《InternationalBusinessTransactions_Anderson_Fall2016》.pdfVIP

International Business Transactions Outline Fall 2001 – Prof. Anderson I. Introduction to IBT a. Elements in an economic analysis: i. Risk – who bears the risk? 1. Volatility – possibility of a good/gain or bad/loss thing happening. Distribution of outcomes around some point. An economist will not take a risk if possibility of loss is greater than potential gain. ii. Return – who receives the return? 1. Possibility of profit. iii. Control – who has the control? 1. Ability to determine what risks need to be taken to make certain gains. iv. Cost of Capital II. What Law Governs International Business Transactions – Lex Mercatoria [NOT ON EXAM!!] a. Historical System - Lex Mercatoria – The law merchant i. Common law between merchants based on custom. This is the law of international merchants based on common usage. ii. Authorities wanted commercial disputes to be heard in courts to give them control. iii. Merchant courts were established with arbitrators which facilitated trade. 1. Used shut-out of merchants from market as punishment b. Modern System i. Most systems include mandatory arbitration. ii. Some court systems (NY, London, HK) allow other contracting parties to select their jurisdiction. III. International Contract Formation a. Contract as narrative i. What does each party want? 1. Reciprocal flows of value ii. Reduce it to writing