International Commercial Transactions
Final Test Solutions
Course Introduction
International Commercial Transactions explores the legal frameworks and practical issues governing cross-border business deals. The course covers key aspects such as international sale of goods, transportation and payment mechanisms, dispute resolution, and the influence of international conventions like the CISG (United Nations Convention on Contracts for the International Sale of Goods). Students will examine contract formation, risk allocation, documentary credits, and the roles of intermediaries, gaining insight into the complexities that arise when parties from different legal systems engage in commercial transactions. The course also considers current trends and challenges in the global marketplace, preparing students to navigate legal and regulatory hurdles in international trade.
Recommended Textbook
International Business Law and Its Environment 10th Edition by Richard Schaffer
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Page 2
Chapter 1: Introduction to International Business
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Q1) Which of the following is NOT an example of the transfer of technology?
A) Medical researchers at a university providing research data to a pharmaceutical company as part of an effort to find a cure for cancer.
B) A computer programmer sharing her source code with the public via the Internet.
C) A website designer downloading a copy of a photograph for use on a website, without the photographer's knowledge or permission.
D) A franchisor teaching a new franchise owner how to set up and run his franchise, using the franchisor's methods and materials.
Answer: C
Q2) As a form of foreign direct investment,a foreign branch is a business presence by the investor in the ________ country.
A) home
B) host
C) neighboring
D) local
Answer: B
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Chapter 2: International Law and the World's Legal Systems
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Q1) Once a group of nations has negotiated a convention,other nations cannot adopt the treaty.
A)True
B)False
Answer: False
Q2) The jurisdiction of the International Court of Justice upon its members in a dispute is compulsory.
A)True
B)False
Answer: False
Q3) Islamic law is known as:
A) Sharia.
B) Koran.
C) Sunna.
D) Fiqh.
Answer: A
Q4) A treaty between three countries is said to be trilateral.
A)True
B)False
Answer: False
Page 4
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Chapter 3: Resolving International Commercial Disputes
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Sample Questions
Q1) Zapata,a Texas Corporation,entered into a contract with Unterweser,a German corporation,to tow Zapata's drilling rig from Louisiana to Italy.A storm arose and Zapata told Unterweser to tow the rig into Tampa,Florida.Zapata immediately filed a lawsuit in Florida against Unterweser for damages to the rig.The original contract called for "Any dispute must be heard before the London Court of Justice." The U.S.Supreme Court held that:
A) Florida has jurisdiction since that is where the oil rig is now located.
B) the case should be heard in Texas or Germany because that is where the parties are located.
C) the forum-selection clause is contrary to public policy and will not be enforced; either Florida, Texas, or Germany would be the correct place to hear it.
D) the parties must adhere to the forum-selection clause and have the case heard in London.
Answer: D
Q2) Venue describes the appropriate geographical location of a court with jurisdiction.
A)True
B)False
Answer: True
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Page 5
Chapter 4: The Formation and Performance of Contracts for
the Sale of
Goods
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Q1) The CISG is inflexible as to making sure that goods are delivered on a specified date.
A)True
B)False
Q2) The uniform Commercial Code has been approved by all fifty states without any changes.
A)True
B)False
Q3) International Sales Law: Which of the following is correct?
I.Is not uniform because of vast political,cultural,and historical differences.
II.Is embodied in the Convention on the International Sale of Goods.
A) Both I and II.
B) Neither I nor II.
C) I only.
D) II only.
Q4) In the People's Republic of China,domestic contract law serves largely to enforce commitments made between state agencies.
A)True
B)False
Q5) Re-write that contract using U.S.law.
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Chapter 5: The Documentary Sale and Terms of Trade
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Q1) A good faith purchaser is one who purchases a document of title:
A) for value, in good faith, in the ordinary course of business.
B) for value, in good faith, directly from the seller.
C) in good faith and by endorsement from the seller's bank.
D) with understanding that the seller had acted in good faith in selling the goods.
Q2) Under the Uniform Commercial Code,the risk of loss in a destination contract passes to the buyer when the goods are tendered to the buyer at that place.
A)True
B)False
Q3) What are the benefits and possible detriments of using an inspection firm?
Q4) Incoterms are published by the International Chambers of Commerce based in Paris,France.
A)True
B)False
Q5) Bills of lading are negotiable instruments but cannot be used as collateral for an outstanding debt.
A)True
B)False
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Chapter 6: Legal Issues in International Transportation
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Q1) The U.S.law that governs the liability of an ocean carrier for transporting goods from one U.S.port to a foreign port is:
A) The Hague Rules.
B) The Uniform Commercial Code.
C) The Harter Act.
D) The Carriage of Goods by Sea Act.
Q2) What are the differences and similarities between a freight forwarder and a non-vessel operating common carrier and the relative benefits of using each?
Q3) 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) All of these are correct.
Q4) In the event of cargo damage,an action under COGSA must be brought within:
A) a reasonable period of time.
B) one year.
C) two years.
D) the time specified in the UCC.
Q5) Weigh the merits and shortcomings of the Montreal Convention.
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Chapter 7: Bank Collections and Letters of Credit
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Q1) Under the UCP,the description of the goods in the commercial invoice must correspond with the description in the credit.In all other documents,the goods may be described _____
A) in perfect conformance with the credit.
B) in general terms not inconsistent with the description of the goods in the credit.
C) in specific terms as requested by the buyer.
D) in general terms consistent with the contract for the sale of goods.
Q2) A back-to-back letter of credit is actually two letters of credit used as a financing device.
A)True
B)False
Q3) As a seller to a foreign market,assess whether you would prefer to use a documentary sale than a sale on open account terms.
Q4) The holder of a banker's acceptance may convert it to cash immediately at a discount rate,sell it on the discount market,or hold it until it matures,provided the buyer's account has sufficient funds to cover the transaction.
A)True
B)False
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Page 9
Chapter 8: National Lawmaking Powers and the Regulation of USTrade
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Sample Questions
Q1) Treaties are negotiated by:
A) just the executive branch.
B) just the House and Senate.
C) the executive branch and the Senate.
D) the executive branch, the House, and the Senate.
Q2) Trade law has been used in the U.S.to further not only U.S.economic policy but also U.S.foreign policy.
A)True
B)False
Q3) Compare and contrast the Treaty Clause and the Commerce Clause (and the powers that flow from each).
Q4) The president derives his power and authority to deal with foreign commerce and international trade from all of the following sources except:
A) powers delegated to him by Congress.
B) his authority as commander in chief.
C) his "inherent" executive power.
D) his judicial power delegated by the courts.
Q5) Recalling the issue in Japan Line,Ltd.v.County of Los Angeles,write an international agreement on the taxation of cargo containers.
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Chapter 9: The World Trade Organization: Basic Legal Principles
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Q1) All of the following are basic principles of GATT except:
A) commitment to normal trade relations.
B) elimination of import quotas.
C) non-reciprocal tariff increases.
D) non-discrimination against imported goods.
Q2) Which of the following may not be a reliable criterion for determining whether import and domestic goods are "like products"?
A) Consumers' tastes and habits
B) The product's end uses
C) The product's uniform tariff classification
D) All of these are correct
Q3) In a tariff concession,one country promises not to levy a tariff on a given product at a level higher than agreed upon.
A)True
B)False
Q4) The Uruguay round of tariff negotiations was the first major multilateral trade negotiating session since World War II.
A)True
B)False
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Chapter 10: Laws Governing Access to Foreign Markets
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Q1) The GATT 1994 Agreement on Import Licensing Procedures provides strict guidelines for licensing paperwork.Licenses can be refused if any of the procedures are not strictly followed.
A)True
B)False
Q2) Trade discrimination can occur even when imported and domestic products are treated the same.
A)True
B)False
Q3) Craft a statutory addendum deeming what constitutes a valid,non-discriminatory "health regulation." Students might wish to review GATT Article XX(b)'s to "protect human health" language.
Q4) The Japanese technical barriers are imposed to protect its citizens and based on performance standards.
A)True
B)False
Q5) Consider the similarities and differences between situations in which the U.S.Trade Act of 1974 can be used instead of the WTO dispute settlement procedures.
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Chapter 11: Regulating Import Competition and Unfair Trade
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Q1) The International Trade Commission is the U.S.agency that investigates and after reviewing all the evidence makes the final determination whether or not import relief will be granted to a domestic firm.
A)True
B)False
Q2) Consider the differential domestic and foreign political ramifications of the following U.S.trade laws: Section 201 escape clause,the antidumping statute,and the countervailing duty statute.
Q3) Draft a statue defining a domestic industry.Draft statutes from the perspective of Westernized,developed nations and from developing nations.
Q4) All subsidies are even those that are beneficial to domestic,economic,and social objectives are considered damaging to the international economy.
A)True
B)False
Q5) Weigh the strengths and weaknesses of all possible actions a country can take to protect its market against unfair trade.
Q6) "Scenario"
An across-the-board reduction by the United States in the corporate tax rate.
Page 13
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Chapter 12: Imports,Customs,and Tariff Law
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Sample Questions
Q1) Goods may be refused entry into the U.S.by the Bureau of Customs and Border Protection due to:
A) quarantine to protect the public health.
B) embargoed country of origin.
C) lack of a commercial invoice.
D) all of these are correct.
Q2) The dutiable value of imported goods includes the price actually paid or payable when sold for exportation plus all of the following items if not included in the purchase price,with the exception of:
A) royalty paid by the buyer as a condition of sale.
B) proceeds from the resale of the goods that accrues to the seller.
C) selling commission incurred by the buyer.
D) export fees paid by the seller.
Q3) The country of origin is always determined by the WTO definition where the article is grown,produced,or manufactured.
A)True
B)False
Q4) Contrast the traditional "name,character,and use" test with that used presently.
Q5) Compare and contrast GSP status with normal trade relations status.
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Chapter 13: Export Controls and Sanctions
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Q1) Items that are not classified on the Commerce Control List may be exported without an in individual export license.
A)True
B)False
Q2) "Diversion" is when controlled goods are sold by a U.S.exporter to an importer in Country A,who in turn re-exports them to a buyer in Country B,which is unfriendly with the United States.
A)True
B)False
Q3) In the United States,the office that initially reviews and rules on license applications is the:
A) Bureau of Industry and Security.
B) Office of Export Trade Control.
C) Export Administration Board.
D) Export Policy Operations Committee.
Q4) In some circumstances,the presentation of research by a U.S.scientist at a convention in a foreign nation may require an export license.
A)True
B)False
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Chapter 14: North American Free Trade Law
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Q1) A free trade area is:
A) two countries that have a common external tariff.
B) a geographic area between two countries where there are no tariffs.
C) a group of two or more countries in which import duties and other trade barriers are reduced or eliminated.
D) a geographic area between two countries where tariffs are reduced, but not necessarily eliminated.
Q2) NAFTA,an economic union,has evolved into a political union similar to the European Union.
A)True
B)False
Q3) Regarding NAFTA's investment provisions:
A) domestically owned companies are given priority over foreign-owned firms.
B) Mexico has stricter environmental laws than the United States.
C) firms operating in any NAFTA country can convert foreign exchange at local banks.
D) local firms owned by investors from other NAFTA countries must fill senior management positions with local citizens.
Q4) Create a regulation regarding reciprocity of professional licenses.
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16
Chapter 15: The European Union
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Q1) The Court of First Instance is the equivalent to the U.S.International Trade Court and has original jurisdiction over trade disputes between EU members and non-members.
A)True
B)False
Q2) The Commission of the European Communities v.Italian Republic involved the importation of vegetable fats labeled as "chocolate substitutes."
A)True
B)False
Q3) The Council of Ministers and the European Council are the same body.
A)True
B)False
Q4) The European Union is committed to a common foreign policy and individual state sovereignty over economic issues.
A)True
B)False
Q5) Compare and contrast EU directives with regulations,giving examples of each.
Q6) Write a memorandum advocating for or against the entrance of Turkey into the EU.
Q7) Compare and contrast the European Court of Justice with the U.S.Supreme Court.
Page 17
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Chapter 16: Marketing: Representatives,Advertising,and Anti-Corruption
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Q1) In order to be liable for illegal payments made to foreign officials,the payment must be made directly to the official from the firm receiving the favors granted.
A)True
B)False
Q2) Nepotism can be a violation of the Foreign Corrupt Practices Act.
A)True
B)False
Q3) Draft an internal memo or company rule regarding permissible and forbidden actions/payments in dealing with foreign contracts.
Q4) The FCPA is a multilateral agreement among member nations of the WTO to combat the practice of global bribery.
A)True
B)False
Q5) 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?
18
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Chapter 17: Protection and Licensing of Intellectual Property
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Q1) Licensees of IPRs are generally eager to operate under specific marketing quotas requested by the licensor.
A)True
B)False
Q2) Importation of merchandise produced and sold abroad and then imported back into the United States for sale in competition with the U.S.trademark owner is referred to counterfeit goods.
A)True
B)False
Q3) The EU departs from general American intellectual property law and bans the trademark registration of geographical indications.
A)True
B)False
Q4) Restrictions written into the franchise agreement must be strictly adhered to regardless of the effects it may have on the competitive potential of the franchisee in the host country.
A)True
B)False
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Page 19
Chapter 18: The Legal Environment of Foreign Direct Investment
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Q1) U.S.multinational corporations are generally safer in building a factory in a foreign country that has entered into an investment treaty with the United States than in a country that has no such treaty.
A)True
B)False
Q2) Modern traditional theories of the taking of private property are followed by:
A) most developed industrialized countries.
B) most developing countries.
C) most communist countries.
D) all of these are correct.
Q3) In which of the following cases do the developing countries encourage foreign investment?
A) Companies producing quality consumer goods because these firms bring a variety of needed products at reasonable prices for consumers
B) Companies producing goods for export
C) Companies investing in telecommunications and transportation industries
D) Companies investing in the oil and gas industry and other natural resources
Q4) Weigh the relative benefits of political risk insurance from government agencies and private insurers.
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Chapter 19: Labor and Employment Discrimination Law
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Q1) You are an international human resources consultant retained by Pacific Paper Products,a U.S.corporation headquartered in Seattle.PPP recently downsized its operations located in Germany,which resulted in significant layoffs.The basis of this decision was the inability of the German plants to generate sufficient revenues.Although marginally profitable,PPP concluded that it would be fiscally prudent to downsize the facilities.PPP provided ten days written notice to their employees at these facilities prior to their termination.In response,the employees have submitted claims for wrongful discharge.You have been retained to advise PPP's board of directors on the validity of these claims.Did PPP's closure of the plant violate German law? Are the former employees' claims for wrongful discharge valid? Why or why not?
Q2) Germany labor laws grants its workers equal to management rights to participate in the management of the business.
A)True
B)False
Q3) In Germany,companies that employ more than 2,000 workers must have supervisory boards with 25% representation from labor and 75% representation from shareholders.
A)True
B)False
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Page 21
Chapter 20: Environmental Law
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Q1) American law fails to regulate pesticides that are exported to other countries.
A)True
B)False
Q2) The export restrictions of hazardous materials under the Resources Conservation and Recovery Act are less onerous compared to the Federal Insecticide,Fungicide,and Rodenticide Act.
A)True
B)False
Q3) Address the strengths and weaknesses of the U.S.government's environmental polices pertaining to pesticides (such as those addressed by the never-adopted ban on the export of unsafe pesticides).
Q4) Within the European Union,an environmental action program came about because of:
A) The Uruguay Rounds.
B) The United Nations.
C) The Bill of Rights.
D) The Single European Act.
Q5) Under the Montreal Protocol,trade in chlorofluorocarbons is strictly controlled.
A)True
B)False
Q6) Reflecting on the "Circle of Poison," draft a bill regarding pesticide exports.
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Chapter 21: Regulating the Competitive Environment
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Q1) Under U.S.antitrust law:
I.Most actions are brought by private individuals.
II.Successful litigants can collect treble damages.
A) I only.
B) II only.
C) Both I and II.
D) Neither I nor II.
Q2) Consider in what ways the histories of the U.S.,Japan,and Europe may explain their respective laws regarding market competition.
Q3) Compare and contrast the Sherman Act and Articles 81 and 85 of the EU Treaty and/or other Competition laws.
Q4) Weigh the benefits and detriments of the EU and U.S.rules regarding jurisdiction and forum in privately enforced competition laws.
Q5) In what instances would both the U.S.and EU extraterritorial jurisdiction of competition laws apply?
Q6) Write an argument that clawback provisions violate international law.
Q7) Weigh the relative benefits and short-comings of the EU preapproval model and the U.S.litigation model as exemplified by the Hart-Scott-Rodino Antitrust Improvements Act.
Page 23
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