INTERNATIONAL BUSINESS LAW AND ITS ENVIRONMENT

International Business Law and its Environment



International Business Law and its Environment

Question 1

The same divergence between ethics and law can be found in business. For instance, Henry Ford once wanted to forego increasing dividends for his shareholders and instead wanted to use the money for philanthropic purposes. He felt that his company was rich enough and the ethical thing to do at that time was to lower the price of cars and increase the size of his company so that he could hire more workers and pay them the same good wages he was paying his current employees. However, in a famous opinion, the Michigan Supreme Court disagreed: The court found that Ford Motor Company's primary duty was to its shareholders and to make a profit and did not justify the charitable steps he was planning (Radin, 2008, 45).

To begin with, enforcing a duty to rescue would be contrary to a free society and the principle that individuals have the freedom to pursue their own individual good as long as they do not attempt to deprive others of theirs or impede their effort to obtain it. Creating a legal duty to rescue would imply a society that focuses on a group good rather than individual good. Moreover, creating a legal duty to rescue would be impractical. When would such a duty arise? How would it be enforced? If there were a crowd of people, on whom would the duty fall?

To make the relationship between law, business, and ethics still more complex, while there are times when societal mores and ethics lead to the enactment of law, there are also times when morality and business law diverge. For example, it is a long-standing principle of common law that there is no duty to rescue, so that if you see a man about to step in front of a fast-moving car, you have no legal obligation to reach out and stop him—though most of us would feel we had a moral obligation to do so (Shenkar, 2008, 59).

In addition to being driven by ethics, business law is also driven by society's need to foster commerce, because a strong commercial environment is directly related to the health of a nation's economy and the welfare of its citizens. The United States Constitution was influenced by the concern that commerce be fostered, as seen in the Commerce Clause, which has been interpreted as prohibiting states from discriminating against products from other states (Logsdon, 2005, 55). The creation of the Constitution, however, was also driven by the nation's need to raise taxes, and this taxing power has led to a symbiotic relationship between business tax laws and new forms of business entities such that business forms are designed to take advantage of tax laws.

Question 2

Describe and critically evaluate how an Islamic mortgage might be designed employing e.g. the “diminishing musharakah” and associated mechanisms in order to comply with Shariat law's prohibition against riba ...