The legal environment is derived partly from the political climate in a country and has three distinct dimensions to it:

Legal systems vary from country to country. You are likely to find that the legal systems in operation in the buyers’ country are in many respects different from that of South Africa.

Domestic laws govern marketing within a country, e.g. the physical attributes of a product will be influenced by laws (designed to protect consumers) relating to the purity, safety or performance of the product. Domestic laws might also constrain marketers in the areas of product packaging, marking and labelling, and contracts with agents. Most countries also have certain laws regulating advertising, e.g. Britain does not permit any cigarette or liquor advertising on TV

Different legal systems

South Africa’s commercial legal system, influenced by English law, shares similarities with the English courts in creating and following precedents. English cases are often cited as authority in South African courts when there is no domestic decision on a point, particularly in areas of law such as insurance or negotiable instruments that have been significantly influenced by English law.

In this context, various legal systems around the world can impact South African companies looking to engage in exporting activities. Aspects such as regulatory requirements, trade barriers, legal systems, currency and payment regulations, customs procedures, taxation, and cultural and language differences can all present challenges for exporters.

For instance, South African companies must comply with distinct regulatory frameworks established by different countries, which govern import and export activities. Some of these regulations are established through arbitrary methods, such as an 80 kph speed limit or a three-day period for canceling a contract, and cover a broad spectrum of a country’s law. These regulations may include licensing requirements, product standards, labeling and packaging regulations, and import/export documentation.

Additionally, South African exporters need to adapt to different legal systems, such as common law, civil law, or religious law, affecting how contracts and business disputes are handled. This adaptation is crucial for drafting contracts, resolving disputes, and protecting intellectual property.

Moreover, South African companies must navigate various trade barriers, currency and payment regulations, customs procedures, and taxation systems, which can impact their competitiveness and profitability in foreign markets. Understanding and complying with these regulations is vital to ensure smooth and efficient operations.

Finally, cultural and language differences must be considered when dealing with foreign customers, partners, and authorities. A deep understanding and respect for these differences are essential for building trust, avoiding misunderstandings, and ensuring effective communication.

To navigate these complexities and ensure compliance with the legal systems of their target markets, companies should conduct thorough research and seek professional advice.

Central to all commercial activities is the contract. The purpose of a contract is to specify the respective rights and obligations of the parties to an agreement and outline specific procedures or actions that must take place. In this way, the possibility of disputes arising between the parties is reduced. In the context of international business, with its inherent risks and complexities, contracts assume a vital role. The principal legal arrangement underlying an export transaction is the export sales contract. However, when a company obtains materials from a local supplier, engages the services of a freight forwarder or insurer, or concludes agreements with carriers, e.g. shipping lines, airlines and domestic road hauliers, it is also entering contracts.

In many cases, a contract is entered into once agreement has been reached. It is important to agree at the beginning of the negotiations that all agreements are reduced to writing before contracts are formalised.

When an international commercial dispute occurs, the problem must be settled in one of the countries involved according to the laws and regulations of that country unless the contract states otherwise. If the dispute cannot be settled amongst the parties involved, resolution can possibly be obtained through arbitration (i.e. through negotiations facilitated by a independent third party). Where the process of arbitration fails, for one reason or another, the option of litigation, i.e. going to court, might be considered. Disputes that go to court usually involve either large monetary transactions or the ownership of patents, copyright (see chapter 4) or physical property. Court actions can take from a few months to several years and can involve large expenditure in legal fees and lost revenues.

Whose system of law (i.e. South African law or that of the importing country) is applicable at a particular stage of an international business transaction depends, inter alia, on the nature and terms of the agreement.

Central to all commercial activities is the contract. The purpose of a contract is to specify the respective rights and obligations of the parties to an agreement and outline specific procedures or actions that must take place. In this way, the possibility of disputes arising between the parties is reduced. In the context of international business, with its inherent risks and complexities, contracts assume a vital role. The principal legal arrangement underlying an export transaction is the export sales contract. However, when a company obtains materials from a local supplier, engages the services of a freight forwarder or insurer, or concludes agreements with carriers, e.g. shipping lines, airlines and domestic road hauliers, it is also entering contracts.

In many cases, a contract is entered into once agreement has been reached. It is important to agree at the beginning of the negotiations that all agreements are reduced to writing before contracts are formalised.

When an international commercial dispute occurs, the problem must be settled in one of the countries involved according to the laws and regulations of that country unless the contract states otherwise. If the dispute cannot be settled amongst the parties involved, resolution can possibly be obtained through arbitration (i.e. through negotiations facilitated by a independent third party). Where the process of arbitration fails, for one reason or another, the option of litigation, i.e. going to court, might be considered. Disputes that go to court usually involve either large monetary transactions or the ownership of patents, copyright (see chapter 4) or physical property. Court actions can take from a few months to several years and can involve large expenditure in legal fees and lost revenues.

Whose system of law (i.e. South African law or that of the importing country) is applicable at a particular stage of an international business transaction depends, inter alia, on the nature and terms of the agreement.

International Law

Buyers and sellers are at times also subject to international law, which may be defined as that body of rules which regulates relationships between countries or other international legal persons. There is neither an ‘international parliament’ empowered to create international law; nor an ‘international police force’ to enforce it.

The principal sources of international law are treaties and conventions. These are created when several countries reach agreement on a certain matter and bind themselves to it by authorising their representatives to sign a document embodying that agreement. Essentially, they have entered into a contract that obliges them to do something or to refrain from doing something. Failure to comply is the equivalent of breach of contract.

Other sources of international law are custom (i.e. international practice that is accepted as law) and the general principles of law recognised by civilised nations or natural law (the basis of human co-existence). Although there is no organised body to ‘enforce’ international law, there is an International Court of Justice situated at The Hague in The Netherlands. This court decides any matter which the parties regard as suitable for submission to it for adjudication. This means that a country approaches the court voluntarily; it cannot be ‘brought’ to the court involuntarily.

Before a country is liable to comply with the provisions of a treaty or a convention, it must have signed the original protocol (i.e. the original treaty document or minutes of the convention). Once a country has signed the protocol, the method of enforcement depends on the terms of the treaty or convention. A common way of bringing a defaulting country to heel is by imposing sanctions against it. Sanctions may take many different forms and can be applied with varying degrees of severity. Obviously, the more parties there are to the protocol, the easier it is to enforce by virtue of the weight of opinion and the efficacy of any measures that can be taken against an offender.

Another area in which international law plays an important role is in controlling the use of the sea and the environment outside the territorial waters of countries. The control of international air travel by organisations such as IATA (International Airline Transport Association), or structures such as The Hague-Visby Rules in relation to ocean freight, may also be regarded as part of international law.

Exporters need to be able to recognise the legal significance of their actions in the general course of marketing and export-related activities both in South Africa and abroad. Potentially costly errors will be avoided and should develop greater confidence in conducting negotiations at both a domestic and international level.