Benefits of incorporating a company for international trade and minimizing risk in transportation of goods

This article discusses the benefits of incorporating a company for international trade, including exposure to new markets and increased profits. It also covers international trade organizations that can provide advice, transportation insurance to minimize risk, and Incoterms to reduce misunderstandings. The article also addresses the issue of creating a valid contract and the use of electronic signatures. Finally, it explains the differences between arbitration, mediation, negotiation, and litigation.

BUS706
SHORT-RESPONSE ASSIGNMENT

Part 1
Issue: the data presented in this question, if certain benefits will be available to Tony if he
incorporated company for the purpose of trading internationally. And the same time, Tony also
wants to know the international and domestic organizations that can provide advice to Tony in
this regard. Tony is also looking for ways to minimize risk and expense while he is transporting
goods to international buyers and the Incoterm that will be most suitable for him.
Rule: it is clear that several benefits are available to the parties when they have incorporated a
company for doing their business internationally. While involving international trade by forming
a company, a number of benefits are available. The growth that is experienced by business in the
form of a company is not possible otherwise. In the same way, the business can increase its
profits by exposure to new markets as this advantage is not available to the competitors.
Tony can rely on a number of international trade organizations for seeking advice. These
organizations include the World Trade Organization, International Chamber of Commerce (ICC),
UN Commission on International Trade Law, World Customs Organization and Organization for
Economic Cooperation and Development (OECD). A large number of information is available
on their websites. This can be very helpful for the traders. The ICC particularly has supreme
authority in making the rules that administer the performance of business taking place
internationally. Similarly, the ICC also administers dispute resolution services. These services
help the parties in dealing with the problems that may have to face while trading internationally
and resolving their disputes.
The law provides several ways to reduce risk and expenses, while goods are being transported to
international buyers. One such common method is to use transportation insurance. In this way,

cargo insurance is highly recommended before international transportation of goods (Jiménez,
2008). It is worth mentioning that the carriers only have limited liability for the goods being
shipped by them through air or sea. Similarly, the owner of the woods is responsible for the
goods before the place of delivery to the international buyer. For the purpose of providing
common terminology dealing with international shipping of goods and to decrease any
misunderstandings, the ICC has introduced a set of terms (Ramberg, 1997). These terms are
called 'Incoterms'. ICC has provided these terms in several languages. In this way, Incoterms can
be used by the parties for describing the major terms of the contract that has been formed for
shipping of goods overseas.
Incoterm EXW: Ex Works appears to be the most suitable Incoterm for Tony in this case.
According to this Incoterm, as a seller of goods, the party prepares the goods for transport. In this
way, theoretically, the responsibility lies with the sender and as soon as the goods have left the
warehouse, storage or factory. Even if the buyer contracts transportation under this term, but the
loading of goods at the starting place may require the oversight of the seller. In this way becomes
the responsibility of the seller. However, in principle, the responsibility has been placed by this
Incoterm of loading the goods on the recipient. But in practice, it becomes vague and generally
the seller has to organize the loading in view of logic and ease. Due to this ambiguity, it is very
important that it should be defined clearly that which party has the responsibility in case any
incident may occur during loading.
Application: in view of the legal position mentioned above, it is clear that there are a number of
international and regional organizations that can provide advice to Tony regarding international
trade. Similarly, Tony can rely on transportation insurance for the purpose of reducing the risk
that is present in the shipping of goods. It is worth mentioning in this context that the liability of

the carriers is limited towards the goods. Consequently, generally it is the responsibility of the
owner of the goods (Ramberg, 1990). They are the goods have reached the place of delivery to
foreign buyer. In view of this situation, it is very significant that the party should use the proper
Incoterm. In order to reduce the risk of the seller, it is advisable that Incoterm Ex Works may be
used by the parties.
Conclusion:
It becomes clear that a number of benefits will be available to the party that has decided to
incorporate a company for trading internationally.
Several international and regional organizations can provide advice to Tony regarding
international trade.
In the same way, transportation insurance can be used by Tony for minimizing risk.
Incoterm Ex Works can be used in this case.

Part 2
Issues: after going through the circumstances present in this question, the issue arises if a valid
contract was created between the parties? If Britney has a right to amend the typographical error
made by her? Will there be any difference in the outcome if Britney had found the typographical
error only after the delivery of MRX8 v2 safe? If under the rules of this convention, when it is
considered under the law that the e-mail was sent by Britney and received by FD?
Rule: According to the UNCITRAL model law, in case of electronic contracts, there are two
grounds of mistake. Therefore the mistake can be the mistake of the parties or the mistake made
by automated system. Therefore, if the mistake was often natural person, it is possible that the
mistake may be made in two ways, the mistake in data entry or if it is patently false. The error
made in input or in other words, the mistake in data entry takes place when the mistake is made
by a buyer. For example, the buyer may enter a digit two times. In this way, in place of one, 11
may be placed in the order (Debattista, 1995). Therefore in this case, although it was the
intention of the bar to make a purchase, but an error was made in the data entry, for example, the
figure of goods on the nature of goods. A solution has been provided by the convention in case
of these mistakes (Radtke, 2011).
Article 14 of the convention has provided that when the party is made an input mistake regarding
the automated message system used by the other party and an opportunity was provided by such
system to correct the mistake, the party making the mistake has the right to withdraw the part of
e-communication in which such mistake was made if:-
Such party had informed the other party regarding the mistake as soon as it came to know
regarding it and has also indicated that an error was made in electronic communication; and the
party had not received any material benefit of value under the contract.

It is further provided by the law that the provisions of this article shall not affect any rule
governing the cost of any error other than the errors that have been mentioned above.
Application:
In the present case, Britney had made an input error. Therefore in place of ordering MXR8v2
safe, she ordered MRX8 v2 Safe as she made a typographical error. Under these circumstances,
even if the parties have entered into a contract but the party that had made the error has been
providing a ride by the law to remove the part of e-communication , where it had made the error
regarding the automated system being used by the other party as there was no chance to correct
the mistake (Rushton, Croucher and Baker, 2010). Hence, the conclusion arises that Britney or
Moscow House are allowed by the law to withdraw this part of the communication where an
error was made in mentioning the safe.
Article 14 of the convention provides that the party who had made a mistake, can withdraw the
part of the communication. This right is provided if the automated system did not provide an
opportunity to correct the mistake made in data entry. Therefore, according to this article, it is
required that the party responsible for the automated system should provide procedures that can
detect and correct any errors that may be made by either party in negotiating electronic contracts.
In case Britney would have discovered the error made in the name of the safe after it had
received the delivery of MRX8 v2 Safe, the things would have been different. The reason behind
this situation is that when any significant advantage or value has received by a party under the
contract, such party is not allowed to withdraw that part of the e-communication.

Article 3 of the Convention mentioned that unless otherwise agreed, it is considered that a
written communication has been received by the other party when the communication was
delivered to the addressee personally, at the place of business or the mailing address of such
party. However, regarding electronic communication, Article 10 has provided that the time of
receiving electronic communication is a time when such communication became capable of
being received by the other party at the electronic address provided by such party (Rhidian,
1981). Therefore, it is presumed under the law that the e-communication has breached the other
party in such a case.
Conclusion:
In the present case, the law provides an option to Britney or Moscow House to withdraw the part
of e-contract when they had made the mistake in data entry.
According to law, a right is available to amend the typographical error if the party has given a
notice regarding it to the other party as soon as the error became known to such party.
In case Britney found the typographical error only after it had received the safe, this remedy
would not be available to her.
Britney's e-mail can be considered to be received by FD on 22 November.
Part 2 Q 2.
(a)
The provisions of UNCITRAL Model Law on electronic signatures apply to all electronic
signatures used in commercial activities. For this purpose, various electronic signature
technologies used by the parties are treated in the same way. Hence, electronic signatures can be

used as reliable and suitable for the reason behind the creation or the communication of data
message. In this context, it has been provided by Article 6(3) that electronic signatures have to be
considered as viable in the contracts (i) that are used only for the purpose of creating the
signature is only linked with the signatory; (ii) the signatory has exclusive control over the
signature creation data; (iii) any alteration to the signature can be detected after the signature and
(iv) . The signature confirmed to the integrity of information and any change in such information
can be discovered before signing.
(b)
The UNCITRAL Model Law on Electronic Signatures has imposed certain obligations on the
signatories. Hence, it is the obligation of the signatories that they should use due care in order to
manage the signature creation data. They should immediately advise any person who is going to
rely on such data that it has been compromised. Similarly, the signatories should also make sure
that representations that have been made in the supporting signature certificate are correct.

Part 3
(a)
Article 5.2(b), New York Convention states that the court may decline to recognize or implement
foreign arbitration award if the award is contrary to the public policy of host nation. But the New
York convention has not defined the term “public policy”. Consequently, a conflict institution is
present in the courts of contracting countries. In the same way, as a contracting country, China
also does not provide the perfect legal explanation of the meaning of the term public policy.
However, a suggestion can be taken from the reported cases. At the same time is worth
mentioning that the major difference is present between the language of New York convention
and the language used in applicable Chinese legislation. Hence, the convention has use the term
public policy, while Chinese law uses “public interest” (Ramberg, 1999). The debate has been
seen for discussing the difference present between these two terms (McLaughlin, 1988). But for
the purpose of convenience and clarity, the term public policy can be considered as the same as
public interest (Amelia and Wolfgang, 2008). In few of the need for clarity regarding the scope
of public policy and its openness to legal explanation, Chinese courts have declined to use the
term public policy as a ground for refusing the recognition and enforcement of a foreign
arbitration award (Richardson, 1997). Hence, if any of the judicial ground is present to refuse the
implementation and acknowledgment of foreign arbitration award, the court will not consider the
application of public policy.
(b)
It is available to refer the dispute to ICC, if the parties have stated that ICC standard clauses will
apply in the arbitration or dispute religion clause of the contract concluded between the parties.

The standard clause is available in many languages. Therefore, it is not combusted at the party
looking for arbitration under ICC should be a member of ICC or that it should have any
affiliation with it. But it is necessary that the parties should have agreed for arbitration by the
ICC. These parties include a Corporation, an individual, an international organization or a State.
(c)
Even if arbitration and mediation and negotiation have the same objective as the methods of
resolving disputes, some differences are present between these methods. The main difference
that can be seen in arbitration and mediation is that the arbitrator hears the evidence provided by
the parties and then makes a decision (Abel, 1982). In this way, arbitration can be described as
somewhat similar to court proceedings. In case of a trial, the parties also produce evidence,
however. The process adopted in case of arbitration is generally less formal. As compared to it,
in mediation and negotiation, there is a process of negotiations. This process is carried on by the
parties with the help of a neutral third party (Abramson, 2004). Hence, in the process of
mediation and negotiation, the parties cannot arrive at the solution if all the parties have not
agreed to it.
(d)
In case of the process of litigation, the courts decide a particular issue. But in the process of
arbitration, the parties to dispute agreed that they will take the help of a neutral third party in
their efforts to resolve the dispute. Therefore, under the process of arbitration, the number of
arbitrators can be one or more (Douglas, 2001). The arbitrators hear the arguments provided by
the parties to dispute and then arrive at a decision. It is worth mentioning that the process of

arbitration is private and informal (Nadja, 2008). On the other hand, litigation is a formal process
and takes place in public
The benefits and difficulties found in these two processes can be described as below:-
The process of litigation is public process. However, arbitration takes place privately. Similarly
limited process of evidence is available in case of arbitration. However in litigation, the legal
rules of evidence apply. In arbitration, the parties have the freedom of selecting the arbitrator.
But this choice is not available in litigation as the judge is not decided by the parties. In this way,
arbitration is an informal process, but litigation can be described as a formal process.

References
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