LAW 531 Week 5 International Law and Business Example

Suppliers in Taiwan, Customers in Europe: International Legal Issues for an Oregon E-Bike Maker

[Student Name]

University of Phoenix

LAW/531: Business Law

Week 5 Assignment

[Instructor Name]

[Date]

Willamette Cycle Works, its partners, plans and figures are composites written for a model paper; this is not legal advice.

The company is international in both directions. Batteries and frames come from suppliers in Taiwan, about 45 percent of its component spending. And its board wants it to begin selling in Germany and the Netherlands, Europe's largest e-bike markets, within two years. This paper analyzes the international legal issues it faces on both sides, from enforcing its supply contracts to meeting European product rules, and recommends steps in order.

Sources of International Business Law

International business law draws on treaties between countries, the national laws of each country involved, international rules developed by organizations and private choices made in contracts (Bagley, 2019). For a sale of goods, the key questions are which law governs the contract, where disputes will be resolved and how decisions will be enforced.

Which Law Governs the Supply Contract

The UN Convention on Contracts for the International Sale of Goods applies automatically to sales between parties whose places of business are in different contracting states, unless they exclude it. The United States is a contracting state; Taiwan is not, because of its international status. The convention therefore does not apply automatically to Willamette's purchases from Taiwan, though it could apply through choice-of-law rules in some cases. Week 3 found that the battery agreement chooses Taiwanese law and courts. That means Willamette's claim for recall costs would be decided under Taiwan's Civil Code by a Taiwanese court, limited by the agreement's cap on liability.

The treaty most textbooks describe for international sales does not reach the company's largest supplier.

Enforcing Claims Across Borders

A judgment from an Oregon court is not automatically enforceable in Taiwan. Taiwan's courts may recognize foreign judgments under conditions including reciprocity, but the process takes time and money. Arbitration offers a more practical path. Most trading nations have joined the New York Convention, which requires courts to recognize and enforce foreign arbitral awards with limited exceptions (Moses, 2017). Taiwan is not a party, but its arbitration law provides for recognizing foreign awards, generally subject to reciprocity. For future contracts, a clause choosing arbitration seated in a neutral, arbitration-friendly city such as Singapore, under established institutional rules, would give Willamette a clearer route to enforcement than litigation.

What the Recall Claim Would Look Like Today

Under the current agreement, Willamette's claim against its battery supplier for the $900,000 recall faces three obstacles: Taiwanese law governs, Taiwanese courts have jurisdiction and the agreement caps recovery at replacement of defective cells. Pursuing it would require hiring Taiwanese counsel, translating documents and arguing that the cap should not apply because of the supplier's own quality failures. Realistically, Willamette's best route is commercial: using its future volume to negotiate a credit against future purchases, while renegotiating terms for the next contract.

Why Legal Institutions Matter for Trade

Berkowitz et al. (2006) found that the quality of exporting countries' legal institutions mattered for trade in complex products more than for simple ones, consistent with the idea that complex products depend on contracts that are hard to specify and enforce. E-bike batteries and controllers are complex products, which helps explain why Willamette's contract terms and dispute options matter so much.

Tariffs and Trade Rules

Imported components face US tariffs that depend on their customs classification and country of origin. Components from Taiwan face ordinary tariff rates, while similar components from mainland China have faced additional duties under trade actions since 2018. Willamette must classify each component correctly, document its origin and monitor trade policy changes, which can raise costs quickly. A customs broker and an annual classification review reduce the risk of underpayment penalties. If Willamette moves some sourcing to other countries to reduce tariff exposure, it must ensure that origin claims are accurate, since misstating origin to avoid duties is a violation.

Export Controls and Sanctions

Exports raise their own rules. E-bikes are not generally controlled items, but some electronic components and software may carry export classification requirements, and US sanctions bar dealings with certain countries and parties. Before shipping to European distributors, Willamette should confirm classifications for its controller and app and screen distributors against government lists. These steps are inexpensive and prevent penalties that can be severe even for unintentional violations. Screening software for a company of Willamette's size costs a few thousand dollars a year, a small price next to the penalties and delays that one violation could bring.

Selling in the European Union

Entering Europe raises product regulation. Electrically power-assisted cycles sold in the European Union must comply with applicable safety requirements, typically demonstrated against the harmonized European standard for such bicycles, and carry conformity marking. Motor power and assisted speed limits define which bikes count as bicycles rather than motor vehicles. Batteries face European battery rules on safety, labeling and take-back. Product liability in the European Union follows its own directive, imposing liability on producers and, in some cases, importers for defective products. Willamette would also need to comply with European data protection law for customer data collected through its app.

Willamette's US models allow assisted speeds above the typical European limit, so it would need European versions with different firmware settings.

Who Will Manage International Compliance

Willamette has no one responsible for international legal matters. As it enters Europe, the in-house lawyer should coordinate outside counsel in Taiwan and the Netherlands, the operations director should own customs and product conformity and the finance team should handle value-added tax registration. A short international compliance calendar, like the domestic one recommended in Week 1, would track registrations, renewals and reporting deadlines in each country. Without clear ownership, the company risks repeating its domestic pattern of reacting to problems after they arise.

Ethical Considerations

Global sourcing also raises questions about labor conditions at suppliers' factories. Willamette's Taiwanese suppliers source cells from several countries. A supplier code of conduct and periodic audits would address both reputation and emerging legal requirements in Europe on supply chain due diligence.

Recommendations

Contracts: renegotiate supply agreements to choose arbitration seated in Singapore, specify governing law and, where both parties are in contracting states, decide whether to apply or exclude the sales convention deliberately.

Customs: hire a customs broker, review classifications annually and document origin.

Europe: build European versions to the applicable standard, appoint an authorized representative or importer, join a battery take-back scheme and appoint a data protection lead.

Sourcing ethics: adopt a supplier code of conduct with audits.

Staging: begin with the Netherlands through one experienced distributor, then expand to Germany.

Conclusion

Willamette's international exposure runs through its supply contracts and its planned European sales. The sales convention does not automatically govern its Taiwanese contracts, enforcement of judgments abroad is uncertain and arbitration offers a better path. Tariffs and customs rules affect costs, and European product, battery, liability and data rules shape entry. Careful contracts, compliance and a staged entry let the company expand without importing new legal risk.

References

Bagley, C. E. (2019). Managers and the legal environment: Strategies for business (9th ed.). Cengage Learning.

Berkowitz, D., Moenius, J., & Pistor, K. (2006). Trade, law, and product complexity. Review of Economics and Statistics, 88(2), 363-373. https://doi.org/10.1162/rest.88.2.363

Moses, M. L. (2017). The principles and practice of international commercial arbitration (3rd ed.). Cambridge University Press.