International Commercial Transactions
Test Questions
Course Introduction
International Commercial Transactions explores the legal and practical frameworks governing the sale of goods and services across national borders. The course examines fundamental aspects of international contracts, including the negotiation, formation, and enforcement of agreements, as well as key international instruments such as the United Nations Convention on Contracts for the International Sale of Goods (CISG). Students will analyze issues related to payment methods, risk allocation, transportation, dispute resolution, and the roles of intermediaries. Emphasis is placed on understanding the interaction between domestic laws and international regulatory regimes, providing students with the knowledge and skills necessary to navigate the complexities of international business transactions.
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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Q1) Which of the following does not accurately characterize export management companies?
A) They act as advisors or consultants.
B) They engage in foreign market research.
C) They exhibit goods at foreign trade shows.
D) They use their extensive sales contracts to market the products of other companies.
Answer: D
Q2) Customs brokers are government inspection officials who regulate the shipment of goods in and out of the country.
A)True
B)False
Answer: False
Q3) Nontariff barriers have a significant influence on how firms make their trade and investment decisions.
A)True
B)False
Answer: True
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Chapter 2: International Law and the Worlds Legal Systems
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Q1) A nation can be brought before the World Court whether or not it wants to be there.
A)True
B)False
Answer: False
Q2) Which of the following is not part of the structure of the United Nations?
A) General Assembly.
B) Security Council.
C) Secretary General.
D) House of Representatives.
Answer: D
Q3) Foreign investment laws might include:
A) Protection against state intervention and the ability to repatriate profits.
B) Repatriation of profits and the ability to have 100% foreign ownership.
C) Governmental approval of technology transfer agreements.
D) All of the above.
Answer: D
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Chapter 3: Resolving International Commercial Disputes
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Q1) Choice of law clauses in contracts stipulate in advance what court the parties will use in case of a dispute.
A)True
B)False
Answer: False
Q2) When determining whether personal jurisdiction offends "traditional notions of fair play and substantial justice," the court evaluates several factors,including:
A) Burden on the defendant.
B) The plaintiff's interest in having a convenient forum.
C) The forum's legitimate interests in the dispute.
D) Two of the above.
E) All of the above.
Answer: E
Q3) A basis for the non-enforcement of a foreign judgment is that there was not proper notice.
A)True
B)False
Answer: True
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5
Chapter 4: Sales Contracts and Excuses for
Nonperformance
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Q1) In practice,most force majeure clauses do not excuse a party's performance entirely but only suspend it for a while.
A)True
B)False
Q2) The CISG is inflexible as to making sure that goods are delivered on a specified date.
A)True
B)False
Q3) In what ways do both U.S.law and the CISG contemplate circumstances beyond a party's control? How are these similar and different from each other?
Q4) "Conflict of Laws" in an international setting refers to which nation's laws apply to when a court hears a case.
A)True
B)False
Q5) In what ways is the coverage of the CISG and the UCC similar? Different?
Q6) Compare and contrast the remedies for breach under both U.S.law and the CISG.
Q7) How are the concerns of CISG Article 77 reflected in U.S.law? How does U.S.law diverge from Article 77?
Page 6
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Chapter 5: The Documentary Sale and Terms of Trade
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Q1) Which of the following documents are always required in a documentary collection for the sale of goods:
A) The draft, invoice, and bill of lading.
B) The invoice, bill of lading, and delivery order.
C) The certificate of origin, insurance policy, and invoice.
D) The draft, insurance policy, and invoice.
Q2) A seller who quotes on open account terms in a foreign currency bears the currency risk during the open credit period.
A)True
B)False
Q3) Inspection certificates are often used to assure that a shipment will conform to the specifications required by the buyer.
A)True
B)False
Q4) Consider when a shipping term as opposed to contradictory contract language will be most persuasive in identifying the type of contract.Vice versa?
Q5) What are the benefits and possible detriments of using an inspection firm?
Q6) Draft a contract that includes shipping terms.
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Chapter 6: The Carriage of Goods and the Liability of Air and Sea Carriers
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Q1) COGSA gives little protection to carriers for damage resulting from perils of the sea.
A)True
B)False
Q2) 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.
Q3) COGSA relieves carriers of liability for negligent care and handling of cargo.
A)True
B)False
Q4) Himalaya Clauses in bills of lading:
A) Protect the carrier for damage to cargo being transported over mountainous and rugged terrain.
B) Protect stevedores from liability in loading and unloading ships.
C) Protect only the shipper for improper packaging of goods for shipment.
D) All of the above.
Q5) Draft an air waybill or consignment note for inland carriage.
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Chapter 7: Bank Collections, Trade Finance, and Letters of Credit
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Q1) The Convention on Bills of Exchange as well as U.S.and English domestic laws require the language "bill of exchange" to appear clearly and prominently on the face of the instrument.
A)True
B)False
Q2) Draft a specialized letter of credit,recalling some of the uses noted in the text.
Q3) A documentary draft issued for the purchase of goods by ABC Co.payable to XYZ Co.,payable upon presentation,defines ABC Co.as the ____,XYZ Co.as the ____,and the specialized name for the documentary draft is ____.
A) Drawee; drawer; sight draft.
B) Drawer; drawee; sight draft.
C) Drawee; drawer; documents against acceptance.
D) Drawer; drawee; cash against documents.
Q4) Weigh the benefits and detriments of counterpurchase,barter,and buy-back agreements.
Q5) How are a red clause and a revolving letter of credit similar as compared to a red clause and a back-to-back letter of credit?
Page 9
Q6) 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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Q1) A convention is a multilateral agreement on matters usually related to commercial issues of common concern.
A)True
B)False
Q2) Congress has delegated to the president the authority to carry out the trade policies that it has set by statute.
A)True
B)False
Q3) The Bureau of Customs and Border Protection is administered by the:
A) Department of Commerce.
B) Department of State.
C) Department of Treasury.
D) Department of Homeland Security.
Q4) The Omnibus Act provides a fast-track procedure for approving trade agreements whereby the president can declare the agreement to be law.
A)True
B)False
Q5) Weigh the relative merits and detriments of FCN treaties.
Q6) Weigh the relative value and risks of fast-rack regulation.
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Chapter 9: Gatt Law and the World Trade Organization:
Basic Principles
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Q1) The GATT Agreement on Technical Barriers to Trade is a code that has as its purpose:
A) To allow free movement of technical equipment among nations.
B) To establish technical data for computer applications.
C) To harmonize standards and standard-setting techniques.
D) None of the above.
Q2) A tariff is:
A) An import duty.
B) A tax levied on goods being brought into a country.
C) A ban on trade with a foreign nation.
D) Both A and B.
Q3) Which of the following are not true regarding WTO dispute settlement procedures?
A) A complaining party can request consultations to seek a solution.
B) Even if a solution is not reached, the panel has no authority to authorize trade sanctions.
C) Other member nations with a "substantial interest" in the case may make written submissions and oral arguments before the panel.
D) An appellate body of three people will hear appeals from a panel case.
E) All of the above are untrue.
Q4) In what ways are GATT and the WTO similar? Different?
Page 11
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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) ISO 14000 refers to:
A) Standards used for assuring product quality through design and manufacturing process.
B) Guidelines in environmental management and labeling.
C) European Union import regulations.
D) A trade agreement between the U.S. and EU designed to reduce barriers to trade.
Q4) The largest purchaser of U.S.agricultural products is Russia.
A)True
B)False
Q5) Compare and contrast unilateralism with bilateralism.
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Chapter 11: Regulating Import Competition and Unfair Trade
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Q1) 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.
Q2) Managed trade is:
A) A principle under which a government sets trade goals for an industry and then uses a system of government incentives and controls to guide trade toward those goals.
B) Illegal under U.S. law.
C) Used when arbitrators are called in to settle a trade dispute.
D) A set of laws passed by the U.S. Congress in 1994 to protect the U.S. semiconductor industry from Japanese imports.
Q3) Identify and evaluate the importance of the several factors taken into account in an ITC proceeding to impose import restrictions.
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Chapter 12: Imports, Customs, and Tariff Law
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Q1) Goods held in a Foreign Trade Zone must be removed within one year of their original import date.
A)True
B)False
Q2) U.S.imports that originate in a normal trade relations country and are shipped to a GSP country must undergo a dual transformation in the GSP country in order for the GSP country to be considered the country of origin.
A)True
B)False
Q3) A protest of entry is filed by the importer against the Customs Service when:
A) A dispute arises regarding liquidation.
B) A dispute arises regarding the port at which the goods were received.
C) The importer wishes to refuse delivery and possession of the goods.
D) All of the above.
Q4) Comparing the U.S.and the EU,in what ways are U.S.businesses at a disadvantage in customs valuations/assessment of duties? In what ways are EU businesses?
Q5) What are the differences and similarities between the substantial transformation and the value-added test? What categories of countries are likely to favor which?
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Chapter 13: The Regulation of Exports
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Q1) Unilateral export controls are determined by several countries (against another or group of other countries)but enacted by only one country; multilateral export controls are determined and enacted by several countries to control the exports to another country or groups of countries.
A)True
B)False
Q2) Section 8 of the Export Administration Act does not create a private right of action in favor of victims of foreign boycotts.
A)True
B)False
Q3) There is no global consensus on the level of export control necessary.
A)True
B)False
Q4) EPCI controls were instituted to stem the flow of currency to the third world countries.
A)True
B)False
Q5) Compare and contrast unilateral export controls with multilateral controls.
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Chapter 14: North American Free Trade Law
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Q1) The North American Agreement on Labor Cooperation promotes:
A) Freedom of association.
B) Restrictions on child labor.
C) Equal pay for men and women.
D) Prohibition of forced labor.
E) All of the above.
Q2) A free trade area is a group of two or more sovereign countries in which import duties and other trade barriers are reduced or eliminated.
A)True
B)False
Q3) 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.
Q4) Write a memo advocating for the inclusion or exclusion of certain products or areas from NAFTA (or CBERA)treatment.
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Chapter 15: The European Union and Other Regional Trade Areas
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Q1) The principles of the Treaty of Rome were based on the creation of a customs union that would remove internal tariffs for members.
A)True
B)False
Q2) Compare and contrast the various dispute resolution mechanisms available to an EU member.
Q3) The Four Freedoms preempt any action by the member states in the areas of goods,services,capital and people.
A)True
B)False
Q4) Members of the EU include the following countries except:
A) France.
B) Luxembourg.
C) Italy.
D) Switzerland.
E) All of the above are members.
Q5) Compare and contrast the EU with NAFTA.
Q6) In what ways does MERCOSUR resemble the EU? The U.S.?
17
Q7) Compare and contrast the European Court of Justice with the U.S.Supreme Court.
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Chapter 16: International Marketing Law: Sales
Representatives, Advertising, and Ethical
Issues
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Q1) The distinction between independent and dependent agents is important because tax and labor law considerations are determined by the designated relationships.
A)True
B)False
Q2) Under EC Directive 86/653,an evergreen contract occurs when the agency relationship has:
A) Lasted for three or more years.
B) Been continued beyond the original fixed term with no formal renewal.
C) Been terminated by giving a three-month written notice.
D) All of the above.
Q3) An independent agent is often characterized by which of the following:
A) Principal is involved in working out details of the agent's work organization.
B) The agent is always subject to a change in instructions.
C) The agent works for many clients.
D) The agent is paid on an hourly or salaried basis.
E) All of the above.
Q4) In what ways are advertising regulations pertaining to "sin" products in the U.S.more or less liberal than those in Europe (and/ or other regions)?
Page 18
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Chapter 17: Licensing Agreements and the Protection of Intellectual Property Rights
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Q1) Licensors of IPRs are generally wary of offering licensees exclusive rights in a certain geographic area.
A)True
B)False
Q2) A field of use limitation in a licensing agreement restricts the licensee's ability to market in certain geographical areas.
A)True
B)False
Q3) Under U.S.copyright law,an author's moral rights are not protected.
A)True
B)False
Q4) The greatest protection for a firm's copyrights and patents comes from international conventions and not the local laws of individual countries.
A)True
B)False
Q5) Naked licensing results in abandonment of rights in a trademark. A)True
B)False
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Chapter 18: Takings and National Controls on Foreign Direct Investment
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Q1) Presume that you are considering investing in a foreign business/industry that is about to undergo government privatization.Draft a set of negotiation objectives you wish to address with the government.
Q2) A foreign investor may take a case against a foreign government to arbitration where:
A) The arbitration has been ordered by the president.
B) The Foreign Sovereign Immunities Act requires it.
C) The act of state doctrine requires it.
D) The foreign nation consents to it.
E) All of the above.
Q3) Classical theories on the taking of property of foreign citizens by governments were originally developed to protect the interests of European investments abroad.
A)True
B)False
Q4) Write a memo to the legislature advocating the adoption of a particular tax exemption system.
Q5) Draft a model law (plan or treaty)for government privatization.This may be done with an eye toward privatizing through national or foreign investment.
Page 20
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Chapter 19: Labor and Employment Discrimination Law
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Q1) 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
Q2) 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?
Q3) Workers in the United States acquire a property interest in their jobs such that severance pay is an entitlement to compensate for property taken upon dismissal from the position.
A)True
B)False
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Chapter 20: Environmental Law
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Q1) Some of the inadequacies of the traditional international pollution-control system include:
A) Voluntary consent by nations to international litigation or arbitration of environmental disputes is rare.
B) Litigation in the polluting company's home country can be circumvented by having all actions and decisions occur through a subsidiary in the less environmentally conscientious country.
C) A and B.
D) Neither A nor B.
Q2) Developing nations tend to oppose extensive international environmental regulation because it impairs their ability to profit from less-sophisticated production techniques.
A)True
B)False
Q3) The "circle of poison" refers to the importation of crops produced in developing nations using pesticides banned in the U.S.
A)True
B)False
Q4) 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) A clawback provision allows a foreign company to sue in their own country to recover against local American assets all or part of an antitrust judgment rendered in the U.S.
A)True
B)False
Q2) Through what is called a block exemption,the European Commission grants an automatic competition exemption to a variety of different types of transactions and agreements.
A)True
B)False
Q3) Under the single economic unit concept,the European Court of Justice imputes the behavior of a 51 percent-owned subsidiary to the parent.
A)True
B)False
Q4) The U.S.antitrust laws apply to the conduct of U.S.firms outside the territorial boundaries of the United States.
A)True
B)False
Q5) Write an argument that clawback provisions violate international law.
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