Trade Forms, Organizational, and Legal Institutions

International trade transactions involve negotiation between the seller and the buyer (of price, quantity, product specifications, delivery period), entering a contract (oral or in writing, typically signed by each party), and performance of the contract (the seller produces the products, which are then transported to the buyer, who inspects them and makes payment). There is a degree of risk involved for both parties. What if the buyer does not pay? What if the seller sends poor-quality goods? These risks have been addressed to some extent through international payments methods such as bills of exchange and documentary credits (also known as letters of credit).

The legal arrangements for international trade are typically based on a contract; that is, the trading parties enter into a binding agreement. Other issues may arise, such as tort (if there is negligence), crime, and in some countries (such as Australia) trade practices (if there is misleading or deceptive conduct). Transport law is also relevant, with different rules applying to carriage of goods by sea, air, road, rail, and, with e-commerce, electronic transmission. Specific forms of contract are used for transportation: a bill of lading for sea carriage, and an air waybill for air carriage.

Other trade arrangements include:

agency agreements, in which the agent agrees to sell the goods on behalf of the buyer for a fee;

distribution agreements, in which the distributor buys the goods in bulk and sells them for a profit;

joint ventures, which involve a company in the place the goods are manufactured and a company where they are to be sold;

licensing, by which the buyer is given the right to produce the seller's intellectual property (patents, trademarks, designs, copyright) and pays a fee plus royalties; and

franchising, whereby the franchisee is able to use the franchisor's system of doing business.

SEE ALSO Franchising, International; Free Trade, Theory and Practice;International Trade Agreements;Networks, Supply, Distribution, and Customer.

BIBLIOGRAPHY

Pryles, Michael; Waincymer, Jeff; Davies; Martin. International Trade Law: Commentary and Materials. Sydney: LBC Information Services, 1996.

Sanson, Michelle. Essential International Trade Law. London: Cavendish Publishing, 2002.

Yates, D., Todd, P., Clarke, M., Gaskell, N., Glass, D., and Hughes, N., eds. Contracts for the Carriage of Goods by Land, Sea and Air (Transport Law Series). LLP, Inc, 2000.

Michelle Sanson