-tier model of corporate governance with employees’ representatives appointed in the supervisory board for the 1/3. The German company suggests to create – after the merger – an SE (Societas Europaea). What will be the mechanism of the worker participation existing in the future SE? Is there nay possibility of getting rid of the German codetermination?

Before the merger, the number of employees in the German Company was 1000. The employees in German company were working in a two-tier model of corporate governance. According to this model of governance, the employees had the authority to nominate one-third of the supervisory board of their company. Now when the merger has taken place, the number of employees had increased to 2200. After the merger, the German company is interested in creating an (SE) Societas Europaea. Legally there are four ways in which an organization or company in a European country can become an SE. These methods include mergers between two or more companies, formation of a holding company, formation of a joint subsidiary and finally, conversion of a public limited company that was previously formed under the national law of the state (Arlt et al., 2002). The only way available for a merger to become an SE company is in the case when the public limited companies from different nation states are merged together (Oplustil and Teichmann, 2004). Therefore, the German company after the merger can become an SE.
For many organizations where there are already provisions of the employee participation in the decision making processes of the organization, the board is afraid that becoming an SE company can lead to some of the hindrances in the decision making processes for the important business operations. But this will be not the situation in the abovementioned case since the German-based companies already have the provision of employee participation in their decision making process.
If the SE is created then according to the Council Directive, that supplements the Statute for a European Company, the worker involvement between the employees and their management will be decided through the negotiation between the two parties (Directive, C., 2001). In the case, when the agreement between the two parties is not made, then the provisions that are present in the Council Directive will apply for the worker participation. According to the provision, if a certain minimum percentage of the employees belong to the organizations where there is already employee participation, then the SE must have worker involvement within itself. At the same time, the Directive has made no compulsion for the business entities to implement these provisions in their national laws (Directive, C., 2001).
Even if the German company after the merger becomes an SE, it is not possible that this company can stop becoming having the co-determination. According to (Kremp and Morgenroth (2010), once an SE has come into existence, it is not possible to change its existing status. For example, if the company follows co-determination, it will remain the same no matter how much the number of employees increases in the company.


Arlt, M.A., Bervoets, C., Grechenig, K. and Kalss, S. (2002) 'The Societas Europaea in Relation to the Public Corporation of Five Member States (France, Italy, Netherlands, Spain, Austria)', European Business Organization Law Review, vol. 3, no. 4, pp. 733-764.
Directive, C. (1994) '94/45/EC of 22 September 1994 on the Establishment of a European Works Council or a Procedure in Community-Scale Undertakings and Community-Scale Groups of Undertakings for the Purposes of Informing and Consulting Employees', Official Journal of the European Communities, vol. 30, no. 9.
Directive, C. (2001) 'Council Directive 2001/86/EC of 8 October 2001 Supplementing the Statute for a European Company with regard to the Involvement of Employees', Official Journal of the European Communities, vol. 294, no. 10, pp. 22-32.
Hervey, T.K. and Kenner, J. (2003) Economic and Social Rights under the EU Charter of Fundamental Rights: A Legal Perspective, Hart Publishing.
Kremp, P. and Morgenroth, S. (2010) Court Proceedings. In Key Aspects of German Employment and Labour Law, Springer Berlin Heidelberg.
Oplustil, K. and Teichmann, C. (2004) The European Company-all over Europe: A State-by-state Account of the Introduction of the European Company, Walter de Gruyter.
Rayner, S. (1991) 'Note on Force Majeure in Islamic Law', A. Arab LQ, vol. 86.
United Nations Commission on International Trade Law (2010) United Nations Convention on Contracts for the International Sale of Goods, New York: United Nations Publications, Available: [11 July 2014].
Zimmermann, R. (2002) 'Breach of Contract and Remedies Under the New German Law of Obligations', Centro di Studi e Ricerche di Diritto Comparato e Straniero, vol. 48.

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