International Business law

IBL-4.708

Individual Assignment 2

Black Dragon

Submitted by

Plaban Roy

20141161

WORD COUNT: 2969

Contents

Legal and Business risks both parties face in entering into

the transaction….. 02

Step by Step procedure to set up a company in New Zealand

………………...04

Availability of the name “Black Dragon Limited”…………………………….06

Minimum number of directors and shareholders required under NZ

law ……..06

Heads of Agreement……………………………………………………………07

Possible ways of payment………………………………………………………10

Advantage and Disadvantage of letter of credit…………………………………11

References……………………………………………………………………….14

1.0 What steps should both parties take to protect themselves

in respect of the transaction? In other words what are the

specific legal and Business risks which both parties face in

entering into the transaction?

1.1 Legal and Business risks both parties face in entering

into the transaction:

1.1.1 Civil remedies and broader legal issues:

Some of these issues identify with the requirement for

legitimate backing and conviction on business risks, for

example, nonpayment, difficulties in returning inadequate

products or in recuperating property, and vulnerability in the

rights and obligations of dealers or traders in a business.

Different issues identify with direct legitimate risks, for

example, the effect of two or all the more varying lawful

frameworks on a specific business or exchange. This can bring

about multifaceted nature and vulnerability in administrative

requirements. These issues need direct consideration. They

make expenses and postponement. They should be explored and

tended to as a feature of the administration and business work

supporting a country’s global exchange and venture (Legal riskin international transactions, 1996)

1.1.2 The Work Required:

Some work is needed on litigation and other formal issue

resolving mechanism. It can be essential to have suit,

arbitration or another debate determination system accessible

as a possibility for managing cross border risks. To make them

a more practical alternative the procedural challenges and

hindrances that bother them need continuous consideration and

change. A larger piece of the work ought to be centered on how

the law can bolster international trade when there is no

dispute. International disputes rise and result in litigation

just in few situations where an exchange has turned out badly

and there is sufficient money in question for the parties to

look for review through the courts. The law gives backing to

numerous more exchanges through the rights and obligations set

out in business laws and the legislature and private sector

authoritative frameworks needed to apply those laws and

guarantee compliance. To add to this bolster, further work is

required on the worldwide agreements that set out the

substantive standards and administrative courses of action

that are connected to universal trade. Taken a gander at from

a global viewpoint, the business laws supporting International

transaction are inconsistent and fragmented. There is degree

for further two-sided cooperation and some local and other

multilateral initiatives. Work is additionally needed on non-

legal arrangements. Indeed, even where the laws exist on the

statute book, they are in some cases inadequately executed.

The arrangement may be more assets for executing existing laws

or it might be outside the lawful framework inside and out

(Legal risk in international transactions, 1996).

1.1.3 Political risks both parties face in entering into the

transaction:

Political jeopardy emerges when a nation's administration

unexpectedly changes its policies, which now undesirably

affect the overseas firm. These policy deviations can include

such things as trade barriers, which aid to bound or prevent

international trade. Some administrations will request added

capitals or tariffs in exchange for the right to export items

into their nation. Tariffs and quotas are used to protect

domestic producers from foreign competition. This also can

have a huge effect on the profits of an organization because

it either cuts revenues from the result of a tax on exports or

limits the amount of profits that can be earned (Sargeant,

n.d.) .

2.0 What is the Step by Step procedure to set up a company in

New Zealand? If the New Zealand entity were to incorporate as

a limited liability company is the name “Black Dragon Limited

“Available? What is the minimum number of directors and

shareholders required under NZ law? Do the directors have to

be resident in New Zealand?

2.1 Step by Step procedure to set up a company in New Zealand:

2.1.1 The first step is to register on “Realme”. Basically

“RealMe” permits customers to utilize the same logon

(username, secret key) crosswise over different government

online administrations that are a piece of the “RealMe”

program. This spares you from needing to recall various logon

points of interest for distinctive administrations. (Step one- RealMe logon, n.d.)

2.1.2 In the wake of making your new “RealMe” logon, one will

be consequently come back to the Companies Office site. One

will then need to finish a couple of more points of interest

to complete the process of setting up their new Companies

Office account (Step two - Companies Office account, n.d.).

2.1.3 The Registrar of Companies is in charge of the

endorsement and reservation of organization names. This is the

first stride to consolidating the organization. In the event

that one wish to change the name of his/her organization, they

likewise need to apply to save the new organization name

(Reserving a company name, n.d.).

Before one applies to save an organization name direct a free

enlist inquiry to guarantee there are no different

organizations enrolled with an 'indistinguishable or verging

on indistinguishable' name. Also check whether the name

party/parties are keen on is enlisted as a “Trademark”. It is

allowed to seek the register of exchange imprints at the

“Intellectual Property Office of New Zealand (IPONZ)” site.

Any organization name can be saved, however here one will get

an idea to take in more about which names can't be held with

reference to

Contravene another Act

Identical or almost identical names

Improper use of symbols and numbers

The use of plurals

Hostile words

At the point when applying to hold a name, the party/parties

have the capacity to utilize macrons inside Māori names. In

the event that the name they are planning to hold is a Māori

area name, one must guarantee that the name is steady with the

“New Zealand Geographic Board protocol” (Check the name is

available, n.d.).

2.1.4 Then the next step is incorporation of the company. One

must finish the consolidation handle inside of 20 working days

of holding your organization name. This incorporates the last

stride of giving back the marked assents One needs to give

some essential insights about the organization - what number

of executives/directors, shareholders and shares it will have.

One additionally needs to show whether they need to enlist for

Tax (Applying to incorporate a company, n.d.). Likewise the

party(s) needs to give three location sorts that is an

enlisted office, an address for administration, and a location

for correspondence when joining an organization. One

additionally pick the yearly return documenting month in this

procedure (Company addresses, n.d.)

2.2. Availability of the name “Black Dragon Limited”

The name “The Black Dragon limited” is not available as “The

Black Dragon Limited” name is already take and incorporated on

13th of April 2012 (Search the New Zealand Companies Office

Register, n.d.)

2.3 Minimum number of directors and shareholders required under

NZ law:

As per NZ law there should be at least one director in the

company (How many directors should a company have?, n.d.).

2.4 Do the directors have to be resident in New Zealand?

An organization must have no less than one director who either:

Lives in New Zealand; or lives in Australia and is a director of an

organization joined in Australia (How many directors should a

company have?, n.d.).

3.0 Draw a “Heads of Agreement” between the two companies

containing what you think are the key terms of sale and

purchase. Assume you are reacting acting for the purchaser.

The task includes choice of law, force majeure, quality and

dispute resolution clauses.

3.1Heads of Agreement:

Purchase Contract

This Purchase agreement (“agreement”) is entered into on the

17th day of July 2015 by and between:

Black Dragon

Auckland, New Zealand

Hereinafter referred to as “Buyer”

And

Lung Meng

Kaohsiung, Taiwan

Hereinafter referred to as “Seller”

The undersigned buyer and seller have consented to close the

accompanying exchanges according to the terms and conditions

settled out as under:

1. Product : Stone Paper. Wight range 45microns-700 microns.

2. Price : Price for the transaction shall be finalized

through negotiation between buyer and seller. Delivery of

the product should be reached on 30th day of January 2015.

3. Terms of delivery : Within 30 days after receipt of L/C

allowing full shipment.

4. Terms of payment: Payment shall be made by confirmed,

irrevocable L/C opened by the buyer in favor of seller.

L/C must specify that transshipment and partial shipments

are allowed.

5. Packaging: Packaging shall be managed by the seller.

6. CIF: CIF might be liable to the International rules for

the Interpretation of Trade terms (INCOTERMS 2000)

provided by International chamber of Commerce (ICC) unless

generally stipulated in this:

Total amount: $US 150,000/-

7. Insurance: Marine insurance and war risk insurance, will

be payable by the buyer upon submission of bills.

8. Guarantee: Item will supply subject to the seller's

guarantee, conditions as to wellness or suitability of the

items for any reason, resistance to any conditions

included.

9. Quality /Quantity discrepancy: In the event of quality

deviation from the specified standard, purchaser ought to

record a case inside of 30 days after the arrival of the

item at port of destination and for quantity discrepancy

it is 15 days.

10.Force Majeure: Either party shall not be responsible for

failure or deferral to perform all or any piece of this

agreement due to any act of god, war, tremor, fire,

mishap, common uproar, pandemic, demonstration of

government or some other true blue cause outside the

ability to control of the buyer or the seller.

11. Governing Law/Arbitration: The authenticity, structure,

extension and presentation of this agreement should be

administered by the laws of New Zealand. On the off chance

that any bit of this understanding itself is clashing to

law, the remaining provision will stay substantial. All

sort of question, cases identified with this agreement

that couldn't be settled by mutual agreement inside of 60

days from the date that a written notification put

together by one party to other party should be settled by

arbitration to be held in Auckland, New Zealand. The

dialect of the arbitration should be English. The

arbitrators are endorsed to achieve a decision and make a

grant. Controlling and grant may not be challenged by

either party nor might alleviation from the remuneration

be looked for in any court. Any court hosting ward over

any gathering may authorize any arbitral decisions and the

grant. The losing party in the discretion should bear the

costs of the intervention and legitimate expenses too.

12.Confidentiality : The terms of this agreement will be

confidential within the parties and their advisors. A leak

of information regarding this agreement to any undisclosed

third party will be consider as a breach of agreement.

13.Modification of the agreement: Any modification will not

valid until it signed by the both party.

14.Address for communication: Computer Business Solution, 5th

floor, 507/85 Airedale street, Auckland CBD Auckland:

1010,New Zealand or by mail under protection of email to

sales@blacdkdragon.co.nz

Signed for or Authorized signatory on behalf of Black Dragon,

New Zealand

Sign, Name and address of witness to signature:

Dated:

Signed for or Authorized signatory on behalf of Lung

Meng, Taiwan.

Sign, Name and address of witness to signature:

Dated:

4.0 What are the possible realistic options for payment of the

product? Which is best for the buyer? Which is best for the

seller? What are the advantages and disadvantages of letters

of credit?

4.1 Possible realistic options for payment of the product:

Various reasonable remission systems can apply in cross border

trade. Taking after are the rundown of remission strategy

sorted from most secure to slightest for the exporter.

4.1.1Cash in Advance:

Trade in for money in advance is by all accounts best

remission technique for merchants. Remission with weigh ahead

of time may postpone to accumulation which makes pressure for

merchants. In the event that they get trade in for money in

advance can expand their income flow and working capital.

4.1.2Drafts method:

It is one of the regularly utilized system to secure the

interest of both purchaser and merchant. Here record ought to

be required with all terms and conditions before the

settlement of installment. Both are paid instantly either at

sight or later date. Drafts can be paid as sight draft or date

drafts. A fractional rate of commission are charged by banks.

4.1.3 LETTER OF CREDIT Method:

LETTER OF CREDIT is a surety issued by a Bank that payments

from a purchaser to a seller will be gotten as soon as

possible and they will get full sum relies on upon the

conveyance that has been legitimately sent and met every one

of the conditions according to accord. In the event that the

buyer is not able to pay everything on the buy, bank will be

mindful to pay the full or left over measure of the

arrangement in the interest of buyer.

4.1.4 Payment made by digital currency – bitcoins:

Another approach to settle the exchange is bit coins. It is an

advanced monetary component generated through electronically.

It is not a conventional paper cash furthermore nobody control

it. Its decentralization framework can make the exchange

simple and straightforward. Then again because of restricted

bit coin money, the shot of expansion is not very many. It can

lessen the deceitful from both sides.

4.2.1Best payment method for buyer:

For the purchaser it is clear that they won't pick trade in

for money in advance installment on account of risk involved

especially the seller is overseas entity and you are dealing

for the first time. They incline toward payment on delivery,

with the goal that they can check the nature of item and on

time delivery. One of the mainstream strategy that purchaser

lean toward is letter of credit system. Merchant can't make

any fake for this situation.

4.2.2Best payment method for Seller:

From the Seller side the best alternatives is trade in for

money full in advance. In the event that the purchaser trade

in for money in advance, Seller can make future arrangement

and produce the item easily and they can be sans feel from the

danger of deferral or non-payment.

4.3Advantages and disadvantages of Letter of credit:

We know for a worldwide business exchange, advance method of

remission is the most ideal route however after that letter of

credit is the most ideal method for method of remission. In

spite of the fact that it has numerous positive side however

it has a few disadvantages likewise both for exporter and

shipper.

4.3.1Advantages to Exporter

4.3.1.1 Diminishes the risk of credit or delay payment

(Advantages of Letter of Credit (LC) to exporters, 2015).

4.3.1.2 Some misrepresentation purchasers attempt to keep

away from full payment or hold payments by making contention

on nature of item yet as LC is in light of documentation ,

purchaser couldn't deny to pay and it likewise not be effected

on the exchanges, which is secure vender's business

(Advantages of Letter of Credit (LC) to exporters, 2015).

4.3.1.3 An exporter can acquire a pre shipment fund with a low

interest from banks or any Finance related foundations against

the Letter of credit, as the LC consider as a protected export

order (Advantages of Letter of Credit (LC) to exporters,

2015).

4.3.1.4 Letter of credit has a fitting rule, which rolls out

limitation on regular improvement of request quality and

amount by the purchaser and exporter can likewise be without

stay from the trepidation of retraction of requests

(Advantages of Letter of Credit (LC) to exporters, 2015).

4.3.2 Advantages to Importer

4.3.2.1 By acknowledging letter of credit means a supplier

consented to meet all terms and condition gave in the LC. This

archive gives an enormous security to an Importer (Advantages

of LC - letter of credit to Importers., 2015).

4.3.2.2 From the time when bank do everything in support of

shipper, it ensures purchaser and also abate lessen time and

the trouble of the business strategies (Advantages of LC -

letter of credit to Importers., 2015).

4.3.2.3Without proper delivery and credentials seller will not

be able to receive imbursement from the bank. Accordingly,

importer can get free from the strain of advance payment

(Advantages of LC - letter of credit to Importers., 2015).

4.3.3 Disadvantages to exporter:

4.3.3.1 Suppliers acknowledge every one of the terms and

condition while they acknowledge LC. This is an archive, in

this way, if the supplier couldn't meet any piece of the

condition or if there is any disparity, bank may deduct some

specific charges on this (Disadvantages of Letter of credit

(LC) for Exporter, 2015).

4.3.3.2 There are some bank charges and certain costs for

letter of credit methods. Some purchaser demands dealers to

share this expense which is an additional costs for suppliers

(Disadvantages of Letter of credit (LC) for Exporter, 2015).

4.3.3.3 Some purchaser's open LC which is not a recognized

bank, there may be an opportunity to happen fake dealings with

the supplier. In the event that the supplier does not check

the bank standard they may confront the instance of deceitful

(Disadvantages of Letter of credit (LC) for Exporter, 2015).

4.3.3.4 Typically letter of credit is given once in a year.

Because of swelling cost of crude materials may increment, yet

they can't raise their item cost because of LC. This is a

unfair disadvantage to exporter (Disadvantages of Letter of

credit (LC) for Exporter, 2015).

4.3.4 Disadvantages to Importer:

4.3.4.1In Letter of credit exchange bank just consider the

documentation, they don't check physically. On the off chance

that the item quality is not up to the imprint, dealer can get

all payment in view of satisfying the terms and condition.

This is clearly a negative mark for shipper.

4.3.4.2 On the off chance that the item value turn out to be

down because of subsidence, purchaser can't change their

request or cost, and this is another hindrances for merchant.

Letter of credit strategy is an extravagant technique than

other procedures.

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