Unit 4.1. Introduction to Foreign Trade

Unit 4.1. Introduction to Foreign Trade

I. Pre-reading task

Before you read, look at the title. What do you expect the text to be about?

II. Read the text to fulfill the tasks

1. Definition of foreign trade. Tariffs in foreign trade. As we know, people have been trading since ancient times. In the global economy goods and services are exchanged across national boundaries in a process described as "international trade". Goods we purchase from abroad are known as imports. Those sold by us to foreign countries are exports.

Trade among nations takes place for the same reasons that it does within a nation: to obtain goods and services that a region could not produce itself, or to obtain them at a lower cost than they could be produced for at home. This is explained by the principle of comparative advantage, which states that as long as the opportunity costs to produce items differ between two nations, both will profit by specializing in those things that they produce most efficiently and exchanging their surpluses. Despite the many advantages of international trade, most nations have been erecting artificial barriers to the trade for ages. These barriers are usually in the form of tariffs or quotas. A tariff is a duty, or tax, on imports. There are two basic types of tariffs. Revenue Tariffs are levied as a way to raise money. Protective Tariffs are levied to protect a domestic industry from foreign competition. The goal is to make the foreign product more expensive then a similar item produced by a domestic producer. Then people will stop buying the foreign-made item and purchase its domestic counterpart. Restrictions on the numbers of certain specified goods that can enter the country from abroad are called quotas. Like protective tariffs, quotas limit the amount of foreign competition a protected industry will have to face.

2. Other devices affecting trade. There are a number of other devices that directly affect the free flow of trade among nations. One of these is export subsidy- a payment by a country to its exporters that enables them to sell their products abroad at a lower price than they could sell them for at home. Selling the same product for a lower price abroad than at home is called dumping.

Imports must be paid for in a currency that is acceptable to the seller. In order to facilitate these transactions, there is a market for the currencies of all trading nations. The selling price of one nation's currency in terms of the currencies of other nations is known as its "exchange rate". Exchange rates fluctuate in accordance with the laws of supply and demand.

When the value of a nation's currency is decreasing in terms of other currencies, its exports are likely to increase because they will be less expensive to people in foreign countries. Imports, in these circumstances are likely to decrease because foreign goods will become more expensive. When a nation's currency is appreciating in terms of other currencies, the opposite is likely to occur.

The balance of payments summarize the transactions that have been going on in international trade for a given period of time, usually one year. Economists look to the balance of payments for clues to future trends in the value of a nation's currency and other consequences of its foreign trade.

Text-study

III. Learn the following words

abroad – за границей

acceptable – приемлемый

in accordance with – в соответствии с

artificial - искусственный

balance of payment – платежный баланс

boundaries – границы

circumstances – обстоятельства

dumping – заниматься демпингом (выбросить товар на рынок в большом количестве)

exchange rate – обменный курс

fluctuate – колебаться

goal – цель

levy – облагать налогом, взимать налоги

opportunity costs – оптимальные издержки или доход (при наиболее эффективном использовании факторов производства)

revenue tariff – фискальный тариф

surplus – избыток, перенасыщение рынка

in terms of – исходя из

transaction – сделка

Unit 4.2. The Contract

I. Pre-reading task

Text-study

III. Learn the following words and their definitions:

Breach of contract: a legally inexcusable failure to perform a contractual obligation

Commit (here): bind or obligate

Contract: an agreement between two or more people enforceable in a court law

Damages: the award of money assessed to compensate for financial loss to the injured party in a lawsuit

Execute a contract: to fulfill all of the terms of a contract

Executory contract: the contract which still has some provisions to be complied with

Express contract: the contract which has all of its provisions agreed upon by the parties

Implied contract: the contract created by the behaviour of the parties

Lease: an agreement by which the owner of real estate rents and permits it to be used by a tenant

Void: means “without any legal or effectual force to bind”

IV. Answer the following questions:

1. What kind of contracts are our daily acts based on?

2. What is a contract in terms of law?

3. What obligations and rights are created by different types of contracts?

V. Translate from English into Russian:

Arrangement made by two or more persons; promise, duty or condition that indicates what action ought to be taken; to get up; one of the persons or sides in a legal agreement or dispute; piece of business; to bring upon oneself; to gain by one’s own efforts; something one may do or have by law, special favour on benefit; breaking or neglect of a rule, duty, agreement, etc.; inability to do something.

VI. Translate from Russian into English:

Правовое обязательство; заключать соглашения; имеющий исковую силу; участники сделки; брать на себя обязательства; заключать контракт; приобретать права; выполнять обещание; право на возмещение; взаимные обещания; нарушение договора; контракт, условия которого выполнены обеими сторонами; ничтожный и не имеющий юридической силы; избегать ответственности; контракт, выполнение которого не завершено или близко к завершению; недействительный договор; несовершеннолетний; подробно излагать; договор страхования.

Interpretation of Contracts

Contracts are not always clear-cut. Disputes may arise as to a contract’s meaning or its terms of enforcement. Sometimes these arguments result in attempts to have the contract enforced in court. The purpose of any contract litigation is to interpret what the parties originally put in writing. To provide uniform guidelines for interpretation, the law has developed many rules for courts and lawyers to follow.

One of these rules is the parole evidence rule. In contract law, “parole” refers to oral and written statements. If two persons have signed a written contract and intended it to express the full terms of their agreement, no court, in interpreting that contract, will admit as evidence any written or oral statements made prior to the signing of the written contract. Thus, a person cannot contradict or vary the term of a written contract by introducing for the court’s consideration evidence of discussions that occurred before the written agreement was signed.

There are exceptions to the parole evidence rule. The law allows the introduction of parole evidence if there is some indication that a purported contract is the result of fraud, duress, or illegality. In any of these circumstances, a binding contract does not exist. Second, parole evidence is admissible to show that the written agreement does not include all terms of the contract. The third exception arises when the terms of a contract are vague or ambiguous. In this case oral evidence can be introduced to help clarify the meaning of the contract. For example, it may include the term “barrel”. In the oil industry, a barrel means forty gallons. However, in the beer industry, a barrel refers to thirty gallons. In this situation oral evidence would be permitted to explain the usage of the term in the contract.

Other rules of interpretation state that words be given their plain and usual meaning, except when customary business usage indicates a special meaning, or when a technical word is defined. Obvious mistakes of grammar or punctuation are corrected by the courts. However, ambiguous words will generally be construed more unfavorably against the party who used them. Of there is a conflict between a printed word and a written word, the written word will govern. So also, when there is a conflict between a figure number and a written numeral, the written version will prevail.

Although these rules may seem unyielding, their purpose is to help the court interpret the contract in a manner that best expresses the intent of those who made it.

 

Unit 4.1. Introduction to Foreign Trade

I. Pre-reading task