International Business Transactions
Exam Review
Course Introduction
International Business Transactions explores the legal, regulatory, and practical frameworks that govern cross-border commercial activities. The course covers topics such as international sales contracts, financing and payment mechanisms, dispute resolution, and the roles of organizations like the World Trade Organization and the International Chamber of Commerce. Students examine issues related to import/export regulations, trade barriers, and multinational corporate structures, gaining an understanding of how international law, cultural differences, and economic factors influence global business practices. Through case studies and real-world examples, the course prepares students to navigate the complexities of international commerce and manage the risks and opportunities inherent in global markets.
Recommended Textbook
International Business Law and Its Environment 8th Edition by Richard Schaffer
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Page 2
Chapter 1: Introduction to International Business
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Sample Questions
Q1) Nontariff barriers have a significant influence on how firms make their trade and investment decisions.
A)True
B)False
Answer: True
Q2) Foreign investment refers to the ownership and active control of ongoing business concerns.
A)True
B)False
Answer: True
Q3) Two examples of nontariff barriers that refer to quantitative restrictions on importing and a total or near total ban on trade respectively are:
A) Partial embargoes, embargoes.
B) Trade seizures, limits.
C) Embargoes, quotas.
D) Quotas, embargoes.
Answer: D
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Chapter 2: International Law and the Worlds Legal Systems
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Q1) The Security Council of the United Nations has veto power over the U.N.General Assembly.
A)True
B)False
Answer: False
Q2) The United States belongs to the Organization for Economic Cooperation and Development.
A)True
B)False
Answer: True
Q3) A nation can be brought before the World Court whether or not it wants to be there.
A)True
B)False Answer: False
Q4) The World Court is a major force in settling world disputes. A)True
B)False
Answer: False
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Page 4
Chapter 3: Resolving International Commercial Disputes
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Sample Questions
Q1) DownPillow,Inc.,a U.S.company,and Eiderhoff,a German Company,negotiate a contract with forum and choice of law clauses for the U.S.A dispute arises,the case is heard in the U.S.,and a judgment is given to DownPillow.DownPillow wants to enforce this judgment in Germany.
A) Germany will not allow this judgment to be enforced in Germany because it does not recognize U.S. judgments.
B) Germany will allow one-half of the judgment to be enforced in Germany.
C) Germany will allow the entire judgment to be enforced if Eiderhoff received notice, it does not violate German law, and the U.S. reciprocates with German judgments.
D) None of the above.
Answer: C
Q2) Jurisdiction means the "power to hear" a case.
A)True
B)False
Answer: True
Q3) The results of a mediation are not binding on either party.
A)True
B)False
Answer: True
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Page 5
Chapter 4: Sales Contracts and Excuses for
Nonperformance
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Sample Questions
Q1) Draft a model statute regarding international e-contracts (perhaps considering rules for offer,acceptance,and revocation).
Q2) A U.S.company sends a purchase order to an Italian shoe company.The Italian shoe company sends a letter confirming the purchase order.The CISG provides:
A) The acceptance by the Italian company cannot be withdrawn under any circumstances.
B) The Italian company can withdraw the acceptance if the withdrawal reaches the U.S. before its acceptance.
C) The acceptance by the Italian company was effective when sent.
D) None of the above is correct.
Q3) If a question arises over a trade usage,the CISG provides that:
A) No reference to trade usage is allowed by a court.
B) A court can look at those trade usages that the parties knew or ought to have known and are regularly used in the industry.
C) A court can look at those trade usages to which the parties agree to be bound.
D) Both B and C.
Q4) Compare and contrast the remedies for breach under the CISG and U.S.law.
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Chapter 5: The Documentary Sale and Terms of Trade
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Q1) The Incoterms definitions will automatically become a part of a contract for the sale of goods,governed by the UN Convention for the International Sale of Goods.
A)True
B)False
Q2) An importer in Germany requests a price quotation from a cotton broker in Memphis.The broker wishes to place the cotton in the hands of a multimodal terminal operator in Memphis for shipment through the port of New Orleans.He will pay the freight charges through to the German seaport,but he wishes the risk of loss to the cotton to pass to the German importer as soon as he places the cotton in the hands of the multimodal terminal operator in Memphis.The broker should quote his prices for the cotton:
A) CIF Germany.
B) FOB New Orleans.
C) CPT New Orleans.
D) Ex Factory.
E) None of the above.
Q3) Draft a bill of lading.
Q4) Compare and contrast the circumstances under which a buyer would and would not accept "E"-term contracts.
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Chapter 6: The Carriage of Goods and the Liability of Air and Sea Carriers
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Sample Questions
Q1) Write an insurance policy for air or sea carriage.
Q2) In the event of cargo damage,an action under COGSA must be brought within:
A) A reasonable period of time.
B) Within one year.
C) Within two years.
D) Within the time specified in the UCC.
Q3) After reviewing the sample international air waybill and marine cargo insurance policy in the text,note any problems or issues that may not be adequately addressed in these documents.
Q4) Ocean carriers are liable for damages resulting from which of the following:
A) Providing a seaworthy ship at the beginning of the voyage.
B) Mismanagement of the ship that causes a shipwreck.
C) Errors in navigation that cause a mid-ocean collision.
D) Two of the above.
E) All of the above.
Q5) COGSA relieves carriers of liability for negligent care and handling of cargo.
A)True
B)False
Page 8
Q6) Describe how a shipper and the party requesting shipment of goods would frame and address a ship-board fire that destroyed the goods.
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Page 9
Chapter 7: Bank Collections, Trade Finance, and Letters of Credit
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Sample Questions
Q1) A letter of credit whose payment is assured by two banks is a(n):
A) Confirmed Letter of Credit.
B) Irrevocable Letter of Credit.
C) Letter of Credit with Stipulations.
D) Standby Letter of Credit.
Q2) The U.S.government agency that provides guarantees on loans or credit terms made by U.S.commercial banks or U.S.exporters to foreign buyers of U.S.made merchandise is called:
A) The World Bank.
B) Eximbank.
C) Commodity Credit Corporation.
D) The Foreign Credit Insurance Association.
Q3) Draft a letter of credit.
Q4) The U.S.Export-Import Bank is the largest U.S.export financing agency that can provide:
A) Financing through the World Bank.
B) Financing for imports by U.S. firms.
C) Guarantees on loans made by commercial banks.
D) All of the above.
Q5) Draft a letter of credit compliant with the standards of the UCP.
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Chapter 8: National Lawmaking Powers and the Regulation
of Ustrade
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Sample Questions
Q1) The U.S.Constitution gives the president specific powers over foreign commerce and international trade.
A)True
B)False
Q2) During the 1940s,the U.S.instituted a price support system for American potatoes.Congress had addressed the problems of agricultural imports in the Agricultural Act of 1948.The U.S.Secretary of State entered into an executive agreement with Canada that would permit only seed potatoes to be imported into the U.S.This agreement was not submitted to or approved by congress.A potato importer imported potatoes into the U.S.for A & P grocery stores for resale.When the court tried this case brought by the U.S.against the importer:
A) The court found for the importer because the executive agreement was entered into without Congressional approval.
B) The court found for the U.S. because this was an executive agreement provided for by the president.
C) The court used the "first in time rule" and found for U.S. since Congress and the president are equal.
D) None of the above is correct in this situation.
Q3) Weigh the relative merits and detriments of FCN treaties.
Page 11
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Chapter 9: Gatt Law and the World Trade Organization:
Basic Principles
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Q1) Countries A and B both produce coffee.Both countries belong to GATT.Country A imports coffee from B.Once B's coffee enters A's stream of commerce,under the national treatment provisions of GATT:
A) Country A cannot subject B's coffee to higher internal taxes or charges than its domestic coffee.
B) Country A may now charge higher internal taxes or charges on B's coffee in order to discourage coffee drinking since the goods have already passed the border.
C) Country A cannot subject B's coffee to any internal taxes or charges, even if it does so to domestic coffee.
D) None of the above is correct.
Q2) While WTO reports carry no weight as precedent,subsequent panels often consider them,and they can create legitimate expectations as to the interpretation of the treaty by WTO members.
A)True
B)False
Q3) Compare and contrast Japan's former Large-Scale Retail Stores Law with its present Large-Scale Retail Store Location Law.
Q4) Describe the benefits and detriments of enacting a quota?
Page 12
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Chapter 10: Laws Governing Access to Foreign Markets
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Q1) The GATT Agreement on Agriculture is expected to increase export opportunities for agricultural products and to reduce government subsidies.
A)True
B)False
Q2) The principle that limits restrictions on trade to the lowest level possible to achieve the goals for which they are imposed is:
A) Trade barrier limitation principle.
B) Fair trade principle.
C) Principle of least-restrictive trade.
D) Principle of nominal trade barriers.
Q3) Which of the following statements is true regarding trade in agriculture?
A) The United States exports almost 50 percent of its agricultural production.
B) In general, governments let agricultural markets operate on the free trade principle.
C) Nations do not mind being reliant on other countries for their food supply.
D) Most countries impose strict restrictions on both raw and processed food products.
Q4) Consider the benefits and detriments of bringing an IPR dispute before the WTO and the USTR.
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Chapter 11: Regulating Import Competition and Unfair Trade
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Q1) The U.S.countervailing duty statute requires that the International Trade Commission determine the fair market price of the imported product in the country of origin.
A)True
B)False
Q2) Quotas are often favored over tariffs as import restrictions because:
I. They are more flexible tools for regulating imports.
II. It is easier for government policy makers to assess the potential impact of a quota.
A) I only.
B) II only.
C) Both I and II.
D) Neither I nor II.
Q3) Draft a statute or treaty defining a non-market or state-controlled economy OR identifying which factors should be considered in making such a determination and how they should be applied.
Q4) Scenario
Tax credits extended by the Japanese government to Japanese computer chip manufacturers on the basis of the volume of their chip sales in the United States.
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Chapter 12: Imports, Customs, and Tariff Law
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Q1) The rule of informed compliance requires the importer to unilaterally seek a customs ruling on the tariff status of all goods they plan to import.
A)True
B)False
Q2) Foreign Trade Zones are free ports provided by the government to allow the receipt of imports to be duty free.
A)True
B)False
Q3) In the United States v.Golden Ship Trading case,Wu,the owner,was found not liable because she exercised due care in verifying the merchandise was manufactured in China.
A)True
B)False
Q4) Goods re-exported without having been significantly altered after being imported are subject to a refund of duties paid known as a:
A) Manufacturing drawback.
B) Substitution drawback.
C) Same condition drawback.
D) Non-transformation drawback.
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Chapter 13: The Regulation of Exports
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Q1) K&L Chemicals is a U.S.-based manufacturer of agricultural chemicals.K&L recently sold two thousand gallons of its most toxic pesticide to Sahara Traders,a company headquartered in the North African desert nation of Chad.Sahara Traders refused to disclose the use that it intended to make of the product and paid cash upon its delivery.Sahara ultimately shipped the pesticide to the North Korean government for use in its chemical weapons program.Is K&L liable for the ultimate transshipment of its pesticide to North Korea? Please explain your answer.
Q2) Which is not a current issue regarding export controls?
A) Can effective multilateral controls be established?
B) Who is the enemy?
C) In the absence of multilateral controls, can unilateral controls be effective?
D) Can the State Department both promote trade and commerce and control exports?
Q3) The illegal placement of goods or commodities in the hands of an individual for whom an export license would be denied is known as:
A) Conversion.
B) Delusion.
C) Derision.
D) None of the above.
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Page 16
Chapter 14: North American Free Trade Law
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Q1) A criticism raised against NAFTA is that it serves to divide the world into regional trading blocks.
A)True B)False
Q2) In 1994,the Extraordinary Challenge Committee found that the U.S.Department of Commerce was correct in implementing countervailing duties against Canadian lumber.
A)True B)False
Q3) No other trade sector is as complex or as highly regulated as trade in textiles. A)True
B)False
Q4) Draft a new NAFTA clause regarding an environmental or labor protection issue (you may also wish to consider environmental measures applicable to investment).
Q5) Compare and contrast the structure and purpose of a free trade area and a customs union or common market.(Compare and contrast NAFTA with the EU.)
Q6) Presume that the Caribbean countries have been granted NAFTA membership.Design a plan for phasing them into membership.
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Chapter 15: The European Union and Other Regional Trade Areas
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Q1) Members of the EU include the following countries except:
A) France.
B) Luxembourg.
C) Italy.
D) Switzerland.
E) All of the above are members.
Q2) A ____ is binding and directly applicable in all member states; and a ____ sets forth the result to be achieved but leaves to the individual states the responsibility to employ the appropriate steps:
A) Regulation; directive.
B) Rule; resolution.
C) Resolution; rule.
D) Directive; regulation.
Q3) The European General Court was established to reduce the workload of the Court of Justice and it has jurisdiction over appeals on the Commission's decisions on mergers and acquisitions.
A)True
B)False
Q4) Compare and contrast the European Court of Justice with the U.S.Supreme Court.
Page 18
Q5) Compare and contrast EU directives with regulations,giving examples of each.
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Chapter 16: International Marketing Law: Sales
Representatives, Advertising, and Ethical Issues
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Q1) Evaluate the foreign political ramifications of bribery (witness the scandals and resignations in countries such as Japan,the Netherlands,and Italy in the 1970s,not to speak of the tremendous political impact in the developing countries).Does corruption interfere with the foreign policy of the United States,exerting influence that may be counter to U.S.policy?
Q2) The formerly communist countries of Eastern Europe have no advertising laws. A)True
B)False
Q3) Scenario
A cash payment of $250,000 made by Durdy Coal,Inc.,a U.S.corporation,to DCI's agent with the instruction "put this to good use on DCI's behalf" which in turn is paid to the State Importation Officer of the People's Republic of China in order to secure a Chinese import license.
Q4) Evaluate the socioeconomic impact of corruption in developing countries.For instance,does corruption merely cause an African dictator to buy tractor parts from Country A instead of Country B,or does it cause him to buy helicopter gun ships or AK-47s instead of syringes and pharmaceuticals for infant health care at his country's modest hospitals?
Page 19
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Chapter 17: Licensing Agreements and the Protection of Intellectual Property Rights
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Q1) When the intellectual property being licensed is technology protected primarily by a patent,a key license provision will be a clause setting forth the licensee's obligation to keep the licensed technology confidential.
A)True
B)False
Q2) A single multinational application process is available for protecting intellectual property in:
A) In the U.S., Canada, and Mexico.
B) In the Eastern European countries.
C) In countries that are member of the Asian Patent Protection Treaty.
D) In the European Union.
E) All of the above.
Q3) The concept of language politics in systems franchise agreements refers to:
A) The legal system's primary language must be recognized.
B) A country that requires a certain language to be used to conduct business in a certain region.
C) Efforts to incorporate the home country's language into standard business practice of the host country are extensive.
D) None of the above.
Page 20
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Chapter 18: Takings and National Controls on Foreign Direct Investment
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Q1) The vehicle of choice most often for a U.S.investor who wishes to exercise a measure of control over its foreign investment is a(n):
A) Interlocking directorate.
B) Investment trust.
C) Joint venture.
D) All of the above.
Q2) Under the Foreign Sovereign Immunities Act,federal courts in the U.S.cannot hear which of the following cases:
A) The foreign government breached a contract with the U.S. firm for the sale of goods.
B) A dispute over the amount of compensation paid by a foreign government to a U.S. investor when the investor's real estate was taken to build a national airport.
C) The foreign government is being sued for money damages sought as a result of personal injury or death caused by the foreign government or its agents in the United States.
D) All of the above are exceptions.
Q3) Weigh the relative benefits of political risk insurance from government agencies and private insurers.
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Page 21
Chapter 19: Labor and Employment Discrimination Law
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Q1) Compare and contrast the employee discharge laws in the U.S.with those in Germany.
Q2) In the Civil Rights Act of 1991,Congress extended Title VII to all U.S.firms operating outside the United States.
A)True
B)False
Q3) Germany grants its workers great rights to participate in the management of the business.
A)True
B)False
Q4) In Germany,workers:
A) Can be dismissed at the will of the employer.
B) Participate in corporate decisions.
C) Are often represented on boards of directors.
D) A and B
E) B and C
Q5) Compare and contrast attitudes toward the employer-employee relationship in the United States with those in other countries.How are these reflected in the respective legal frameworks?
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Chapter 20: Environmental Law
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Q1) One example of a global solution to a global environmental problem is a multilateral agreement concerning depletion of the ozone layer and the production of chlorofluorocarbons.
A)True
B)False
Q2) Under NAFTA's Environmental Side Agreements:
A) Mexican environmental laws must gradually approach U.S. and Canadian standards for clean air, clean water, and hazardous waste.
B) U.S. industries can request a tariff on the import of products from Mexico that are produced under environmentally unsustainable methods.
C) NAFTA benefits may be suspended where any state party has shown a pattern of failure to effectively enforce its environmental law.
D) A and B.
E) A and C.
Q3) There is no U.S.law forbidding the export of pesticides banned in the U.S.to foreign countries.
A)True
B)False
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23
Chapter 21: Regulating the Competitive Environment
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Q1) The primary reason for the absence of much litigation under foreign competition law is:
I. The preapproval process reduces the necessity for litigation.
II. Differences in the remedies and types of sanctions for violations.
III. Cultural attitudes toward antitrust law differ.
A) I only.
B) II only.
C) III only.
D) I and I.
E) I, II, and III.
Q2) Draft guidelines for the application of anti-trust laws to anti-competitive practices outside of the U.S.or critique any (existing)proposed guidelines.
Q3) EU competition law applies only to agreements and transactions that:
A) Involve an EU-based company.
B) Have an effect on intra-EUC trade.
C) The EU wishes to have its approval and involvement.
D) Have a direct impact on foreign commerce.
Q4) Consider in what ways the histories of the U.S.,Japan,and Europe may explain their respective laws regarding market competition and competition.
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