1 international marketing law: sales representatives, advertising and ethical issues chapter 16 ©...
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International Marketing Law: Sales Representatives,
Advertising and Ethical Issues
International Marketing Law: Sales Representatives,
Advertising and Ethical Issues
Chapter 16
© 2005 Thomson/West Legal Studies In Business
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Sales Representatives, Advertising and Ethical Issues
Sales Representatives, Advertising and Ethical Issues
• National law plays a major role
• Seek local counsel where appropriate
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Why Have a Foreign Representative?
Why Have a Foreign Representative?
• Regulation of representatives
• Agency- one party (agent) performs a variety of functions on behalf or on direction of another (principal)
• Independent contractors- perform general tasks but retain substantial discretion and independence
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United States LawUnited States Law
• In the U.S. a principal is generally liable for the acts of an agent but not those of an independent contractor
• Can negotiate an arrangement
• U.S tax law consequences
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Outside the United StatesOutside the United States
• Many countries disregard written contracts to protect agent/independent contractor
• Supersession (local law superseded contract)• Tax consequences: once hired a “dependent
agent” deemed to have opened an office in that country, subject to tax, considered an employee, trigger representation on Board
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“Evergreen Contract”“Evergreen Contract”
• A fixed term contract in the EU that if continued beyond the stated term can only be terminated after that upon 3 month WRITTEN notice for any relationship that has lasted for three years or more
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Electra- Amambay v. Comania Antarctica
Electra- Amambay v. Comania Antarctica
• Paraguayan Law requires that if a Paraguayan national is terminated for other than just cause from a foreign company doing business in Paraguay, the company must pay a statutory penalty to the employee.
• The Supreme Court of Paraguay upheld the constitutionality of this law
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Regulation of AdvertisingRegulation of Advertising
• Very country specific: difference between France and Saudi Arabia
• But some universality - regulation of deceptive advertising
• Case example - Carlill v. Carbolic Smoke Ball
• Content specific regulation - aimed at children
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Foreign Corrupt Practices Act: US law that applies extraterritorially
Foreign Corrupt Practices Act: US law that applies extraterritorially
• Antibribery- corruptly offering something of value to a foreign official to obtain or retain business
• Exception: facilitating or expediting a routine governmental action like a visa, mail or phone service, utilities
• Accounting and record keeping provision- system of controls but no reference to materiality
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Foreign Corrupt Practices Act: US law that applies extraterritorially
Foreign Corrupt Practices Act: US law that applies extraterritorially
• Routine government action exception
• “corruptly”
• “knowing”
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Adler v. Federal Republic of NigeriaAdler v. Federal Republic of Nigeria
• Adler ( a U.S. Citizen) paid over $2.11 million to Nigerian individuals in hopes of collecting $60 million. This turned out to be a scam and he never received the money. Adler sued but the Court barred Adler from pursuing his claim.
• Why?
• What did the appeals court do?
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International responseInternational response
• Feb. 1999 OECD Convention on Combating Bribery of Foreign Public Officials
• Encouraging after 20 plus years
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DOJ ReviewDOJ Review
• What?
• Why not used by more businesses?
• What alternatives does a business have?
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Other Countries?Other Countries?
• Some even make bribes outside the country tax deductible
• Some progress with OECD Antibribery Convention- but countries still have to implement into national law
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Implications for Business?Implications for Business?
• Care and selection of agents
• Supesession problem
• Actions of agents may be imputed to principal in FCPA context