Text IV. PRODUCT SAFETY AND PRODUCT LIABILITY
Product safety laws set certain safety standards to which a product must adhere. Product liability involves holding a firm and its officers responsible when their product causes injury, death, or damage. Product liability can be much greater if a product does not conform to required safety standards. There are both civil and criminal product liability laws. Civil laws call for payment and money damages. Criminal liability laws result in fines or imprisonment. Both civil and criminal liability laws are probably more extensive in the United States than in any other country, although many other Western nations also have comprehensive liability laws. Liability laws are typically least extensive in less developed nations.
A U.S. boom in product liability suit and awards has resulted in a dramatic increase in the cost of liability insurance. In turn, many business executives argue that the high cost of liability insurance makes American businesses less competitive in the global marketplace. This view was supported by the Bush administration. Former Vice President Dan Quayle once argued that the United States has too many lawyers and that product liability awards are too large. According to Quayle, product liability insurance rates are typically much lower overseas, thereby giving foreign firms a competitive advantage. Quayle does have a point; tort costs amount to about 2.4 percent of U.S. GDP, three times as much as in any other industrialized country. So the costs of lawsuits does seem to put America at a competitive disadvantage.
Aside from the competitiveness issue, country differences in product safety and liability laws raise an important ethical issue for firms doing business abroad. Specifically, when product safety laws are tougher in a firm’s home country than in a foreign country, or when liability laws are more lax, should a firm doing business in that foreign country adhere to the more relaxed local standards, or should it follow the standards of its home country? While the ethical thing to do is to adhere to home country standards, firms have been know to take advantage of lax safety and liability laws to do business in a manner that would not be allowed at home.
Vocabulary notes
comprehensive - разумный
liability -ответственность
to adhere to – придерживаться (правил)
tort –гражданско-правовой деликт
lax rules –либеральные правила
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competitiveness issue –проблема конкуренции
Scanning reading
You are going to scan the text about Product Safety and Product Liability. Before you start doing that try to answer the following questions:
- Why did the EU ban the use of growth-promoting hormones in livestock and impose a ban on the import of beef produced with such hormones? (It was in 1988)
- Some years ago Bushe’s chickens were forbidden for selling in Ukraine. Was it a justified barrier to trade? Give your idea.
- Do you know any updated regulations related to food safety and animal health?
- What Ukrainian food products would you recommend for selling abroad?
Now scan the text and speak:
- About civil and criminal product liability laws.
- About the difference of product-safety laws in a home country and abroad and say if it is the right thing.
Text V. CONTRCT LAW
A contract is a document that specifies the conditions under which an exchange is to occur and details the rights and obligations of the parties to a contract. Many business transactions are regulated by some from of contract. Contract law is the body of law that governs contract enforcement. The parties to an agreement normally resort to contract law when one party believes the other has violated either the letter or the spirit of an agreement.
Contract law can differ significantly across countries, and as such it affects the kind of contracts that an international business will want to use to safeguard its position should a contract dispute arise. The main differences can be traced to variations in legal tradition. The two main legal traditions found in the world today are the common law system and the civil law system.
The common law system evolved in England over hundreds of years. It is now found in most of Britain’s former colonies, including the United States. Common law is based on tradition, precedent and custom. When law courts interpret common law, they do so with regard to these characteristics.
Civil law based on a very detailed set of laws that are organized into codes. Among other things, these codes define the laws that govern business transactions. When law courts interpret civil law, they do so with regard to these codes. Over 80 countries, including Germany, France, Japan, and Russia, operate with a civil law system. Since common law tends to be relatively ill specified, contracts drafted under a common law framework tend to be very detailed with all contingencies spelled out. In civil law systems, however, contracts tend to be much shorter and less specific, since many of the issues typically covered in a common law contract are already covered in a civil code.
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Vocabulary notes
transaction –ведение дел, сделка
enforcement –соблюдение, реализация (мероприятий)
to resort to –ссылаться на что-то
to evolve –развиваться
contingencies –случайность, возможные обстоятельства
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