Dynamic Business Law 3rd Edition By Nancy K. Kubasek and M. Neil Browne – Test Bank

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International law governs the conduct of states and international organizations and their relationships with one another and natural and juridical persons, while comparative law is the study of legal systems of different states.

FALSE

Unlike the foreign sales representative, the distributor takes title to the goods and assumes the risk of being unable to resell them at a profit.

FALSE

A franchise agreement is a contract whereby a company (known as the franchisor) grants permission (a license) to a foreign entity (known as a franchisee) to utilize the franchisor’s name, trademark, or copyright in the operation of a business and associated sale of goods in a foreign state. In a joint venture with a company in the host state, the parties share profits and management responsibilities for a specific project.

FALSE

International business persons must take ethical considerations into account in the decision-making process.

FALSE

The General Agreement on Tariffs and Trade (GATT) became effective on January 1, 1948.

TRUE

As understood in the General Agreement on Tariffs and Trade, a subsidy is a government payment to a specific industry or enterprise. Subsidies can be direct transfers of funds, such as loans and grants; loan guarantees; tax credits; government procurement; and price supports.

TRUE

In a multilateral free trade agreement, three or more states agree to reduce and gradually eliminate tariffs and other trade barriers.

FALSE

The United States is a party to the Central American Free Trade Agreement (CAFTA) with El Salvador, Guatemala, Nicaragua, Honduras, Costa Rica, and the Dominican Republic.

TRUE

The European Union (EU) is an example of a customs union meaning a free trade area with the additional feature of a common external tariff on products originating outside the union.

FALSE

The United States has several bilateral free trade agreements, including those with Australia, Bahrain, Chile, and others.

FALSE

In Pebble Beach Company v. Caddy, the court recognized that an Internet domain name and passive website alone are not enough to subject a party to jurisdiction.

Comparative law is the study of the legal systems of different states. For example, a comparative legal theorist might study contracts in the American, Chinese, and French legal systems by identifying and contrasting applicable national laws.

International law governs the conduct of states and international organizations and their relationships with one another and with natural and juridical persons.

The United Nations, the International Monetary Fund, the International Bank for Reconstruction and Development (World Bank), and the World Trade Organization are international organizations.

The U.S. Supreme Court has held that in the absence of a governing international agreement or controlling executive or legislative act or judicial decision, U.S. courts must rely on customary international law.

An international agreement is a written agreement made between states governed by international law that relates to an international matter. International agreements can be bilateral (between two states) or multilateral (between three or more states).

The simplest method of entering a foreign market is through the export of the company’s product to the foreign marketplace.

A foreign sales representative is an agent who distributes, represents, or sells goods on behalf of a foreign seller and forwards orders directly to the company.

Companies may engage distributors for their products, who purchase goods from a seller for resale in a foreign market. Unlike the foreign sales representative, the distributor takes title to the goods and assumes the risk of being unable to resell them at a profit.

In the United States, ratification of an international agreement requires the advice and consent of two-thirds of the Senate after the president submits the agreement for consideration.

The Foreign Corrupt Practices Act (FCPA) prohibits U.S. companies from offering or paying bribes to foreign government officials, political parties, and candidates for office for the purpose of obtaining or retaining business.

Tariffs are taxes levied on imported goods.

A nontariff barrier is any impediment to trade other than tariffs, including quotas, embargoes, and indirect barriers.

The General Agreement on Tariffs and Trade (GATT) is a comprehensive multilateral trading system designed to achieve distortion-free international trade by minimizing tariffs and removing artificial barriers.

The World Trade Organization facilitates international cooperation in opening markets and provides a forum for future trade negotiations and the settlement of international trade disputes.

Article I of GATT addresses the principle of most-favored-nation relations, a principle now known as normal trade relations, through which WTO member states treat like goods coming from other WTO member states on an equal basis.

Dumping is the practice wherein an exporter sells products in a foreign state for less than the price charged for the same or comparable goods in the exporter’s home market.

There are three types of subsidies under GATT, actionable subsidies, nonactionable subsidies, and domestic subsidies.

The Dispute Settlement Understanding allows recognized governments of WTO member states to bring an action alleging a violation of GATT.

The North American Free Trade Agreement (NAFTA) between the United States, Canada, and Mexico is a multilateral free trade agreement.

A customs union is a free trade area with the additional feature of a common external tariff on products originating outside the union.

Many civil law systems are derived from Roman law.

Civil law systems assume a separation of powers, but it is unlike the U.S. system of checks and balances. In civil law systems, the legislative branch has ultimate authority. The judicial branch interprets the code and applies it to resolve disputes. However, the judicial branch cannot create its own law.

The judge is primarily responsible for developing evidence by asking witnesses questions and introducing legal theories.

Common law systems originated in the English legal system.

Socialist legal systems, such as exist in Cuba and North Korea, are based on the premise that the rights of society as a whole outweigh the rights of the individual.

One potential source of contract law is the lex mercatoria, literally the “law of merchants.”

The CISG was adopted in 1980 and has been ratified by the majority of states in the developed world.

As recognized in Exhibit 6-2, nachfrist allows additional time for performance of a contract upon notice to the other party.

The employment relationship in the United States is governed by the employment-at-will standard meaning that unless an exception applies either the employer or the employee may terminate the employment relationship at any time.

Australia requires that employers pay a certain amount per week.

The Universal Declaration of Human Rights of 1948, often referred to as the basis for modern human rights law, prohibits slavery and grants everyone the right to free choice of employment, just and favorable conditions of work, reasonable limitation of working hours, and compensation adequate to provide for the worker’s health that of his or her family.

Personal jurisdiction is the power of the court over the persons appearing before it.

General personal jurisdiction permits adjudication of any claims against a defendant regardless of whether the claim has anything to do with the forum, or location where the claim is filed.

The Hague Evidence Convention, a multilateral convention establishing procedures for transnational discovery between private persons in different states, has been ratified by only 31 states.

The New York Convention is an international agreement governing the arbitration of private international disputes and has been ratified by 148 states to date, including the United States.

Arbitration is a type of alternative dispute resolution whereby disputes are submitted for resolution by private, nonofficial persons selected in a manner provided by law or the agreement of the parties.

In the United States, foreign judgments are not entitled to full faith and credit but are only evidence of the justice of the plaintiff’s claims.

The current minimum wage in the U.S. is $7.25 per hour.

Forum non conveniens is a doctrine that permits courts to decline to exercise jurisdiction where there is a more convenient forum to hear the case.

A franchise agreement is a contract whereby a company (known as the franchisor) grants permission (a license) to a foreign entity (known as a franchisee) to utilize the franchisor’s name, trademark, or copyright in the operation of a business and associated sale of goods in a foreign state.

In a joint venture with a company in the host state, the parties share profits and management responsibilities for a specific project.

An affiliate is a business enterprise located in one state that is directly or indirectly owned and controlled by a company located in another state.

The simplest method of entering a foreign market is through the export of the company’s product to the foreign marketplace.

The North American Free Trade Agreement (NAFTA) between the United States, Canada, and Mexico is a multilateral free trade agreement.

Despite numerous similarities among contract laws, international business persons must be aware of significant differences between U.S. and other national contract laws. There are also numerous significant differences between the employment law in the United States and employment law in other countries.

The employment-at-will standard references the right of either the employer or the employee to terminate the employment relationship at any time.

A change in the employment-at-will doctrine is that federal, state, and local government restrictions protect workers in the areas of minimum wages, unemployment and workers’ compensation, occupational health and safety, employment discrimination, and termination.

The Foreign Corrupt Practices Act (FCPA) prohibits U.S. companies from offering or paying bribes to foreign government officials, political parties, and candidates for office for the purpose of obtaining or retaining business.

A forum selection agreement allows the parties to choose where disputes between them will be resolved. In the United States, such clauses are presumptively valid and will be disregarded only if they are unreasonable.

A choice-of-law clause lets the parties to a contract choose the law of a certain state to apply to the interpretation of the contract or in the event of a dispute. Choice-of-law clauses are generally enforceable as long as there is a reasonable relation between the transaction and the law of the selected jurisdiction.

According to the Court, the defendants “attenuated connections” fell short of “the continuous and systematic general business contacts” required to empower a North Carolina court to entertain suit against them on claims unrelated to anything connecting them to the State.

Article 38 of the Statute of the International Court of Justice, a part of the United Nations system, identifies four sources of international law as follows: Customs, international agreements, general principles of law recognized by legal systems throughout the world (such as equity and elementary considerations of humanity), and secondary sources (such as decisions of the international court of justice, resolutions of the U.N. General Assembly and scholarly writings).

A franchise agreement is a contract whereby a company grants permission to a foreign entity to utilize the franchisor’s name, trademark, or copyright in the operation of a business and associated sale of goods in a foreign state. A joint venture is an association between two or more parties wherein the parties share profits and management responsibilities with respect to a specific project. An affiliate is a business enterprise in one state that is directly or indirectly owned and controlled by a company located in another state. The affiliate is usually established in conformity with the laws of the foreign state and is subject to that state’s regulation.

Student responses, of course, will vary. Students should analyze the difficulty of making decisions when resources are limited.

Tariffs are taxes levied on imported goods. Tariffs may be calculated as a percentage of the value of the imported good (ad valorem tariff), on the basis of the number or weight of the imported units or a flat per-unit charge (specific tariff), or as a combination of the two (compound tariff). A nontariff barrier is any impediment to trade other than tariffs. Examples of nontariff barriers include quotas, embargoes, and indirect barriers. Quotas are limits on imported goods, usually imposed for national economic reasons or for the protection of domestic industry. An embargo is a ban on trade with a particular state or on the sale of specific products, usually on the basis of foreign policy or national security. Indirect barriers are laws, practices, customs, and traditions that have the effect of limiting or discouraging the sale or purchase of imported goods.

The Uruguay Round established the World Trade Organization. Membership presently consists of 157 states. The WTO facilitates international cooperation in opening markets and provides a forum for future trade negotiations and the settlement of international trade disputes.
The normal trade relations principle requires that WTO member states treat like goods coming from other WTO member states on an equal basis. WTO member states are specifically prohibited from discriminating against like products based upon their country of origin.
National treatment prohibits WTO member states from regulating, taxing, or otherwise treating imported products any differently than domestically produced products.
Article XI prohibits quantitative restrictions imposing limits on the importation of certain products on the basis of the number of units, weight, or value, for national economic reasons, or for the protection of domestic industry.
Dumping is the practice whereby an exporter sells products in a foreign state for less than the price charged for the same or comparable goods in the exporter’s home market. Article VI condemns dumping if it causes or threatens to cause material injury to an established industry.

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