Introduction
International financial transactions take place between varieties of jurisdictions which may belong to any of the existing legal families. Each legal family emerging in their own ways, with their respective philosophies are bound to have differences. For the purpose of this essay we shall look at whether in the current legal environment, in the context of set-off and netting do these differences matter or not and in case of any differences, if they are only based on terminology.
To begin it is of use to identify main legal families. They include Anglo-American group, Roman-Germanic group, Napoleonic group, mixed civil law/common law group, Islamic group and new jurisdictions. Amongst these, most of the jurisdictions recognize
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Examples may include simple liquidated debts, damages for non-performance of a contract, claims for differences under contracts held by both parties etc.
Netting
Netting has various types which need to be distinguished. Most common being close-out netting which is regarded as ‘cancellation of a series of open executory contracts between parties on the default of the counterparty and set-off of the resulting gains and losses’ . It is usually done in three steps, cancellation, calculation and setting off. Another type is settlement netting that is an advance set-off of the obligations under contracts which are yet not due. ‘This type of netting is a classical case of novation.’
Legal Position of Set-off and Netting
The position of law in jurisdictions with regards to these concepts is dependent on the timing of when these concepts need to be utilized. This timing can be broadly divided into the category of before insolvency and after insolvency proceedings have been initiated. Having set-off available before a party becomes insolvent is not an issue as the law does not have to deal with the insolvent owing money to third parties. Therefore, the main difference that arises in law in different jurisdictions is based on insolvency
The primary purpose of the “Statute of Frauds” (SOF) is to protect the interests of parties once they are involved in litigating a contract dispute (Spagnola, 2008). The relevant statutes are reliant upon state jurisdictions to determine whether the contract falls under the SOF, and whether the writing of the contract satisfies the requirements of the statute of frauds (Spagnola, 2008). However, all contracts are not covered under the SOF. In essence, for a contract to be deemed as legal by definition of the SOF, there must be verification of the following requirements for formation of the contract, which are as follows: (1) There must be least two parties to the contract, (2) There must be a mutual agreement and acceptance on the price to pay for goods and services offered, (3) The subject matter or reason for entering the contract, must be clearly understood by all parties to the contract, (4) and there must be a stipulated time for performance of duties under the contractual obligations (Spagnola, 2008). Lastly, there are five categories of contracts that are covered under the SOF, which are as follows: (1) The transfer of real property interests, (2) Contracts that are not performable within one year, (3) Contracts in consideration of marriage, (4) Surtees and guarantees (answering to the debt of another), and (5) Uniform Commercial Code (U.C.C.) provisions regarding the sale of goods or services, legally valued over five hundred dollars ($500.00) (Spagnola, 2008).
Liability in restitution with disgorgement of profit is an alternative to liability for contract damages measured by injury to the promisee.” (2011)
In conclusion it is clear the pari passu principal in practice is rarely achieved and is quite frankly easy to refer to as a glorified theoretical doctrine as it has been severely eroded. This being said it is impossible to discount the pari passu theory as a fundamental principle in corporate insolvency law as although not overly effective in the capacity it was created, the principle spreads all across insolvency law promoting fairness and efficiency in the distribution of assets in insolvency proceedings from the hierarchy and classes of claims to other rules for proportionality. It is a principle which advocates creditor protection which is a pillar of corporate insolvency law.
A Quistclose trust arises when money is paid to a recipient for a specific purpose, if that purpose fails the money is held on trust for the payer. It mostly arises in insolvency cases where the proprietary rights have to be established. However, this type of trust has been thought to be inconsistent with the traditional trust principle. Many have suggested the Quistclose trust must be treated as any other fully fledged security device taking into account the protection it offers the payer on insolvency and should therefore be registrable. This essay critically analyses the concept of Quistclose trust, whether it differs from the resulting trusts.
"A contract is a legally enforceable promise or set of promises. In other words, when promises have the status of contract, the contracting party harmed by a breach of the contract is entitled to obtain legal remedies against the breaching party" (Mallor et al., 2015, p. 320)
Once reaching an agreement on the overseas sale of goods, trader will carry out their management plan, such as controlling the quality and quantity of goods and especially preparing for exports, which ensures the performance of the contract and the legality of the transaction . Therefore, trade terms in international sale contracts are different from these of domestic trade and intended to clarify the method of delivery, the estimates of the goods and any incidental charges . FOB (Free on board) and CIF (Cost, Insurance and Freight) are of the most common forms of these special trade terms . The fundamental difference is that FOB contract specifies the port of loading meanwhile CIF contract stipulates the port of arrival . Despite in universal
Since these agreements are exempted from FAR/DFAR, only a limited guidance is available when dealing with data rights and other terms/conditions which is negotiable ninety percent of the time. Lack of formal training, legal guidance and experienced staff creates a status quo when officials do not show much interest in getting involved in the OT agreements. Since other transaction agreements were used infrequently, they faced challenges in making officials involved in the agreements aware of the flexibilities afforded by other transaction
The same treatment of the international airspace for purpose of Sec. 911 was expressed in Savary v. Commissioner , Clark v. Commissioner and Struck v. Commissioner. The consistency of the Tax Courts treatment of the income in questions as non-foreign source income assures the taxpayer that any in...
Based on common law and precedent, the English law of contract has been formulated and developed over a number of years with it’s primary purpose to provide a regulated framework within which individuals can contract freely. In order to ensure a contract is enforceable there are certain elements which must be satisfied, one of which is the doctrine of consideration. Lord Denning famously professed; “the doctrine of consideration is too firmly fixed to be overthrown by a side wind” . This is a crucial indication that consideration has long been regarded as the cardinal ‘badge of enforceability’ in the formulation and variation of contracts in English common law.
...countries, especially developed countries like America, England and Australia etc. use this guideline as a basis to monitor internal transactions. This guideline also reflects the arm’s length price principle. Countries like America could be noted to have over 300 pages on this topic. But the enactment of these regulations as a basis to monitor abusive transfer pricing is lagging in undeveloped and developing countries. The damaging effects of the transfer policy could be limited if the international co-ordination amongst countries tax authorities are enhanced.
This seminar paper will dwell on the topic of Lloyd’s of London. It will shortly focus on the origin of Lloyd’s and its path to becoming a specific integral part in the world of insurance. Once the background is covered, it will explain how Lloyd’s is structured and organized while elaborating how participants in the market operate and interact with each other. Afterwards, several types of risks that are part of Lloyd’s business will be explained. By underwriting risk Lloyd’s take upon them to smooth the entire process and for this purpose they have developed means of insuring that all claims can be met.
Fishing industries pull up their nets and see all kinds of species. All the fish that are unwanted get thrown back dead or barley living. About 1,500,000 unwanted fish are caught by nets and killed every year. Finally, “Ghost nets” or forgotten nets get left in the waters and kill many species. Every year there are about 640,000 tons of nets left in the water. This is even worse because many of them never get out of the water. Divers try to get the nets out of the water, but it takes many trips and some can weigh 10,000 pounds. It is also bad for fisherman because when they cast and reel in there lures can get caught and they won't get them back. Bycatch and net fishing is a growing problem. It's ruining our environment. It doesn't benefit anyone, including the fisherman because it’s killing their stock and taking anglers fishing lures. It also a danger to the divers. The people who fish, and take more than the bag limit can harm the future of fishing.
...easures pertaining to the micro stability of the intermediaries can be subdivided into two categories; general rules on the stability of all business enterprises and entrepreneurial activities, such as the legally required amount of capital, borrowing limits and integrity requirements; and more specific rules due to the special nature of financial intermediation, such as risk based capital ratios, limits to portfolio investments and the regulation of off-balance activities. [White 1996] References Z Bodie, A Kane and A J Marcus. "Investments". 5th Ed. Irwin 2000. E J Elton and M J Gruber. "Modern Portfolio Theory and Investment Analysis". John Wiley 5th Edition 1995. White L., 1996, "International Regulation of Securities Markets: Competition or Harmonization?” in Lo A. (ed), The Industrial organization and Regulation of the Securities Industry, NBER, Cambridge
There are several trade specific financial methods, which are used to service trade. The common form is to issue a bill of exchange where the buyer gives the seller the right to draw his account on a specific date and amount. These bills are most often conditional to some form of duty to be made before the payment goes trough. Further is possible for the buyer to issue document against payment (D/P). This gives the buyer possibilities to retain payment until he receives the documents according to the sales contract. The seller retains the goods until he receives payment. The similar document against acceptance (D/A) also gives the buyer the possibility to retain credit from the bank on the behalf of the seller. The sellers bank is then in charge of collecting the payment. Th...
Kanamugire J.C., 2013,’The requirement of advantage to creditors in South African Insolvency Law- A critical appraisal’, Mediterranean Journal of Social Sciences 4(13), viewed 23 March 2014, from http://www.mcser.org/journal/index.php/mjss/article/view/1484