Risks Arising out of Foreign Laws under international business

 The information provided here is part of Export import business Course online



What are the Legal Risks in Export and Import Business?


Difference between bond execution and bond acceptance copyNow let us discuss about risks arising out of foreign laws under International business. What are the legal risks involved in import and export business? How to resolve such legal risks in international business?


Every country has its own commercial law. So, different laws prevail both in exporting and importing countries. Legal proceedings are complex as well as expensive. In every relationship, however cordial and long-standing maybe, differences are likely to arise. Legal risks can be avoided to a great extent by incorporating the provision for appointment of an arbitrator, in case of dispute about contractual terms.


I have written two detailed articles about disputes and solutions under international business..You may kindly read those articles also.


Cargo Risks

Transportation of cargo has undergone radical improvements over a period. Most of the goods are transported by sea . transit risks are a common hazard for those engaged in export or import business. The list of dreary and hazardous risks in transit is long viz. Storms, collisions, theft, leakage, explosion, spoilage, fire, and high sea robbery. Every exporter should have working knowledge of marine insurance so the he knows whether he is getting the required risk protection at the minimum cost. It is always possible to transfer the financial losses resulting from perils of sea and perils in transit to professional risk bearers known as underwriters. Principles of marine insurance are also equally applicable to insurance of air cargo. I have explained about marine insurance a couple articles in this website. You may kindly go through to have detailed information about the subject.


Credit Risks

Credit risk is another important factor in any business especially in international business. Compared to domestic market, credit risk is very high in export import business. Risks are inherent in credit transactions, more so in international business. Credit risk is not the same whether one sells the goods in domestic market or in foreign market. Success in international business depends, largely, on the ability of the exporters to give credit to importers on the most competitive and favorable terms. Export business has become highly risky as selling on credit has become very common. Importers are sought after so it is but natural they dictate terms as there are many exporters competing for the cake of international trade. Insolvency rate is on the increase. Balance of payment difficulties has severely affected the capacity of many countries to pay the import price. However, offering credit has become unavoidable to the exporters to face competition.

A smart exporter should have two qualities in handling credit risks, sufficient funds to offer credit to his overseas buyer and firm determination to face such credit risks.


Meaning of Credit Risks

Once goods are sold on credit, risks arising in realizing the sale proceeds are referred as credit risks. Risk may arise due to inability of the foreign buyers to pay on the due date. Alternatively, even if the overseas buyer makes the payment, situations may change in the buyer’s country that the funds of buyer do not reach the exporter. An outbreak of war, civil war, coup or an insurrection may block or delay the payment for goods exported. Whatever the reason may be, if funds are not received, sufferer is finally, exporter. Credit risk has assumed an alarming proportion on account of large volumes in international business and sweeping changes in political and economic conditions, globally. In such a high risky situation, credit risk insurance is of immense help to the exporters as well as banks that finance the exporters.


How to solve credit risks in international business of exports and imports?

There are about 50 international organizations to cover credit risks who have their offices in different parts of the world. These organizations acts as an insurance company and covers risks against credit extended by exporter to overseas buyer. For example in India, Export Credit Guarantee Corporation of India (ECGC) is one of the reputed organizations which is a Government of India enterprise. I have written a couple of articles about ECGC and its functions in simple language to make you easily understand in this website. You can read those articles also to have a good knowledge about ECGC and its functions to solve credit risks to exporters.


In this article, we have discussed about the impact of foreign law risks in import export trade of international business. We have also discussed about cargo risks and credit risks in international business of import and export. I hope you have also enjoyed reading about, how to resolve credit risks in international trade.

Also Read:

Commercial risks and solutions under Export Business     Political risks in International Trade     Cargo risks under Imports and Exports    Types of Policies to cover credit risks in Import Export     TradeCauses influencing price of export goods in Export Trade   Credit risks and solutions under International Business   Foreign exchange fluctuations risks and solutions in import export Business    How to overcome the credit risk in an export business?  Does exchange rate of currency effect export business?  Marine Insurance policies    Risks and solutions in Export Business 


If you would like to express your thoughts about cargo risks, credit risks and other risks involved in export business, you may write below.

Have you satisfied with this article about cargo risks, credit risks and risks under international laws involved in import export business? Comment below your thoughts and experience in resolving risks in export import business.


The above information is a part of Online international business guide course

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santosh krishna: Hi, thank you for your information,i am an engineering graduate,and fed up with this IT jobs,so me and my friend who is in dubai,planning to start an import/export business,so i need your help,we both are good in marketing and he is in dubai,but the problem is we are new to this field,and legally doesn't know anything about it..so could any one please help me to start our dream business.. thanx & regards, santosh.k

Karan Bharodiya: I Appreciate your information relate to import export begginer but there may be applicable charge to traers by ecgc..so there may be too expensive charge by ecgc.

Viral Thacker: Thank you sir for article . . keep writing up these articles and your experiences . . .

khanjan: Hello sir, I have read your mostly article with very interest and I m impressed from u. I have complete my BE in mechanical engg., actually I m very interested in import export business, because of I want to do something diffrent, so I want to start my business with my friend. So on which product we can start our business... Please give us proper guidence. Thank u sir.

Azeem Hussain: "Foreign Law article" i like this but not more understand because of i am new in import export business how i understand more from beginning of this field.

VENKATAKRISHNAN RANGARAJAN: Hi Mr.Santosh/Khanjan I was going through the discussion and basically i am into shipping and Logistics have office in SIngapore and India. Now first step is to Identify the Product are will to do. Basically what is you idea 1) Trading 2) Going to Import and Market or export 3) From which country 4) What is the product you are going to choose. Kindly send you thoughts and views for further discussion. Hope i can be of some assistance/Helpful to you

Manish Vaghasiya: Hello sir, your articles are awesome as always. I have complete my BE in computers , and I m very interested in export business,but we (me and my friend)are struggling since we dont know much about exim.We are intrested in exporting chemicals and pharmaceutical products(we dont know why and how). Please help us with your guidance. Thanks

Jamshed Siddiquee : What documents are need first time of scrap import for importer

rishi rai: I m going to start a business of export I want a support hand anyone instrested can contact me.....

Milan Dhanak: Hello Mr.Surendran Kollerath, I would like to say thank you so much for your kind information about risk management.I have found many things in your article which will be a great supporting ideas for us when we will doing it practically.I would like to ask some special points for convince foreign buyers with best ways for long lasting business in proper manners. So awaiting your fast reply... Thanks,

sid: it was a very usefull piece of information it will be great if some strategies to decide a prof=duct for export is elaborated. was very happy to get the knowledge

vasanth: hai,i m going to start a business of import I want a support hand anyone instrested can contact me..... vasanthsri24@gmail.com

Mansoor sheriff: Hi , i am from bangalore i am working in shipping company ,shipping industry is like ocean ,even i am a begineer in this field if anybody wants to export are import you can contact me 9591989314

gowri sankar: thank u ...!!! :) :) :)

karthick: Hi Mr.VENKATAKRISHNAN RANGARAJAN.. hi sir i am karthick from Tamilnadu in India i need your help for how to import the products without any problem. my mail id: karthick5143@gmail.com

sagar: I am working in Medical Device manufacturing company. I am stuck at one point so I need your support. I had exported shipment 76 pcs in Spain last month, due to expiration of certificate 16 pcs out of 76 pcs rejected in Spain's customs. my customer has imported 60 pcs but not that 16 pcs that rejected. I had exported goods under Draw back & MEIS scheme. now, I want to get that 16 pcs back returned and than will send replacement of that rejected 16 pcs. so here I need your support, I want that 16 pcs return back so now what should I do for MEIS & Draw back that I claimed during export and what about Import duty & GST while getting back that 16 pcs. one more thing I don't have import invoice of that 16 pcs because my customer will not provide me that because they have not imported that 16 pcs so how can they provide invoice.

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