International Business: Contract Types and Dispute Resolution

This report provides a detailed analysis of international business operations, focusing on contract types and dispute resolution mechanisms. It begins by defining international business and exploring various contract structures, including oral and written agreements, highlighting their respective advantages and disadvantages in terms of risk and financial implications. The report then delves into dispute resolution systems, differentiating between formal and informal procedures, such as litigation, arbitration, and mediation, and evaluates their effectiveness within international organizations. It examines the structure of dispute resolution systems, including three-tier procedures, and their impact on financial and risk viability. The analysis includes real-world examples, like the World Bank and IMF, to illustrate how different organizations approach dispute resolution. The report concludes by summarizing the key findings and emphasizing the importance of contract design and effective dispute resolution in ensuring the success and financial stability of international business ventures.

International Business

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Structure of dispute resolution system and its uses in facilitating International Business..........1
Impact on financial and risk viability of business.......................................................................3
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................5

INTRODUCTION
The international business is a kind of trade includes different goods, services as well as
technology are exchange across the countries (Abed and et al., 2018). This business includes
transaction which cross the borders of their respective nations. International business is also
defined as globalization. The international business have various formats like movement of
commodities between the countries, A well-designed contract agreement that promote the
foreign companies to make uses of products, technologies and services which are being imported
from other nation. Various types of international business includes imports and exports,
licensing, outsourcing, joint ventures or strategic partnership of multinational companies, etc.
This report will evaluate the contract type and dispute resolution present structure in place and
their respective uses in facilitating international business than it will determine impacts of
financial and risk viability of business.
MAIN BODY
Structure of contract type and dispute resolution system and its uses in facilitating International
Business
Basically the contract is in oral or written form conducted between to different parties or
individual provides a legal security to both the respective parties who are into the business deal.
The contract type are having a structure in which it includes objectives, work flexibility, parties
security and fair decision. The contract structure also carry a clear knowledge and information
regarding the role and responsibility to its parties. This state that the objectives of the contract is
pre designed so the parties will work accordingly to achieve the group goal their will be no
mismatch of activities. Thus, in the case of conflict the clear and fair structure of contract will
contribute in resolving issues between the parties who are involved in the contract. The parties
will work flexible so that they are more comfortable to do international business with contract
type. The contract type also provide a safety measure to its parties so that they will promote to
do more exchange of commodities. On the other hand if the contract structure is being orally
then the parties have no proof for their security purpose and this is less valid in nature. The oral
contract will make many conflicts regarding the import and export of commodities and services.
The control of services is also less in oral contract and the parties may also face legal issues in
contract (Kraak and Linde, 2019).
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Every international business have to make its contract type to do international business
activities. The business have motive to increase the revenue and try to achieve favourable value
in the international market. This help to make the relation between the parties involved in
business transactions (Odoemena and Horita, 2018). The contract type is useful because of its
different purpose and reasons. It has some key elements to show is usefulness.
Served as evidence of commitment for parties
The contract is done to develop a relationship to work collectively and forge a relation that is
beneficial in nature. The contract is visual presentation for legal relationship of two different
parties in the business. This is useful because all the roles and responsibility that has to be
performed is written in the contract and the work and duties will performed in effective manner.
Preventing from conflicts and risk resolution
As the contract type is build and made In a way that both the parties get fair benefits by each
other. A fair discussion leads in better outcomes without any conflicts and the risk that are
normal occurs while international business get minimized.
Help to keep adhere
The parties involved in the international business will know their process to follow so there will
be less confusion in the work and roles and responsibility. The parties will know that the
structure and the next process after other.
Help to Generating profit
The contract type made by binding the agreement in which inform the detail of delivery side
party in exchange for respective payment for the commodities. As the large amount of goods and
services are transported with a party to other than it will gain a huge amount of profit.
Extending brand and its value
As the extending of brand and business will not the first things to do in Contract but while
contracting and its goods the importing nation will get the knowledge of the brand that is not in
their own nation (Al Rahahleh, Ishaq Bhatti and Najuna Misman, 2019).
Dispute resolution is basically a process of resolving disputes between teams or
individuals in an organization. The structure of dispute resolution system must be in a way
which must respond to the concerns of both the participants and institutions (Calcaterra , 2017).
Employees find the dispute resolution procedures as multitude of affection and fiscal costs and
profits. Organizations try their best to resolve the disputes at very early stages rather than
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pursued at later stages. For that, they conceive dispute resolution procedures as a series for
resolving complaints at earliest stage and defending against unjustified complaints at later
stages. The dispersion will analyse the resolution system from both perspectives:
 Informal VS Formal Procedures
International organizations always provide formal managerial procedures for resolving disputes
with the help of domestic courts, while on the other hand the informal procedures not strictly
requires a series of process and thus, determine the purpose of each organization (Hensler ,
2017). Although, the balance between formal and informal procedures supports real
consequences for international organizations and their employees. Informal procedures offer
approachable and privately addressing the staff concerns to avoid a situation when the staff
management relations destroy up to an irreparable level. Early resolution of disputes increases
the workplace harmony and the efficiency of the employees as well. However, informal
occupational execution such as administrative assembly, employees and organizations may go
through incomplete or biased reviews of disputes or conflicting practical application of policies
and procedures within the organization.
On the other hand, formal procedures are more time and cost demanding operations. By
choosing formal dispute resolution process, individuals have the opportunity to be supported by
advisors, respond to the person and requesting the primary result of the hearing. Generally, in
formal procedures managers send the news letter to its staff member, then hearing overview
takes place in which the views of both parties taken into consideration, after that hearing
outcomes and approval occurs and in the last appeal process takes place. Only formal resolutions
are considered for appeal process. The advantages of this process is that there are less
opportunity for misuse of process, both the parties are obligated to attend the hearings, includes
final decision binding and legal illustrations may be accepted. However, formal dispute
resolution is very time-consuming activity, parties unable to control process and decision, and
expensive process are some drawbacks of this particular procedure.
For instance, the World bank follows the least formal procedures while resolving disputes within
the organization. However, the world's bank informal process fails to produce a directorial
record because they give emphasis on peer reviews at earliest stages which sometimes results in
controversies. Due to which dispute resolution creates tension between the staff members and
managers regarding the dispute result and the need of consistent application of those policies and
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procedures, while in International Monetary Fund a middle level of formal procedures for
dispute resolution has been conducted. Some members reprehend the procedure as being too
formal and not suitable while providing resolutions. To avoid such situation, IMF maintains
ethics advisor for its employees, yet the formal advisory taken as preference in the organization.
 Three- Tier Procedures
Three-tier structure at international organizations includes the reviews of administrative, staff
and judicial (Kayastha , 2020). Administrative review includes resolving disputes by avoiding
costly and time-consuming resources and continue processes in organizations administrative
tribunal. Peer review is quite similar to the administrative review. The major difference is that it
majorly gain credibility of fairness and independent decision but on a contrary note lose its
credibility when organization disrespects the conclusion. On all the above, the judicial reviews
has play a critical role as it is well adopted by most of the international organizations due to
experience and impartial information discovers.
For example, at the World Bank tribunals are allowed to do oral hearings. However, in many
other international organizations, the hearing are decided in private and on written records. In
cases if the rules and regulations have been prepared then written records will be entertained in
international business. As a result, the judicial review plays a vital role in shaping the process at
the highest level in the international business organizations.
Impact on financial and risk viability of business
The types of contract have different impacts on finance and risk viability of business.
The oral contract is having comparatively higher risk than written because This is totally on
assumption between the parties and there is no proof or evidence to its buyer nation regarding
the exporting nation. It can be stated that the risk is becoming higher in oral contract type on the
other hand the financial risk is being low in oral contract because the parties have just
communicate in this there is no agreement or any legal document is used so there is less expanse
in the contract all things are being orally (Liu, Hua and Zhai, 2020). The written contract type is
having a lower risk because the roles and responsibility are stated in the legal documents
between the companies are written. There are no conflicts and mistake in the process of contract
all things are managed so it contains less percentage of risk as compared to oral contract. At the
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same time written contract build with various documents which contain government notary and
other stamps so its take a part of finance so it is more costly. Therefore, if there is any uncertain
situation occurs then the parties will have the written document of contract. It make easy for
them to handle the situation and avoid the conflicts. Written contract is more correct because all
the role and responsibility are in write so it will help the parties in all the situations. Dispute
resolution have major impact on the organizations in terms of financial and risk probability
(Delgado, 2017).
Dispute resolution majorly consists of two procedures i.e. formal and informal. Formal
procedures includes Litigation and Arbitration. Both the procedures have a wide impact on the
institution as it is a very expensive and time-consuming procedure which effects drastically the
financial viability of the business. The risk incurred with this particular procedure is that it has
no control over selection of decision maker as there might be a possibility that decision maker
lacks the technical expertise which might cause in wrong results. Another risk is that the
procedure is not confidential as it requires a series of persons involved. In an international cross
border disputes among the different international organization businesses foreign laws, rules and
regulations, language barrier and possible local unfairness may effects as risks towards the
organizational dispute resolution. Informal procedure includes Mediation. According to risk
perspective the procedure maintains the privacy and confidentiality, flexible procedure to use in
organization, parties selected for this purpose are neutral as neutrals with expertise are
specifically selected but on a contrary note requires party agreements. However, according to
financial terms the procedure is cost saving relative to formal process. Procedural flexibility also
helps to mould the resolution process to get better results also helps the organization to prevent
from spending finance at unreasonable place (Rabinovich, 2019).
CONCLUSION
The above report addresses the topic International Business in detail by covering two
different key areas i.e. contract type and dispute resolution to define the current structure of the
procedures, their procedural critical analysis and uses in facilitating international businesses in
organizations. With the help of examples of organizations the report describes the overall
composition in well-structured manner. Further, this report outlines the impacts of selected key
areas on financial and risk viability of business in international market. With the help of points
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the financial effects and risk measures while choosing particular procedures are described in
this study.
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REFERENCES
Books and Journals
Abed, M. and et al., 2018. SELECTING THE APPROPRIATE CONSTRUCTION
CONTRACT TYPE BY USING THE ANALYTICAL HIERARCHY PROCESS
APPROACH. International Journal of Construction Project Management. 10(2).
pp.137-154.
Al Rahahleh, N., Ishaq Bhatti, M. and Najuna Misman, F., 2019. Developments in risk
management in Islamic finance: A review. Journal of Risk and Financial
Management. 12(1). p.37.
Bachar, G.J. and Hensler, D.R., 2017. Does Alternative Dispute Resolution Facilitate Prejudice
and Bias: We Still Don't Know. SMUL Rev. 70. p.817.
Delgado, R., 2017. Alternative dispute resolution: A critical reconsideration. SMUL Rev. 70.
p.595.
Kaal, W.A. and Calcaterra, C., 2017. Crypto transaction dispute resolution. The Business
Lawyer. 73(1). pp.109-152.
Kisi, K.P., Lee, N., Kayastha, R. and Kovel, J., 2020. Alternative dispute resolution practices in
international road construction contracts. Journal of Legal Affairs and Dispute
Resolution in Engineering and Construction. 12(2). p.04520001.
Kraak, J.M. and Linde, B.J., 2019. The usefulness of the psychological contract in the 21st
century. In Handbook of Research on the Psychological Contract at Work. Edward
Elgar Publishing.
Liu, Z., Hua, S. and Zhai, X., 2020. Supply chain coordination with risk-averse retailer and
option contract: Supplier-led vs. Retailer-led. International Journal of Production
Economics. 223. p.107518.
Odoemena, A.T. and Horita, M., 2018. A strategic analysis of contract termination in public–
private partnerships: implications from cases in sub-Saharan Africa. Construction
Management and Economics. 36(2). pp.96-108.
Rabinovich-Einy, O. and Katsh, E., 2019. Blockchain and the Inevitability of Disputes: The
Role for Online Dispute Resolution. J. Disp. Resol., p.47.
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