International Chamber of Commerce
The International Chamber of Commerce (ICC) is an international organization that
works to promote and support global trade and globalization. It serves as an advocate
of world business in the global economy, in the interests of economic growth, job
creation, and prosperity. As a global business organization, made up of member states,
it helps the development of global outlooks on business matters. ICC has direct
access to national governments worldwide through its national committees among others.
To attain this objective, ICC has developed a range of activities. The ICC International
Court of Arbitration is the most respected service of its kind in the world. Its
voluntary rule-writing for business spreads best practice in areas as varied as
banking, marketing, anti-corruption and environmental management. Their policy-making
and advocacy work keeps national governments, the United Nations system and other
global bodies apprised of the views of the world business on some of the most pressing
issues of the day.
History
The ICC was founded in 1919 to serve world business by promoting trade and investment,
open markets for goods and services, and the free flow of capital. The organization's
international secretariat was established in Paris and the ICC's International Court
of Arbitration was created in 1923. ICC's first president was Etienne Clementel.
In December 2004 the World Council elected Yong Sung Park as the Chairman of ICC,
Marcus Wallenberg as the Vice-Chairman and Jean-Rene Fourtou as the Honorary Chairman.
In June 2005, Guy Sebban was elected International Secretariat by the World Council.
Initially representing the private sectors of Belgium, Britain, France, Italy and
the United States, it expanded to represent worldwide business organizations in
around 130 countries
Dispute Resolution Services
ICC International Court of Arbitration continues to provide the most trusted system
of commercial arbitration in the world, having received 14000 cases since its inception
in 1923. Over the past decade, the Court's workload has considerably expanded as
its reputation for fast, flexible dispute resolution services spreads around the
globe. The Court's membership has also grown and now covers 86 countries. With representatives
in North America, Latin and Central America, Africa and the Middle East and Asia,
the ICC Court has significantly increased its training activities on all continents
and in all major languages used in international trade. In the world of international
commerce, the ICC is perhaps best known for its role in promoting and administering
international arbitration as a means to resolve disputes arising under international
contracts. It is one of the world's premier and leading institutions in providing
international dispute resolution services, together with the American Arbitration
Association, the London Court of International Arbitration (LCIA), the Singapore
International Arbitration Centre (SIAC), and the Stockholm Chamber of Commerce.
It is common for international commercial contracts to provide for an agreed means
of resolving any disputes that may arise, and the ICC is one of leading institutions
for administering international arbitration. The ICC's dispute resolution services
also include ADR procedures such as mediation and expert determinations.
BASCAP
With the launch of ICC's BASCAP initiative, more than 130 companies and trade associations
are now actively engaged in a set of projects designed to defeat the pirates and
increase public and political awareness of the economic and social harm caused by
this illegal activity. BASCAP is using ICC's global media network and national committee
structure to spread the word. BASCAP was launched in 2004 by the then ICC Chairman,
Jean-Rene Fourtou, and its an operational platform established by ICC that connects
all business sectors and cuts across all national borders, drawing them together
to ensure that their message is clearly heard by governments and the public. BASCAP
is prepared for a sustained effort to end this scourge. As the only business organization
with a truky global reach, ICC is well placed to take the fight against counterfeiting
to the level required for action to be effective
When commercial traders enter into a contract for the purchase and sale of goods
they are free to negotiate specific terms of their contract. These terms include
the price, quantity, and characteristics of the goods. Every international contract
will also contain what is referred to as an Incoterm (international commercial term).
The Incoterm selected by the parties to the transaction will determine which party
pays the cost of each segment of transport, who is responsible for loading & unloading
of goods, and who bears the risk of loss at any given point during a given international
shipment. Incoterms also influence Customs valuation basis of imported merchandise.
Incoterms are overseen and administered by the International Chamber of Commerce
in Paris and are adhered to by the major trading nations of the world. There are
currently 13 Incoterms in use, and they can be considered on the basis cited above.
All the current Incoterms are described on this website.
Letter of Credit
A letter of credit is a document issued mostly by a financial institution which
usually provides an irrevocable payment undertaking (it can also be revocable, confirmed,
unconfirmed, transferable or others e.g. back to back: revolving but is most commonly
irrevocable/confirmed) to a beneficiary against complying documents as stated in
the Letter of Credit. Letter of Credit is abbreviated as an LC or L/C, and often
is referred to as a documentary credit, abbreviated as DC or D/C, documentary letter
of credit, or simply as credit (as in the UCP 500 and UCP 600). Once the beneficiary
or a presenting bank acting on its behalf, makes a presentation to the issuing bank
or confirming bank, if any, within the expiry date of the LC, comprising documents
complying with the terms and conditions of the LC, the applicable UCP and international
standard banking practice, the issuing bank or confirming bank, if any, is obliged
to honour irrespective of any instructions from the applicant to the contrary. In
other words, the obligation to honour (usually payment) is shifted from the applicant
to the issuing bank or confirming bank, if any. Non-banks can also issue letters
of credit however parties must balance potential risks. The LC can also be the source
of payment for a transaction, meaning that an exporter will get paid by redeeming
the letter of credit. Letters of credit are used nowadays primarily in ,internationa
trade transactions of significant value, for deals between a supplier in one country
and a wholesale customer in another. They are also used in the land development
process to ensure that approved public facilities (streets, sidewalks, stormwater
ponds, etc.) will be built. The parties to a letter of credit are usually a beneficiary
who is to receive the money, the issuing bank of whom the applicant is a client,
and the advising bank of whom the beneficiary is a client. Since nowadays almost
all letters of credit are irrevocable, (i.e. cannot be amended or cancelled without
prior agreement of the beneficiary, the issuing bank and the confirming bank, if
any). However, the applicant is not a party to the letter of credit. In executing
a transaction, letters of credit incorporate functions common to giros and Traveler's
cheques. Typically, the documents a beneficiary has to present in order to avail
himself of the credit, are commercial invoice, bill of lading, insurance documents.
However, the list and form of documents is open to imagination and negotiation and
might contain requirements to present documents issued by a neutral third party
evidencing the quality of the goods shipped.
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Contents
1
Terminology
2
How it works
3
Legal principles governing documentary credits
4
The price of LCs
5
Legal Basis for Letters of Credit
6
Risks in International Trade
7
See also
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The English name “letter of credit” derives from the French word “accreditif”, a
power to do something, which in turn is derivative of the Latin word “accreditivus”,
meaning trust.[1] This in effect reflects the modern understanding of the instrument.
When a seller agrees to be paid by means of a letter of credit s/he is looking at
a reliable bank that has an obligation to pay them the amount stipulated in the
credit notwithstanding any defence relating to the underlying contract of sale.
This is as long as the seller performs their duties to an extent that meets the
credit terms.
Imagine that a business called the WAPRO from time to time imports steel from a
business called MIL, which banks with the India Business Bank. WAPRO holds an account
at the Commonwealth Financials. WAPRO wants to buy $500,000 worth of merchandise
from MIL, who agree to sell the goods and give WAPRO 60 days to pay for them, on
the condition that they are provided with a 90-day LC for the full amount. The steps
to get the letter of credit would be as follows:
WAPRO goes to The Commonwealth Financials and requests a $500,000 letter of credit,
with MIL as the beneficiary.
The Commonwealth Financials can issue an LC either on approval of a standard
loan underwriting process or by WAPRO funding
it directly with a deposit of $500,000 plus fees between 1% and 8%.
The Commonwealth Financials sends a copy of the LC to the India Business Bank, which
notifies the MIL that payment is ready and they can ship the merchandise WAPRO has
ordered with the full assurance of payment to them.
On presentation of the stipulated documents in the letter of credit and compliance
with the terms and conditions of the letter of credit, the Commonwealth Financials
transfers the $500,000 to the India Business Bank, which then credits the account
to the MIL by that amount.
Note that banks deal only with documents under the letter of credit and not the
underlying transaction.
Many exporters have misunderstood that the payment is guaranteed after receiving
the LC. The issuing bank is obligated to pay under the letter of credit only when
the stipulated documents are presented and the terms and conditions of the letter
of credit have been met accordingly.
One of the primary peculiarities of the documentary credit is that the payment obligation
is abstract and independent from the underlying contract of sale or any other contract
in the transaction. Thus the bank’s obligation is defined by the terms of the credit
alone, and the sale contract is irrelevant. The defences of the buyer arising out
of the sale contract do not concern the bank and in no way affect its liability.[2]
Article 3(a) UCP states this principle clearly. Article 4 the UCP further states
that banks deal with documents only, they are not concerned with the goods (facts).
Accordingly, if the documents tendered by the beneficiary, or his agent, appear
to be in order, then in general the bank is both entitled and obliged to pay without
further qualifications.
The policies behind adopting the abstraction principle are purely commercial and
reflect a party’s expectations:
firstly, if the responsibility for the validity of documents was thrown onto banks,
they would be burdened with investigating the underlying facts of each transaction
and would thus be less inclined to issue documentary credits as the transaction
would involve great risk and inconvenience.
Secondly, documents required under the credit could in certain circumstances be
different from those required under the sale transaction; banks would then be placed
in a dilemma in deciding which terms to follow if required to look behind the credit
agreement.
Thirdly, the fact that the basic function of the credit is to provide the seller
with the certainty of receiving payment, as long as he performs his documentary
duties, suggests that banks should honour their obligation notwithstanding allegations
of misfeasance by the buyer.
Finally, courts have emphasised that buyers always have a remedy for an action upon
the contract of sale, and that it would be a calamity for the business world if,
for every breach of contract between the seller and buyer, a bank were required
to investigate said breach.
The "principle of strict compliance" also aims to make the bank's duty
of effecting payment against documents easy, efficient and quick. Hence, if the
documents tendered under the credit deviate from the language of the credit the
bank is entitled to withhold payment even if the deviation is purely terminological.
The general legal maxim
de minimis non curat lex has no
place in the field of documentary credits.In this phenomenon it is not possible
for the invester to be sure that to get bank money from bank.
The applicant pays the LC fee to the bank, and may in turn charge this on to the
beneficiary. From the bank's point of view, the LC they have issued can be called
upon at any time (subject to the relevant terms and conditions), and the bank then
looks to reclaim this from the applicant
Although documentary credits are enforceable once communicated to the beneficiary,
it is difficult to show any consideration given by the beneficiary to the banker
prior to the tender of documents. In such transactions the undertaking by the beneficiary
to deliver the goods to the applicant is not sufficient consideration for the bank’s
promise because the contract of sale is made before the issuance of the credit,
thus consideration in these circumstances is past. In addition, the performance
of an existing duty under a contract cannot be a valid consideration for a new promise
made by the bank: the delivery of the goods is consideration for enforcing the underlying
contract of sale and cannot be used, as it were, a second time to establish the
enforceability of the bank-beneficiary relation
Legal writers have analyzed every possible theory from every legal angle and failed
to satisfactorily reconcile the bank’s undertaking with any contractual analysis.
The theories include: the implied promise,
assignment
theory, the
novation theory,
reliance theory,
agency theories,
estoppels and
trust
theories,
anticipatory theory, and the
guarantee
theory.
Davis, Treitel, Goode, Finkelstein and Ellinger have all accepted the view that
documentary credits should be analyzed outside the legal framework of contractual
principles, which require the presence of consideration. Accordingly, whether the
documentary credit is referred to as a promise, an undertaking, a chose in action,
an engagement or a contract, it is acceptable in English jurisprudence to treat
it as contractual in nature, despite the fact that it possesses distinctive features,
which make it sui generis.
Even though a couple of countries and US states (see eg Article 5 of the Uniform
Commercial Code) have tried to create statutes to establish the rights of the parties
involved in letter of credit transactions, most parties subject themselves to the
Uniform Customs and Practices (UCP) issued by the
International Chamber
of Commerce (ICC) in Paris.
The ICC has no legislative authority, rather,
representatives of various industry and trade groups from various countries get
together to discuss how to revise the UCP and adapt them to new technologies. The
UCP are quoted according to the publication number the ICC gives them. The UCP 600
are ICC publication No. 600 and will take effect July 1, 2007.
The previous revision
was called UCP 500 and became effective 1993. Since the UCP are not laws, parties
have to include them into their arrangements as normal contractual provisions. It
is interesting to see that in the area of international trade the parties do not
rely on governmental regulations, but rather prefer the speed and ease of auto-regulation
A Credit risk is a risk from a change in the credit of an opposing business.
An Exchange risk is a risk from a change in the foreign exchange rate.
A Force majeure risk is 1. a risk in trade incapability caused by a change in a
country's policy, and 2. a risk caused by a natural disaster.
Other risks are mainly risks caused by a difference in law, language or culture.
In these cases, the cargo might be found late because of a dispute in import and
export dealings.
A Credit risk is a risk from a change in the credit of an opposing business.
An Exchange risk is a risk from a change in the foreign exchange rate.
A Force majeure risk is 1. a risk in trade incapability caused by a change in a
country's policy, and 2. a risk caused by a natural disaster.
Other risks are mainly risks caused by a difference in law, language or culture.
In these cases, the cargo might be found late because of a dispute in import and
export dealings.
In financial economics, a financial institution acts as an agent that provides financial
services for its clients or members. Financial institutions generally fall under
financial regulation from a government authority. Common types of financial institutions
include banks, building societies, credit unions, stock brokerages, asset management
firms, and similar businesses.
—————————————
Contents
1
Function
2
Corporate valuation
3
Governance
—————————————
Financial institutions provide a service as intermediaries of the capital and debt
markets. They are responsible for transferring funds from investors to companies,
in need of those funds.
The presence of financial institutions facilitate the flow
of monies through the economy.
To do so, savings accounts are pooled to mitigate
the risk brought by individual account holders (see adverse selection) in order
to provide funds for loans.
Such is the primary means for depository institutions
to develop revenue. Should the yield curve become inverse, firms in this arena will
offer additional fee-generating services including securities underwriting, sales
& trading, and prime brokerage.
Relative metrics : Price/Equity Price/Book Value
Use Equity Multiples (as opposed to Enterprise Multiples). In order to consider
how valuing a Financial Institution's balance sheet is different from a non-Financial
firm. Consider how an industrials firm wields capital machinery (asset) and the
loans (liabilities) it used to finance that asset. The line is blurred in Financial
Institutions, which must hold deposit accounts (liabilities) to fuel the issuance
of loans (assets). The same accounts are considered loans as they are held in ownership
not of the bank, but of the individual client.
Dividend Discount Model : Earnings-per-share
Dividends-per-share
Discounted Cash Flow (DCF) Model :
You'll need the FCFE (Free Cash Flow for Equity),
which is the amount of money that is returned to shareholders.
Calculate a FCFF (Free Cash Flow to the Firm): EBIT(1-tax rate) - Capital Expenditures + (Depreciation
& Amortization) - (Net increase in working capital) = FCFF
FCFF - Debt + Cash = FCFE
Use the Capital Asset Pricing Model, not the Weighted Average Cost of Capital (for
the same reasons one uses Equity Multiples in relative valuation) to determine the
cost of equity (the return required by shareholders in order to make the decision
to invest in a financial institutions)
Excess Return Model : A model where valuation is expressed as the sum of capital
invested currently in the firm and the present value of dollar excess returns that
the firm expects to make in the future
A beneficiary (also, in trust law, referred to as the cestui que use) in the broadest
sense is a natural person or other legal entity who receives money or other benefits
from a benefactor. The beneficiary of a life insurance policy, for example, is the
person who receives the payment of the amount of insurance after the death of the
insured. The beneficiaries of a trust are the persons with equitable ownership of
the trust assets, although legal title is held by the trustee.
The term is also used in the context of a letter of credit for the party receiving the money related
thereto. Beneficiaries in other contexts are known by other names: for example,
the beneficiaries of a will are called devisees or legatees according to local custom.
A series of beneficiaries may be designated in many cases to designate where the
assets will go if the primary beneficiary or beneficiaries are not alive or do not
qualify under the restrictions in the given contract or legal instrument. Most commonly
the restriction is that the beneficiary be alive, which, if not true, allows the
assets to pass to the contingent beneficiaries.
Other restrictions such as being
married or more creative ones can be used by a benefactor to attempt to control the behavior of the beneficiaries.
Some situations such as retirement accounts do not allow any restrictions beyond death of the primary beneficiaries, but trusts
allow any restrictions that are not illegal or for an illegal purpose.
The concept of a "beneficiary" will also frequently figure in contracts other than insurance policies.
A third party beneficiary of a contract is a person who, although not a party to the contract, the parties intend will benefit from its provisions.
A software distributor, for example, may seek provisions protecting its customers from infringement claims.
A software licensor may include provisions in its agreements which protect those who provided code to that licensor.
Governance is a critical issue for financial institutions as they operate in a substantially
regulated environment. Some of the key governing bodies are: United States
FFIEC
FDIC
NCUA
State governments each often regulate and charter financial institutions
Norway
Financial Supervisory Authority of Norway
International trade is the exchange of goods and services across international boundaries
or territories.[1] In most countries, it represents a significant share of GDP.
While international trade has been present throughout much of history (see Silk
Road, Amber Road), its economic, social, and political importance has been on the
rise in recent centuries. Industrialization, advanced transportation, globalization,
multinational corporations, and outsourcing are all having a major impact. Increasing
international trade is basic to globalization
International trade is also a branch of economics, which, together with international
finance, forms the larger branch of international economics
A traveler's cheque (also travellers cheque, traveler's check, or travelers check)
is a preprinted, fixed-amount cheque designed to allow the person signing it to
make an unconditional payment to someone else as a result of having paid the issuer
(usually a bank) for that privilege.
As a traveler's cheque can usually be replaced
if lost or stolen, they are often used by people on vacation in place of cash. The
use of credit cards has, however, rendered them less important than they previously
were; there are few places that do not accept credit cards but do accept traveler's
cheques – in fact, many places do not now accept the latter.
As a result, Travelex
now also sells "traveller's cheque cards" which are used like credit cards.
Curiously though, American Express, discontinued their own traveler's cheque cards
in mid-2007. American Express announced they would no longer honor the cards effective
October 31, 2007. [1]
Traveler's cheques are available in several currencies such as U.S. dollars, Canadian
dollars, pound sterling, Japanese yen, and euro; denominations usually being 20,
50, or 100 of whatever currency, and are usually sold in pads of five or ten cheques,
e.g., 5 x €20 for €100.
Travelers cheques worth $500 are never printed anywhere(legally).
Traveler's cheques do not expire so unused cheques can be kept by the purchaser
to spend at any time in the future.
The purchaser of a supply of traveler's cheques
effectively gives an interest-free loan to the issuer, which is why it is common
for banks to sell them "commission free" to their customers.
The commission, where it is charged, is usually 1% of the total face value sold.
The largest volume issuer of traveler's cheques is American Express, the first to
develop a large scale traveller's cheque system in 1891.[2] Its invention is traditionally
attributed to American Express employee Marcellus Flemming Berry, after company
president J.C. Fargo had problems in smaller European cities obtaining funds with
a letter of credit (as was the custom then).
Other accounts attribute the development of the traveler's cheque to the London
financial community early in 1772.
Legal terms for the parties to a traveler's cheque are the obligor or issuer, the
organization that produces it; the agent, the bank or other place that sells it;
the purchaser, the natural person who buys it, and the payee, the entity to whom
the purchaser writes the cheque for goods and/or services. For purposes of clearance,
the obligor is both maker and drawee.
A giro, also called a direct deposit, is a banking term for a method of payment.
It is almost the opposite of a cheque. A cheque is given to the payee who deposits
it in his or her bank, whereas a giro is given by the payer to his or her bank,
which transfers funds into the payee's bank, directly into his or her account. Giro
is often used by post offices as well.
The difference is one of 'push' versus 'pull'.
That is, a cheque is a 'pull'-initiated transaction: the presentation of the cheque
by the payee causes the payee's bank to seek the funds from the payer's bank, which
then takes the funds from the payer's account if the funds exist.
If they do not exist, then the cheque "bounces" (is returned to the payee with a message of insufficient
funds).
By contrast, a giro is a 'push'-initiated transaction: the payer directs
his or her bank to take existing funds from his or her account and transfer them
to the payee's bank, where the payee can then draw the funds out. As a result, a
giro cannot "bounce", because the bank will only process the order if the payer
has sufficient funds to cover the payment. However, this also means that the payer
receives no benefit of "float".
History and concept
Giro systems date back at least to Ptolemaic Egypt in the 4th century BC. State
granary deposits functioned as an early banking system, in which giro payments were
accepted, with a central bank in Alexandria. Giro was a common method of money
transfer in early banking.
Postal Giro or Postgiro systems have a long and honourable history in European financial
services. The basic concept is that of a banking system not based on cheques, but
rather by direct transfer between accounts.
If the accounting office is centralised, then transfers between accounts can happen
simultaneously. Money could be paid in or withdrawn from the system at any post
office, and later connections to the commercial banking systems were established,
often by the convenience of the local bank opening its own account at the Postgiro.
By the middle of the 20th century, most countries in continental Europe had a postal
giro service.
The first postgiro system was established in Austria on the early
19th Century. By the time the British Postgiro was conceived, the Dutch Postgiro
was very well established with virtually every adult having a postgiro account with
very large and well used postgiro operations in most other countries in Europe and
Scandinavia.
The term "bank" was not used initially to describe the
service.
The banks' main payment instrument was based on the cheque which has a
totally different remittance model from the "Giro".
In the banking model, cheques are written by the remitter and then handed or posted
to the payee, who must then visit a bank or post the cheque to his bank. The cheque
must then be cleared, a complex process by which cheques are sorted once, posted
to a central clearing location, sorted again, and then posted back to the paying
branch where the cheque is finally checked and then paid.
In the Postal Giro model Giro Transfers are sent through the post by the remitter
to the Giro Centre. On receipt, the transfer is checked and the account transfer
takes place. If the transfer is successful, the transfer document is sent to the
recipient, together with an updated statement of account being credited.
The remitter
is also sent an updated statement. In the case of large utilities receiving thousands
of transactions per day, statements would be sent electronically and incorporate
a reference number uniquely identifying the remittance for reconciliation purposes.
The rise of electronic cheque clearing (and debit cards as preferred instruments
of payment) has made this difference less important than it once was. For example
in some stores in the United States checks are scanned at the cash register and
handed back to the customer while the funds are removed from the customer's account.
Electronic bill payment
Modern electronic bill payment is similar to the use of giro. Advantages include:
Instant access to the funds via an ATM or cheque card.
There is no paper cheque that can be lost, stolen, or forgotten.
Payments made electronically can be less expensive to the payer; typically electronic
payments may cost around 25? (US) vs. up to $2 to generate, print and mail a paper
cheque[citation needed].
In the United States, the Automated Clearing House (ACH), regulated by NACHA-The
Electronic Payments Association and the Federal Reserve Bank, handles all interbank
transfers, including direct deposit and direct withdrawal
A loan is a type of debt. All material things can be lent but this article focuses
exclusively on monetary loans. Like all debt instruments, a loan entails the redistribution
of financial assets over time, between the lender and the borrower.
The borrower initially receives an amount of money from the lender, which they pay
back, usually but not always in regular installments, to the lender. This service
is generally provided at a cost, referred to as interest on the debt. A borrower
may be subject to certain restrictions known as loan covenants under the terms of
the loan.
Acting as a provider of loans is one of the principal tasks for financial institutions.
For other institutions, issuing of debt contracts such as bonds is a typical source
of funding. Bank loans and credit are one way to increase the money supply.
Legally, a loan is a contractual promise of a debtor to repay a sum of money in
exchange for the promise of a creditor to give another sum of money
Underwriting, refers to the process that a large financial service
provider (bank, insurer, investment house) uses to assess the eligibility of a customer
to receive their products like equity capital, insurance or credit to a customer.
The name derives from the Lloyd's of London insurance market in London, United Kingdom.
Financial bankers, who would accept some of the risk on a given venture (historically
a sea voyage with associated risks of shipwreck) in exchange for a premium, would
literally write their names under the risk information which was written on a Lloyd's
slip created for this purpose.
In banking, underwriting is the detailed credit analysis preceding the granting
of a loan, based on credit information furnished by the borrower, such as employment
history, salary, and financial statements; publicly available information, such
as the borrower's credit history, which is detailed in a credit report; and the
lender's evaluation of the borrower's credit needs and ability to pay.
Underwriting
can also refer to the purchase of corporate bonds, commercial paper, Government
securities, municipal general obligation bonds by a commercial bank or dealer bank
for its own account, or for resale to investors. Bank underwriting of corporate
securities is carried out through separate holding company affiliates, called securities
affiliates, or Section 20 affiliates
De minimis, is a Latin expression meaning about minimal things, which is
used mostly as part of de minimis non curat praetor or de minimis non curat lex,
to say that the law is not interested in trivial matters. De minimis, in a more
formal legal sense, means something which is unworthy of the law's attention. In
risk assessment, de minimis refers to a level of risk which is too small to be concerned
with. Some refer to this as a "virtually safe" level.
Examples of Application of the de minimis rule
Courts will occasionally not uphold a copyright on modified public domain material
if the changes are deemed to be "de minimis".
For instance, a person who
attempts to assert a copyright on a document in the public domain after merely correcting
the spelling mistakes in the document would be denied as that person's contribution
to the public domain text would be judged de minimis.[citation needed] Similarly,
courts have dismissed copyright infringement cases on the grounds that the alleged
infringer's use of the copyrighted work (such as sampling) was so insignificant
as to be "de minimis".However, this ruling, in Bridgeport Music, Inc.
v. Dimension Films, was overturned on appeal and the appeals court explicitly declined
to recognize a de minimis standard for sampling.
Under U.S. tax rules, the de minimis rule governs the treatment of small amounts
of market discount. Under the de minimis rule, if a bond is purchased with a small
amount of market discount (an amount less than 0.25 percent of the face value of
a bond times the number of complete years between the bond’s acquisition date and
its maturity date) the market discount is considered to be zero.
If the market discount
is less than the de minimis amount, the discount on the bond is generally treated
as a capital gain upon disposition or redemption rather than as ordinary income.
Under IRS guidelines, the de minimis rule can also apply to any benefit, property
or service provided to an employee that has so little value that reporting for it
would be unreasonable or administratively impracticable. Cash, regardless of the
amount, is not excludable
Under European Community Competition Law some agreements infringing Article 81 of
the EC Treaty are considered to be "de minimis" and therefore accepted.
Horizontal agreement, that is one between competitors, will usually be de minimis
where the parties’ market share is 10 % or less, and a vertical agreement, that
is one between undertakings operating at different levels of the market, will usually
be de minimis where their market share is 15 % or less
An assignment, (Latin cessio) is a term used with similar meanings
in the law of contracts and in the law of real estate. In both instances, it encompasses
the transfer of rights held by one party—the assignor—to another party—the assignee.
The legal nature of the assignment determines some additional rights and liabilities
that accompany the act.
Assignment of contract rights
Assignment of rights under a contract is the complete transfer of the rights to
receive the benefits accruing to one of the parties to that contract. For example,
if party A contracts with Party B to sell his car to him for $10, party A can later
assign the benefits of the contract - the right to be paid $10 - to party C. In
this scenario, party A is the obligee/assignor, party B is an obligor, and party
C is the assignee.
Such an assignment may be donative (essentially given as a gift),
or it may be contractually exchanged for consideration. It is important to note,
however, that party C is not a third party beneficiary, because the contract itself
was not made for the purpose of benefitting party C. However an Assignment only
transfers the rights/benefits to a new owner. The obligations remain with the previous
owner. Compare Novation.
When assignment will be permitted
The common law favors the freedom of assignment, so an assignment will generally
be permitted unless there is an express prohibition against assignment in the contract.
Where assignment is thus permitted, the assignor need not consult the other party
to the contract. An assignment cannot have any effect on the duties of the other
party to the contract, nor can it reduce the possibility of the other party receiving
full performance of the same quality.
Certain kinds of performance, therefore, cannot
be assigned, because they create a unique relationship between the parties to the
contract. For example, if party A contracts to hire an attorney to represent her
in a civil case for a fee of $1000, she cannot then assign her contractual right
to legal representation to another party. Note however, that party A can assign
her right to sue under the same claim she contracted with the attorney to pursue.
Requirements for an effective assignment
For assignment to be effective, it must occur in the present. No specific language
is required to make such an assignment, but the assignor must make some clear statement
of intent to assign clearly identified contractual rights to the assignee.
A promise to assign in the future has no legal effect. Although this prevents a party from
assigning the benefits of a contract that has not yet been made, a court of equity
may enforce such an assignment where an established economic relationship between
the assignor and the assignee raised an expectation that the assignee would indeed
form the appropriate contract in the future.
A contract may contain a non-assignment clause, which prohibits the assignment of
specific rights, or of the entire contract, to another.
However, such a clause does not necessarily destroy the power of either party
to make an assignement. Instead, it merely gives the other party the ability
to sue for breach of contract if such an assignment is made.
However, an assignment of a contract containing such a clause
will be ineffective if the assignee knows of the non-assignment clause, or if the
non-assignment clause specifies that "all assignments are void".
Two other techniques to prevent the assignment of contracts are recission clauses
or clauses creating a condition subsequent.
The former would give the other party
to the contract the power to rescind the contract if an assignment is made; the
latter would rescind the contract automatically in such circumstances.
Requirement of a writing
There are certain situations in which the assignment must be in writing.
Assignment of wages
Assignment of any interest in real property
Assignment of choses of action worth over $5,000
Assignment as collateral for a loan or debt
For more information about contractual writing requirements see Statute of frauds.