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International commercial practices as well as the applicable national law of the importer and the exporter in combination with the international trade regulations developed and constructed by the United Nations International Trade Law commission explicitly dictate that specific documents should be drafted and utilized by the parties.  Following the opinion of the leading scholar authorities and the leading legal practitioners, these documents can be grouped into three categories, with the subject matter of the agreement being the major criterion for the classification.

Commercial ( Trade) Documents

Shipping Order – the document which corroborates the existence of the agreement between the transporter of the commodities and the importer/exporter of the goods

International Trade Agreement – the treaty between the parties which evinces that the parties have a specific scope of mutually corresponding rights and obligations

Bill of Lading – the document which evinces that all customs and health regulation have been observed when the cargo was loaded on the ship. Another function is to guarantee that the goods have been respectively inspected by the state agencies.

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Financial Document of the Case Study

Annuity Statements – the set of documents which annually declares the financial and other accomplishment of the company, specifying the profits accrued and the losses incurred by the firm

Estimated Taxes List – this document is submitted to the Internal Revenue Service in the United States of America and to the similar tax authorities of other countries, to the States Tax Service of Germany and Similar agency in the United Arab Emirates.  Failure to submit these documents inevitably leads to the immediate termination or temporary suspension of the transaction by the state authorities.

Deferred Compensation Plan and  Stock Option Agreements  these instruments are utilized to divide the accrued profits and the dividends that have been obtained as a result of the stock-related transactions.  The importance of these documents is immense, as they are destined to remove the disputes among the managers and the shareholders of the company resulting from the share of profits accrued by the firm.

Transport Documents

Certificate of Origin  - this document is used to prove that the imported or exported commodities have a designated geographic origin. The purpose of this operation  is to ensure that the terms of the agreement are observed and that the contractual pledges are genuine.

Certificate of Commercial Invoice – this document is designed to serve as a proof that the firm  has paid for the imported or exported commodities in accordance with the procedure that has been agreed on by the parties.

Parties Involved

 This section of the report is focused on the parties that are involved into the transaction and the function they exercise. Besides, it concisely depicts major rights and respective obligations of the parties.

The Importer of the Commodities

The importer of the commodities in question is a local company, registered and incorporated in the United Arab Emirates. The name of the company is Gargash Enterprises LLC, it has its business seat in the United Arab Emirates and operates throughout the country. The company is an officially licensed dealer of the Mercedes Benz Group and employee’s 1200 persons domestically, being one of the leading employers of the country.  The appointed officers of the company are responsible for monitoring and supervising the import and export procedures exercised by the company as well as for the actions connected with the logistics, shipment and other cargo-related operations, storing and internal domestic sales of the commodities.  Besides, in accordance with the terms of the stipulated agreement the exporter of the commodities is obliged to arrange all financial documentation and to ensure that the related payments have been duly exercised.

The Exporter of the Commodities

In accordance with the statement of the facts of the present case study, the exporter of the commodities is the limited liability company registered and incorporated under the laws of the United States of America. The name of the company is Daimler and the company has located its branch offices in the United States of America and in the Federative Republic of Germany. From the offices and stores located at those countries the exporter organizes and monitors the organization and implementation of the shipments to the United Arab Emirates, in where the importer and its facilities are located.                                

Among the functions of the company are the exercise of the payments and the handle of all the customs and related procedures. Another important obligation of the exporter is the quality control of the exported vehicles, due to the fact that in accordance with the Incoterms which are valid and applicable for the present transaction the seller is vested with this obligation.

The Banking Institution

In accordance with the terms of the agreement, the parties are mandated to make their payment through a banking institution. Moreover, considering the amounts of the due payments it is both practically unfeasible and unlawful to pay in cash for the imported goods.  The choice of the banking institution is particularly important, since the bank guarantees the implementation of the contract.

Terms Used

This section of the report outlines the main internationally acknowledged terms which are utilized by the participants of the international trade operations to arrange the payments and to pay for the exported or imported commodities and the related goods. 

Incoterms

Generally, these terms have been elaborated to simplify the agreement drafting processes. To be more exact, there is a set of normative unified regulations which serve as framework for the creation of the contract.  The term specify the  entity ( the exporter or the importer) which will be obliged to arrange the submission of the export customs declaration and which will be obliged to organize the carriage to a port of export, the truck unloading in the port of export, the loading of charges in the port of export, the air or sea carriage of the goods to the port of the importer, the unloading charges in the port of import, the loading into the trucks ( or to the other transporting facilities) in  a port of the importer. Besides, these terms also defines who is ultimately liable for the carriage of the goods to the place of destination, to cover insurance and related obligatory and voluntary payments, organize the import customs procedures and pay the import taxes. In accordance with the terms, the parties are asked only to choose the type of the incoterms and to incorporate a specific provision into the contract, stipulating that the specific type of incoterms shall be applied. To illustrate under the EXW Incoterms payment method, all due payments are to exercise by the seller of the transaction.  In contrast, the DDT (Delivery Duty Paid) Incoterms payment method directly prescribes that all payment shall be exercised by the buyer of the transaction, excluding the insurance payments which must be accorded by the parties.

Terms of Payment

Whilst the  Incoterms primarily designate the methods which shall be applied to define which party to the transaction is obliged to take the contractually stipulated actions, the terms of payment elucidate the procedures which have been agreed by the parties to exercise the payments.  The most widely applicable methods are the following are the cash in advance method, confirmed irrevocable credit and open account method. For the needs of the present case study, the open account method does seem to be the most relevant and opportune method of payment.

Legal Requirements of the Case

Considering the nature of the present agreement, it shall be specified that three groups of legal obligatory prescriptions can be identified for the present business case study.

First and foremost, domestic regulations of the buyer shall be regarded by the parties. Depending on the type of the incoterms, which have been chosen by the parties to govern the details of the transaction either a buyer or a seller is obliged to monitor the observance of the standards. These regulations are usually connected with the health, environmental, tax and labor issues. The government officials of the exporting country are fully entitled under the customary international law to intervene to the privity, providing that it has been evinced that the violation of those regulation has been perpetrated by the contractors.

Moreover, it shall be highlighted that this very situation is centered over the Federative Republic of Germany and the United State of America. These countries have elaborated absolutely different legal systems. While the USA is a common law country and the health and environmental issues of this country are defined by the state agencies, the Federative Republic of Germany is a country with continental legal system, in where the regulations are established by the decree of the parliament. These documents of the both country differ significantly in their structures and natures and these natures shall be highly considered before the transaction is implemented.                                          

Secondly, the domestic regulation of the United Arab Emirates shall be scrutinized by the parties.  Moreover, local municipal regulations of the cities and communities in where the commodities are imported shall be considered separately by the importers and the exporters. Similarly to the exporting countries, health, environmental, tax and labor issues are the primary facets on which the supervisory authorities of the United Arab Emirates focus their attention.  

Thirdly, international applicable legal instruments shall be respected and duly considered by the parties. The parties may explicitly choose the applicable law, or may indirectly incorporate them. To illustrate, the Federative Republic of Germany, the United States of America and the United Arab Emirates are the parties to the Convention on International Sale of Goods, 1980. Since no reservation is made, the parties are not entitled to deviate from the provisions of the convention in question.

Code: Sample20

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