Discussion
Haigh’s Chocolates is an Australian company owned by the family of Alfred E. Haigh, who was the one to establish the company in the year 1915. The Haigh chocolate aims at making chocolates of premium quality from cocoa beans. The headquarters of the company is in Adelaide, Australia. On the other hand, REDDY’S Pty Ltd, is an Australian company, through which the aims to distribute its products into the international markets. Reddy’s Pty Ltd was established in the year 2002, which is primarily managed by the Director and the Marketing Manager. The company makes use of the best and finest resources to be able to deliver its target customers with quality services and products. It comprises more than 200 handmade varieties. Due to its control over the production process from beans to bar, the company controls the customers from both retail and online background. As it has attained high success in the home country, the business further focuses to expand its products internationally. Therefore, the study has considered two different countries namely Argentina and Mexico for purpose of discussing upon the area expansion of its business operation. The paper therefore provides an in-depth analysis of the factors for initiating business operation in another country, to make a proper decision.
Free trade agreements (FTA) have been designed for reducing the barriers between countries and even ensure helping the industries and the local markets as well. FTA facilitates business activities by lowering trade barriers and helping the industries to access other foreign markets, which further acts as a support to expand their market. Mexico has also entered a free trade agreement with Australia and therefore this process ensures REDDY’S Pty Ltd for an ease establishment of a business operation in Mexico. This process will also benefit the customers of Mexico through an increased market competition for the product so as to lower the price of the products in the long run (Grimson, 2014). This process benefits REDDY’S Pty Ltd as the price of export will be less as compared to the other countries, in which Australia possesses no free trade agreements.
If the two countries do not share trade agreements, the consequences are that the tariff barriers become high, which in turn lead to high cost of export and as a result, the price of the product also increases. When the export cost increases for REDDY’S Pty Ltd, the price of the chocolates also tends to increase in Argentina and therefore it becomes a tough situation for the company to compete in a completely new market. When the price of the Haigh’s Chocolates will be high in Argentina, the customers will prefer to buy them from the locally producing companies at a comparatively lower price. Therefore this may decrease the sale of Haigh’s Chocolates to a large extent (Australian Trade and Investment Commission, 2018).
Mexico Has Free Trade Agreement with Australia
There are two options available for operating a business in Argentina. The first option includes agents, local distributors and representatives, who can support the business activities. These are the people or the groups, who possesses in-depth knowledge and understanding about the market. The other option includes setting up of partnerships, joint ventures or agreements (Australian Trade and Investment Commission, 2018).
|
Legal Structure |
Mexico |
Argentina |
|
Adversarial or Inquisitorial |
The Legislation of Mexico follows the adversarial legal structure |
In Argentina, the existing legislative structure has followed is the inquisitorial framework |
|
Strong rule of law and its consequences |
Yes, Mexico has strong rule of law and its consequences. For instance, foreign companies, which are interested in conducting business in Mexico, may face difficulties due to the strict and complicated legal framework |
No, considering the legal aspects of Argentina, it can be stated that the nation do not possess a potential rule of law. However, the lack of strong rule of law can also generate negative consequences. For instance, as per the lack of constructive framework in Argentina, the foreign companies can suffer from associated transaction risks |
|
Does the country have a significant federal system? |
Yes, it is a “Federal Presidential Representative Democratic Republic” |
Yes, it has “Unified Federation” |
|
Source of law comes from parliament or court |
National Parliament has two chambers, the Chamber of Representatives and that of the Senators, as both of them are considered as the source of law in Mexico |
In Argentina, the Supreme Court and other Federal Courts are considered as the sources of law |
|
Courts – Do both countries have commercial court or list? |
Yes, Mexico has the special commercial courts under its legal system |
Yes, Argentina has Commercial Court in its legal framework |
Source: (Freidenberg, 2018; Zwier & Barney, 2018; World Atlas, 2018; Venegas & Sierra, 2017; Library of Congress, 2016; Vítolo, 2012; Cavise, 2006; Roffarello, Roffarello, Trajtenberg & Trajtenberg, 2006)
Mexico
Australian company can enter into three different types of contracts such as the General Business Contract, Sales Related Contract and Employment Contract. In case of general business contract, the partners can create two forms of agreements namely; the partnership and the indemnity agreement. Besides, for sales related contracts, a bill of sale as well as purchase related documents are required for the creation of a valid contract. Moreover, after making an agreement, an employment contract is created. Firstly, the general employment contract is formed for ensuring that the employees are obtaining every facility from his employer. Secondly, a non- compete agreement helps to make it clear that once the employee leave the organization, the company is no more liable for his assistance (Avvo Inc., 2018).
In order to form a contract law with the Mexican company, the Australian company will have to follow the guidelines of the business law as and will need to specify the other company that they are working for the corporate purposes (Piana, Campuzano & Rajunov, 2018). The elements needed for a valid contract in Mexico includes agreement along with initial offer, legal relationship and lawful consideration among others (MexOnline, n.d.). The remedies for breach of contract in Mexico thus include compensation for damages along with restitution, rescission, reformation as well as specific performance (“USLegal, n.d.).
The Section 197 of Argentina’s civil code suggests that they are free to create contract in the business and can follow the general principles of the contract law. Hence, the Australian company can enter into a business contract (Abogadas, 2016). Contract law is made to show the agreement between two parties. When the contract law is formed between two parties, the legal document is signed by accepting each other’s terms and conditions. Hence it can be considered as mutual considerations. The sources in contract law of Mexico entail civil law along with the commercial law and canon law (Avalos, 2013). Similarly, the sources of Law of Contract in the Argentina are Legal systems along with the foreign investments (Farell, Zappa, Sammartino, Ballester & Abogados, 2011). The elements needed for the valid contract in Argentina includes offer and acceptance along with agreement between parties, formation of an agreement and invitation of offer (Adient plc., 2017). The remedies for the breach of contract in Argentina include compensation along with injunction as well as rescission (Kaplan Financial Limited, 2012).
Argentina- No Free Trade Agreement with Australia (What Are the Consequences)
Mexico. In Mexican agency law (Articles 273 to 308 under the Commercial Code of Conduct), individuals or the companies need to employ an agent as a “comisionista” for entrusting the property under the initial authorization. The agent has performed their legal duties under the authorized person. The legal scenario associated with Mexican agency legislation and agents are relatively flexible in nature. The agent in the Mexican agency legislation is considered as an entity, which helps in conducting the business transaction effectively with the association of power of attorney and the principle “comitente”. Under the legislation of Mexico, agency agreement refers to a contract associated with the power of attorney to conduct a specific business transaction (Fox Williams LLP, n.d.). In Mexico, the organization should collaborate with a general agent to accomplish the legalized transaction (Lardbucket.org, 2018). In Mexican law, the agent possesses the right to sue the principle in terms of loss and damage of contract under the Federal Civil Code (Fox Williams LLP, n.d.).
Argentina
In Argentinean agency law, the respective company must employ agent organization to conduct business in the nation. The agent thus possesses the right to promote the business and to develop the principle for clearing transactions. Under the Argentina Law, agency agreement is a contract made between two parties willing to start up a business transaction. In Argentina, an agent needs to be owned by his/her personal organization, thereby acting under its name of as an independent principle (Sammartino, 2017). If the company will deal with Argentina, it has to be associated with a special agent to accomplish the agency agreement according to the law (Lardbucket.org, 2018). Contextually, the agent has the right to compensate on the behalf of clientele during the transaction contract. In the absence of the associated parties’ consent, the agent’s compensation can be related to the variable charges as per the volume or value of the respective contract. The scenario undoubtedly possesses a significant risk in the transaction process because the agent has reasonable criteria for not competing in the process after termination of the contract (Sammartino, 2017).
Mexico
The employment law in the country of Mexico is based on Mexican Federal labour law (MFLL). The sources of the employment law include constitutional rights along with General Rules of Fairness and Law. It is required to employ eligible candidates for holding respective positions in the company. To provide services, around 150 young employees need to be hired of young age the in the initial phase Global Legal Group, 2018). The employment law of Mexico thus includes security of the workers along with their wages, compensations as well as the Employment costs, which they require to pay off to their employees. Moreover, the employment law consists general insurance of the employees along with their minimum benefits that must be provided (Leaders in Law, 2017). The company thus needs to maintain minimum conditions for the employees such as their wages along with weekly or weekend off as well as a bonus. Yes, the employment law protects the employees by providing them with the required facilities (Global Legal Group, 2018). In Mexico, whenever the employee faces any kind of occupation-related problems, the companies may have to pay all the medical expenses as well as the wages that they are liable of. The employers of the companies are also liable to pay off all the employment costs of the employees. Moreover, they must also obtain all the benefits that they deserve after they retire from their company. If the employees have good condition and legal protection than they can work safely in their workplace and this can in turn benefit the company with increased productivity from the end of the satisfied employees (Leaders in Law, 2017).
Legal Structure of Mexico and Argentina
Argentina
The sources of Employment law of Argentina are national constitution along with Employment Contract Act No. 20, 744 (ECA). The company is required to recruit employees for providing services to the customers and for working collaboratively. The age of employees can be around 25-40 years while a total of around 100 employees can be employed. They have various benefits that are provided by the ECA, which includes severance payments along with healthcare protection, weekly rests as well as retirement plan. Yes, the employment law gives the protection to the employees and it is required for meeting the minimum condition of the employees. The good condition of the worker will result in good outcome from work and the legal protection can keep the employees motivated towards the completion of their allocated tasks (Rioja & Vinales, 2013).
Mexico
In Mexico, IP statutes are more comprehensive than the Argentinean IP legislation. It comprises industrial designs, trademarks, slogans, trade names and patent rights among others. The purpose of Mexican IP legislation is to prevent the risks associated with the industrial documentation. The trademark under the Mexican IP law is valid for 10 years since the documentation has been filed and it can be renewed for another period of 10 years. The application for IP is processed under the Official Gazette of the Mexican Institute of Industrial Property (IMPI). Moreover, for the approval of patents and trademarks, the responsible authorized concern is the Patent Prosecution Highway (PPH), which is actually a collaborative corporation of IMPI and the United States Patent and Trademark Office (USPTO). The Mexican IP legislation is constructive in nature and therefore protects the concerning factors through a specialised approach. The main risk associated with this concern is complicated IP related legal framework of Mexico (Offshore International, Inc., 2018).
Argentina
In Argentina, the company will need to adhere to the legislations under the norms developed by the World Intellectual Property Organization and the World Trade Organization, because the region lack in effective IP protection and enforcement law under the national government. The IP legislation of Argentina contains copyright restriction, industrial designs, and patents among other. The Argentinean IP law is unable to offer adequate protection for unfair commercial utilization and unauthorized disclosure for the commercial contents. Based on the projected Argentinean IP legislative framework, it can be stated that the region has an unstable legal construction, which is incompatible with the international business practices. In Argentina, IP legislation follows a general format so that it becomes highly risky for the foreign companies to conduct their business here without a proper framework of IP protection (International Trade Administration, 2017).
Contract Law
Mexico
Mexico does not follow any proper tort law. The civil codes generally provide the remedies to the victim if one causes damage to the other. There are two forms of general torts that are evidenced within the geographical boundaries of Mexico. They are right to fair compensation along with punitive damages. The right to fair compensation is relevant as it enables the rule breaker to provide all the compensation of damage. However, the punitive damage can be considered as negligence as the victim do not gets justice. Moreover, these two tort laws are organised by Mexico, which is defined when any one of the parties engages in an act of damaging the assets of others. The remedies include providing full compensation to the victim, who is facing problems by quantifying the damage that had happened. If it does not take place, the legal contract can be considered as a failure. Therefore, a full compensation must be ensured in this case (Anav, Garcia, Uribe, Burns…… Sainz, 2016).
Argentina
The Tort law is implied in Argentina. According to article 1711 and 1744, preventive actions as well as excessive punishments are the torts that are organized in the country. It can thus be considered as relevant. The damage, when created to others, is considered as Tort (Hauser Global Law School Program,” 2017).
Conclusion
Based on the overall discussion, it has been highlighted that both Argentina and Mexico has distinctive and distinguishable legal system, which undoubtedly portrays certain benefits as well as hindrances for the business operations. Considering Reddy’s Pty Ltd’s business for Haigh’s Chocolates, it is necessary to differentiate the most opportunistic region for business. In relation with the overall legal framework and legislative constructions, it can be concluded that Mexico has wide content of legal infrastructure than Argentina, which may generate complications for the foreign business entity, while Argentinean IP legislations are relatively weak and may create significant risks for the company. In the view of this understanding, it can be stated that it is better for Reddy’s Pty Ltd to conduct business in Mexico with local professional legal advisor to evade the complications.
References
Abogadas, C. (2016). Argentina: Freedom of contract in Argentina. Retrieved from https://www.mondaq.com/Argentina/x/502368/Contract+Law/Freedom+of+Contract+in+Argentina
Adient plc. (2017). Terms and conditions of purchase – Argentina. Retrieved from https://www.adient.com/-/media/adient/shared/suppliers/legal/current-terms-and-conditions/americas/oct-1-2017/pdf—20171001-argentina-purchasing-terms—english-reviewed.pdf
Anav, G. Garcia, F, Uribe. B, Burns…… Sainz, P. J. (2016). The year in review An annual publication of the ABA/section of international law. Mexico, 1-14.
Australian Trade and Investment Commission. (2018). Doing business Export markets – Argentina. Retrieved from https://www.austrade.gov.au/Australian/Export/Export-markets/Countries/Argentina/Doing-business
Avalos, A. F. (2013). Mexican legal system. Retrieved from https://lawlibrary.arizona.edu/research/mexican-legal-system
Avvo Inc. (2018). Common types of business contracts. Retrieved from https://www.avvo.com/legal-guides/ugc/common-types-of-business-contracts
Cavise, L. L. (2006). The Transition from the Inquisitorial to the Accusatorial System of Trial: Procedure: Why Some Latin American Lawyers Hesitate. Bepress Legal Series, (1552), 1-51.
Farell, J. Zappa, J. Sammartino, I. Ballester, G. & Abogados, F. J. (2011). Doing business in Argentina. Retrieved from https://content.next.westlaw.com/Document/I2ef128a71ed511e38578f7ccc38dcbee/View/FullText.html?contextData=(sc.Default)&transitionType=Default
Fox Williams LLP. (n.d.). Agency, Distribution and International Trade. Retrieved from https://www.foxwilliams.com/mexico-agent-law
Freidenberg, E. M. (2018). National Commercial Court decision sets favourable precedent for Argentine aviation industry. Retrieved from https://www.internationallawoffice.com/Newsletters/Aviation/Argentina/Freidenberg-Freidenberg-Lifsic/National-Commercial-Court-decision-sets-favourable-precedent-for-Argentine-aviation-industry#
Global Legal Group. (2018). Employment and labour law. Retrieved from https://iclg.com/practice-areas/employment-and-labour-laws-and-regulations/mexico
Grimson, M. (2014). Free trade agreements: What is an FTA and what are the benefits?. Retrieved from https://www.abc.net.au/news/2014-04-07/free-trade-agreement-explained-bilateral-fta-tpp/5371314
Hauser Global Law School Program. (2017). Update: A research guide to the argentine legal system. Retrieved from https://www.nyulawglobal.org/globalex/Argentina1.html
International Trade Administration. (2017). Argentina – 5-Protection of Property Rights. Retrieved from https://www.export.gov/article?id=Argentina-protection-of-property-rights
Kaplan Financial Limited. (2012). Remedy for breach of contract. Retrieved from https://kfknowledgebank.kaplan.co.uk/KFKB/Wiki%20Pages/Remedy%20for%20breach%20of%20contract.aspx
Lardbucket.org. (2018). Introduction to Agency and the Types of Agents. Retrieved from https://2012books.lardbucket.org/books/the-legal-environment-and-business-law-master-of-accountancy-edition/s28-01-introduction-to-agency-and-the.html
Leaders in Law. (2017). Mexican employment law. Retrieved from https://www.leaders-in-law.com/mexican-employment-law/mexican-employment-law/
Library of Congress. (2016). National Parliaments: Mexico. Retrieved from https://www.loc.gov/law/help/national-parliaments/mexico.php
MexOnline. (n.d.). Mexican legal system overview. Retrieved from https://www.mexonline.com/lawreview.htm
Offshore International, Inc. (2018). Intellectual Property Rights in Mexico. Retrieved from https://insights.offshoregroup.com/intellectual-property-rights-in-mexico
Piana, M. Campuzano, C. & Rajunov, D. (2018). Contracts, negotiation and enforcement in Mexico: overview. Retrieved from https://uk.practicallaw.thomsonreuters.com/w-012-3577?transitionType=Default&contextData=(sc.Default)&firstPage=true&comp=pluk&bhcp=1
Rioja, F. I. & Vinales, E. (2013). Employment and employee benefits in Argentina: Overview. Retrieved from https://content.next.westlaw.com/Document/I2ef129f81ed511e38578f7ccc38dcbee/View/FullText.html?contextData=(sc.Default)&transitionType=Default&firstPage=true&bhcp=1
Roffarello, G. M., Roffarello, E. M., Trajtenberg, E. & Trajtenberg, J. O. (2006). A Research Guide to the Argentine Legal System. Retrieved from https://www.nyulawglobal.org/globalex/Argentina.html
Sammartino, M. E. C. (2017). Argentina: Agency Agreements in Argentina. Retrieved from https://www.mondaq.com/Argentina/x/654876/Contract+Law/Agency+Agreements+In+Argentina
USLegal. (n.d.). Breach of Contract: Remedies. Retrieved from https://contracts.uslegal.com/breach-of-contract-remedies/
Venegas, M. T. & Sierra, V. W. (2017). Commercial Arbitration. Retrieved from https://globalarbitrationreview.com/jurisdiction/1000198/mexico
Vítolo, A. M. (2012). Argentina. International Academy of Comparative Law, (3054), 55-65.
World Atlas. (2018). What Type of Government Does Mexico Have? Retrieved from https://www.worldatlas.com/articles/what-type-of-government-does-mexico-have.html
Zwier, P. J. & Barney, A. (2018). Moving to an Oral Adversarial System in Mexico: Jurisprudential, Criminal Procedure, Evidence Law, and Trial Advocacy Implications. Retrieved from https://law.emory.edu/eilr/content/volume-26/issue-1/articles/moving-to-an-oral-adversarial-system-in-mexico.html
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
