Практический курс английского языка = Practical Course of English for Students of Economics. Учебное пособие для студентов экономических специальносте

tomer may ask the contractor to purchase a surety bond, a bond that provides monetary compensation if the bonded party fails to meet the performance terms of a contract. If the contractor fails to meet the completion deadline, the surety bond will compensate the customer for the face amount of the policy. Without the surety bond, the contractor might be obligated to compensate the customer directly.

A related type of insurance protects the company against the criminal acts of others. This is especially important in the case of burglary, robbery, and theft. Each of these perils requires a separate policy, because the risks differ and require different premiums. Burglary insurance covers losses when the company’s property is taken by forced entry. If a “cat burglar” breaks into the premises at night and steals expensive display items, burglary insurance will cover the loss. Robbery insurance covers losses when the company’s property is taken by force or threat of force, such as frequently happens during a holdup of a bank or convenience store. Theft insurance, which is general coverage, applies to all losses due to any act of stealing, including burglary and robbery. Note that employee theft may be covered by either fidelity bonds or theft insurance.

A very important group of insurance policies covers losses due to sickness, injuries, or deaths of employees. Partners may purchase life insurance policies that cover them for the unexpected death of one partner. In this section, however, we focus on insurance that provides benefits to employees and their survivors. This type of insurance, called employee benefit insurance, is for the benefit of employees and is intended to protect them rather than the company in the event of fortuitous loss. Employee benefit insurance includes health insurance, life insurance, and annuities.

Health Insurance. The rising costs of health care have caused great concern for many Americans and their elected officials, including the Clinton administration. Although medical research has led to cures and treatments for many serious illnesses, the costs of treatments may be excessive. In addition to the direct cost of treatment, employees may lose wages and other benefits while they are sick. Health insurance is designed to cover losses suffered by employees due to illness or injury. These policies typically have a deductible amount which the employee pays when the loss occurs.

It is common for employers to provide group health insurance coverage for employees, in which employees pay part of the premium and the employer pays the other part. Health policies typically cover hospital, surgical, and other common expenses. Major medical expenses, such as those for cancer treatment, are often covered by specific clauses in the policy. Many policies require coinsurance for some medical expenses,

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meaning the insured employee must pay a certain percentage of eligible medical expenses, such as 20 percent. In addition, certain costly, experimental medical treatments, such as bone marrow transplants, may be excluded.

Life insurance provides for payment of a stipulated sum to a designated beneficiary upon death of the insured. Life insurance is one of the most important investments wage earners can make for their dependents. As long as the primary wage earner is alive, the well-being of his or her family is reasonably safe. If the primary wage earner dies, however, the family survivors may be hard pressed to find financial support. Life insurance, especially for the primary wage earner, is one of the basic means by which survivors can be assured of a reasonably comfortable lifestyle.

Social insurance programs are provided by government agencies and regulations. Generally, these programs are financed entirely by mandatory contributions from employers and / or employees rather than by general (tax) revenues. The contributions are set aside for the social insurance

Text 4

Mergers and Acquisitions

There is no more dramatic or controversial activity in corporate finance than the acquisition of one firm by another or the merger of two firms. The acquisition of one firm by another is, of course, an investment made under uncertainty. The basic principle of valuation applies: A firm should be acquired if it generates a positive net present value (NPV) to the shareholders of the acquiring firm.

There are three basic legal procedures that one firm can use to acquire another firm: (1) merger or consolidation, (2) acquisition of stock, and (3) acquisition of assets.

A merger refers to the absorption of one firm by another. The acquiring firm retains its name and its identity, and it acquires all of the assets and liabilities of the acquired firm. After a merger, the acquired firm ceases to exist as a separate business entity. A consolidation is the same as a merger except that an entirely new firm is created. In a consolidation, both the acquiring firm and the acquired firm terminate their previous legal existence and become part of the new firm. In a consolidation, the distinction between the acquiring and the acquired firm is not important. However, the rules for mergers and consolidations are basically the same. Acquisitions by merger and consolidation result in combinations of the assets and liabilities of acquired and acquiring firms.

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There are some advantages and some disadvantages to using a merger to acquire a firm:

1.A merger is legally straightforward and does not cost as much as other forms of acquisition. It avoids the necessity of transferring title of each individual asset of the acquired firm to the acquiring firm.

2.A merger must be approved by a vote of the stockholders of each firm. Typically, two thirds of the shares are required for approval. In addition, shareholders of the acquired firm have appraisal rights. This means that they can demand that their shares be purchased at a fair value by the acquiring firm. Often the acquiring firm and the dissenting shareholders of the acquired firm cannot agree on a fair value, which results in expensive legal proceedings.

The second way to acquire another firm is to purchase the firm’s voting stock in exchange for cash, shares of stock, or other securities. This may start as a private offer from the management of one firm to another. At some point the offer is taken directly to the selling firm’s stockholders. This can be accomplished by use of a tender offer. A tender offer is a public offer to buy shares of a target firm. It is made by one firm directly to the shareholders of another firm. The offer is communicated to the target firm’s shareholders by public announcements such as newspaper advertisement. Sometimes a general mailing is used in a tender offer. However, a general mailing is very difficult because it requires the names and addresses of the stockholder record, which are not usually available.

One firm can acquire another firm by buying all of its assets. A formal vote of the shareholders of the selling firm is required. This approach to acquisition will avoid the potential problem of having minority shareholders, which can occur in an acquisition of stock. Acquisition of assets involves transferring title to assets. The legal process of transferring assets can be costly.

Financial analysts have typically classified acquisitions into three types:

1.Horizontal Acquisition. This is an acquisition of a firm in the same industry as the acquiring firm. The firms compete with each other in their product market.

2.Vertical Acquisition. A vertical acquisition involves firms at different steps of the production process. The acquisition by an airline company of a travel agency would be a vertical acquisition.

3.Conglomerate Acquisition. The acquiring firm and the acquired firm are not related to each other. The acquisition of a food-products firm by a computer firm would be considered a conglomerate acquisition.

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Unit 7

B U S I N E S S L A W

Text 1

Dispute resolving

Almost all the day-to-day activities of a business create potential for a civil dispute: a supplier may fail to deliver goods under a contract; a customer may refuse to pay a bill; one of the business’s products may injure a consumer; an employee may be injured in a manufacturing plant; a marketing plan may involve restraint of trade. Although good business managers attempt to minimize the potential for dispute through careful planning, even the best-run businesses cannot avoid them.

Litigation. A business that becomes engaged in a legal dispute may resort to litigation, contesting the claim in court, to resolve it. Because litigation has become increasingly time-consuming and costly, however, it often is not the best method for resolving a business dispute. The formal procedures of litigation can require a business and its employees to devote valuable time to collecting and reviewing evidence, meeting with attorneys, and attending court hearings. Further costs are incurred to retain attorneys who must draft documents, attend court hearings, review evidence and legal precedent, interview witnesses, and otherwise plan for trial. Litigation rarely resolves a dispute quickly. Complex business issues may further protract proceedings because the judge or jury is not familiar with economic, scientific, or other specialized information. Even after trial, the case may be prolonged by appeal. Litigation also often creates hostility between the parties, a result that is especially detrimental if the parties must maintain a business relationship such as a long-term contract or employer-employee relationship. Moreover, because court proceedings and documents generally are open to the public, a litigated case may produce adverse publicity for a business or the opportunity for its competitors to obtain valuable information. In addition, a successful plaintiff does not have the benefit of the damage award until the case is resolved and the judgment collected. Finally, even a strong case can be lost, and uncertainty regarding the outcome of a case often adversely affects both parties’ ability to plan operations.

Because of the expense, delay, and uncertainty of litigation, most civil disputes involving businesses are resolved using alternative dispute resolution (ADR), processes. ADR encompasses a variety of procedures including time-tested techniques such as negotiation, mediation, and arbitration, as well as recent innovations such as minitrials and private

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trials. Although ADR is available to resolve any legal controversy, many ADR techniques are particularly suitable for resolving business disputes.

Almost all ADR techniques emphasize quick resolution of disputes using informal procedures and allow the parties to avoid crowded court dockets and the protracted appellate process. The appropriate method for resolving a specific dispute depends on a number of factors including the nature of the dispute and the relationship of the parties.

Negotiation. The vast majority of business disputes are resolved through negotiation, a process by which two parties with differing demands reach an agreement generally through compromise and concession. Whether negotiation is informal (for instance, one or more telephone conversations between two business people), or formally structured (such as a meeting or meetings scheduled solely to resolve the dispute), the negotiation process generally follows a similar format. After defining their positions and communicating them to one another, the parties usually engage in a period of discussion, oral or in writing, in which they analyze the strengths and weaknesses of the other. Finally, one or both of the parties propose solutions usually requiring concessions by each. If the parties can mutually agree on appropriate concessions, the dispute will be resolved. Without agreement, the parties eventually become deadlocked, and resort to more formal dispute resolution techniques.

Negotiation is the simplest and most efficient method of dispute resolution, provided the parties truly desire to resolve their differences. Although effective negotiating skills and strategies can be learned in business schools and other programs, negotiating parties also should be knowledgeable about the legal principles underlying their dispute. Many businesses, therefore, either consult with their attorneys throughout the negotiation process or refer the matter to their attorneys who then negotiate the dispute on behalf of their clients.

Mediation. If disputing parties reach a deadlock, they may seek the assistance of a third party to resolve the controversy. Mediation is a relatively informal process in which a neutral third party, the mediator, helps resolve a dispute. A mediator generally has no power to impose a resolution. In many respects, therefore, mediation can be considered as structured negotiation in which the mediator facilitates the process. Although mediators use different techniques and strategies, the mediator usually initiates the process by meeting with the disputing parties, either individually or jointly, to explain the mediation process and to gather information about the parties and their dispute. The mediator then attempts to define the issues, establish an agenda for mediation, and preserve an atmosphere conducive to communication. Through meetings with the

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parties, the mediator assists them in generating options for settlement and assessing the options. Finally, the mediator helps the parties reach concessions and compromises that will lead to a final settlement. If a resolution is reached, the mediator may help reduce the agreement to writing and work with the parties to implement the agreement.

A good mediator knows strategies and techniques to facilitate communication, minimize distrust and help develop alternatives when the parties are unable to achieve these goals without guidance. If the mediator also has expertise in the subject area of the dispute, the mediation process can expedite a fair resolution. The primary disadvantage of mediation is the mediator’s lack of power to impose a binding resolution.

Arbitration. Like mediation, arbitration uses a neutral third party to resolve a dispute. Unlike the mediator, however, an arbitrator generally is empowered to impose a binding decision that resolves the dispute and that may be enforced by a court if the parties fail to comply. Unlike the court, which is a branch of government, the arbitrator derives its power to impose a binding decision from an express contract, the arbitration agreement, between the parties. Most frequently, parties to a contract include a provision requiring any disputes arising under the contract to be resolved through arbitration. Alternatively, parties may enter into an arbitration agreement, sometimes called an Ad Hoc agreement, after a dispute arises. Many arbitration agreements provide for a panel of three arbitrators, who reach a decision by majority vote.

The arbitration contract may establish all of the rules for the arbitration process, including selection of the arbitrator, designation of the site for the arbitration, procedures for presentation of evidence, and deadlines for hearings and the decision.

Text 2

Protecting the Product Idea

In the past few decades, our society has added information and innovation to the formula for producing wealth. Now, knowledge is considered every bit as much a factor in making money as labour, capital, land, plant, and equipment. Moreover, ideas are important “assets” of a company. Consequently, the law affords ideas protection.

Any tangible medium of expression, such as writings, sound recordings, motion pictures, sculptures, notated choreographic works are copyrightable. Copyrights protect the creators of literary, dramatic, musical, artistic, and other intellectual works. Copyright law covers reproduction by photocopying, video tape, and magnetic storage.

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To obtain Copyright protection, the word copyright (or its abbreviation) or the symbol must be on copies along with the author’s name and the year of copyright.

The Copyright Office will issue a copyright to the creator or to whomever the creator has granted the right to reproduce the work. (A book, for example, may be copyrighted by the author or the publisher.) Copyrights issued after 1977 are valid for the lifetime of the creator plus 50 years. Copyrights issued prior to 1977 are good for 75 years.

Technically, copyright protection exists from the moment you create the material. When you distribute a work, place on the copies a notice that includes the term “copyright” or an abbreviation, the name of the author or creator, and the year of publication or production – for example, “Copyright 1986 Jane Doe.”

Choosing a new name for a product is no easy task since there are about 1 million brand names in the US alone. Marketing impact is not the only consideration in the naming of a product. The scheme of laws surrounding product names and symbols must be consulted before selecting a new name.

A trademark is any word, name, symbol, or device used to distinguish the product of one manufacturer from those made by others. A service mark is the same thing for services. McDonald’s golden arches are one of the most visible of modern trademarks. Brand names can also be registered as trademarks. Examples are Exxon, Polaroid, and Chevrolet. If properly registered and renewed every 20 years, a trademark generally belongs to its owner forever. Among the exceptions are popular brand names that have become generic terms, meaning that they describe a whole class of products. A brand-name trademark can become a generic term if the trademark has been allowed to expire, if it has been incorrectly used by its owner. Trademarks and service marks comprise most of the marks protected under state and federal law.

A collective mark is a trademark or service mark used by members of a collective group, such as a union or trade association, to identify that its goods or services are produced by members of the group. Many realtors, for example, display a symbol reading “MLS” indicating that they are members of Multiple Listing Service, a real estate cooperative. A certification mark is a mark that attests to a specified quality, material, or origin from a certain region. The symbol “UL,” for example, certifies that a product is in compliance with the standards of Underwriters’ Laboratories, Inc.

A patent protects the invention or discovery of a new and useful process, an article of manufacture, a machine, a chemical substance, or an improvement on any of these. Issued by the Patent Office, a patent

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grants the owner the right to exclude others from making, using, or selling the invention for 17 years. After that time, the patent becomes available for common use. On the one hand, patent law guarantees the originator the right to use the discovery exclusively for a relatively long period of time, thus encouraging people to devise new machines, gadgets, and processes. On the other hand, it also ensures that rights to the new item will be released eventually. Other enterprises may be able to make use of it more creatively than its originator. Not all inventions are patentable. The Patent Act empowers the federal government to grant three general types of patents: utility patents, design patents, and plant patents.

One of the best variant of protecting product ideas is the law of trade secrets.

As the term indicates, the subject of a trade secret must be secret— not generally known to the public or to other competitors in the trade or business. It may or may not be patentable. Novelty, as used in patent law, is not required. Unlike patents, which confer a right to exclude all others from using the invention, trade secrets are protected against unauthorized use only if the secret is obtained through a breach of a confidential relationship or other improper means. Thus, an employer who confides the secret to key employees under an express or implied restriction against disclosure or use would be protected if the employees subsequently used the secret for personal use or disclosed it to a competitor. In addition, the holder of a trade secret is protected against knowledge gained by improper means such as physical force, burglary, theft, wiretapping, or other forms of industrial espionage. The trade secret holder, accordingly, is not protected against discovery of the secret by honest means, independent invention, or reverse engineering (analyzing the product embodying the secret to determine how it was developed or manufactured). Thus, tort liability is imposed not for using a trade secret, but rather for employing improper means to procure it. A patent provides in some ways more, and in other ways less, protection than a trade secret. For example, trade secrets may last indefinitely and are not limited to patentable inventions. In contrast, patent law protects inventions that are not secret even against persons who independently and honestly discover the patented product or process.

Text 3

International Law

International law, often known as “public international law” or the “law of nations,” is the system of law that governs relationships among states. A state exhibits three basic characteristics: it must have a terri-

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tory, a population, and a sovereign government capable of controlling its territory and conducting international relations with other states. States possess sovereignty, which might be viewed as the supreme political authority from which the state derives other specific political powers. Sovereignty provides the international independence of a state and the right and power to regulate its internal affairs free of foreign interference.

International law should be distinguished from an individual state’s internal law, also known as its “national,” “municipal,” or “local” law. A country’s national law may affect various aspects of international relations, though the extraterritorial effect of one country’s law is necessarily limited by the sovereignty of other countries. For example, almost every country has developed a system of private international law, a branch of conflicts of law that determines (1) when a domestic court should exercise jurisdiction over a case involving foreign persons or territories, (2) when foreign rather than domestic law should apply to a case, and (3) when judgments rendered by foreign courts should be recognized and enforced in a domestic court.

In the United States and other countries a legislature enacts law. The executive, among other functions, enforces it and the judiciary tries violations of criminal law and resolves civil disputes. Violations of law are backed by legal sanctions including money damages, injunctions, fines, and imprisonment. Among the sovereign states no centralized legislature exists, no court possesses mandatory jurisdiction, and no executive body imposes legally enforceable sanctions. This lack of sanctions—lack of an obligatory judicial forum whose judgments are enforceable by executive authority – has led some observers to conclude that the norms that govern human conduct in the world arena are not “law,” in the traditional sense of the term, at all. Nevertheless, states normally obey principles of international law, which are derived from consensus or formal agreement, because it is in their individual self-interest to do so. States are few in number and cannot move; economic and other needs force most states to cooperate with their neighbors and to be reasonably reliable in international dealing. Violation of a rule may lead to retaliation by other states, an unacceptable result in light of increasing interdependence among states.

Modern international law began to develop in the sixteenth and seventeenth centuries, corresponding to the development of modern Western European states. Article 38(1) of the Statute of the International Court of Justice provides the most widely accepted list of the sources of international law. It states:

The Court, whose function is to decide in accordance with international law such disputes as are submitted to it, shall apply:

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(a)international conventions, whether general or particular, establishing rules expressly recognized by the contesting states;

(b)international custom, as evidence of a general practice accepted

as law;

(c)the general principles of law recognized by civilized nations;

(d). . . judicial decisions and the teachings of the most highly qualified publicists of the various nations, as subsidiary means for the determination of rules of law.

Treaties. The first source, “international conventions” refers to treaties. A treaty is an agreement or contract between two or more nations or sovereigns, formally signed by an authorized representative and ratified by the sovereign or supreme power of each state. Because modern technology, communication, and trade have made states increasingly interdependent and willing to cooperate on a variety of common problems, treaties occupy an ever-expanding role in the orderly conduct of international relations. Some address critical national interests of a political character, such as alliances, peace settlements, and bans on atomic testing. Others involve less politically charged relationships between governments and government agencies, such as agreements on foreign aid or cooperation in provision of government services such as weather forecasting. Still others, such as tariff treaties, tax conventions, and treaties of friendship, commerce, and navigation, regulate business relationships between nationals or residents of the participating countries.

Custom. Custom is the original source of international law. A practice is recognized as part of international custom if it involves a consistent course of conduct by a number of states over a considerable period, a recognition that the practice is consistent with or required by international law, and general acquiescence in the practice by other states. Many international customs have been codified in treaties in recent years, providing more precision and predictability in the law.

General Principles of Law. General principles of law provide the third source of international law. These principles, derived primarily from the national law of the developed countries, supplement and fill in the gaps in treaties and customary law, the primary sources of international law. Examples of general legal principles used by international tribunals include estoppel, laches, and res judicata.

Primarily since the end of World War II, treaties have been used to create international organizations using a permanent staff, buildings, and other assets to maintain continuous activity. These organizations play an important role in addressing international legal problems not easily resolved through customary international law, or noninstitutional bilateral or multilateral treaties. The organizations are formed for vari-

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