Legal Environment of Business
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Course Introduction
Legal Environment of Business introduces students to the fundamental legal principles that affect business operations and decision-making. The course covers the sources and functions of law, the structure of the court system, and the regulatory environment of business. Topics include contracts, torts, property, agency, employment law, and government regulation, as well as ethical considerations in the business context. Emphasis is placed on how legal concepts and issues influence business strategy, risk management, and the responsibilities of managers to comply with legal and ethical standards in a global marketplace.
Recommended Textbook
International Business Law and Its Environment 8th Edition by Richard Schaffer
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21 Chapters
1385 Verified Questions
1385 Flashcards
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Page 2
Chapter 1: Introduction to International Business
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63 Verified Questions
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Sample Questions
Q1) International franchising allows the franchisee the right to use a(n):
A) Export management company.
B) Export trading company.
C) Copyright.
D) None of the above.
Answer: C
Q2) Firms that assist indirect exporters and are licensed to operate under the antitrust laws of the U.S.are:
A) Export management companies.
B) Indirect exporter merchants.
C) Export trading companies.
D) None of the above.
Answer: C
Q3) Which of the following is not a characteristic of multinational corporations:
A) The United States is usually their home nation.
B) They derive capital resources worldwide.
C) They operate facilities of production in more than one country.
D) They move production, technology, and capital to those countries with the most hospitable environment.
Answer: A
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Chapter 2: International Law and the Worlds Legal Systems
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Sample Questions
Q1) The International Chamber of Commerce developed the Uniform Customs and Practice for Documentary Credit.
A)True
B)False
Answer: True
Q2) International business law draws from both public and private law as related to business transactions.
A)True
B)False
Answer: True
Q3) The Vienna Convention codified significant international statutory law.
A)True
B)False
Answer: False
Q4) The basic resources of the IMF come from:
A) Individual taxes levied on each nation's industries.
B) Quota subscriptions by member nations.
C) Endowments raised by private contributions.
D) None of the above.
Answer: B
Page 4
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Chapter 3: Resolving International Commercial Disputes
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Sample Questions
Q1) The disadvantages of arbitration include: I. Limited Discovery
II) Limited Rights to Appeal
A) I only.
B) II only.
C) Neither I nor II.
D) Both I and II.
Answer: D
Q2) Many factors must be considered in choosing binding arbitration.All of the following should be considered except:
A) Cost.
B) Speed.
C) Enforceability.
D) Complexity.
Answer: D
Q3) Many societies view litigation as evidence of personal achievement by the parties.
A)True
B)False
Answer: False
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5
Chapter 4: Sales Contracts and Excuses for
Nonperformance
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86 Verified Questions
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Sample Questions
Q1) The CISG says that the remedy of specific performance is allowed where the domestic laws of a country allow such a remedy.
A)True
B)False
Q2) Eastern Airlines contracted with Gulf Oil for a supply of jet fuel.An oil embargo resulted in a 400 percent increase in the price of oil.Gulf demanded a price increase from Eastern.Eastern sued to ensure its supply of oil at the contract price.The result in court was:
A) That Eastern won because Gulf should have foreseen this situation.
B) Gulf won due to commercial impracticability.
C) That Eastern lost because a 400 percent increase is too much of a hardship for Gulf. D) None of the above would be the court's decision in this situation.
Q3) Money damages for breach of a sales contract may also include an amount for lost profits arising as a reasonably foreseeable consequence of the breach.
A)True B)False
Q4) Re-write that contract using U.S.law.
Q5) Compare and contrast the remedies for breach under both U.S.law and the CISG.
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Chapter 5: The Documentary Sale and Terms of Trade
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Sample Questions
Q1) What are the benefits and possible detriments of using an inspection firm?
Q2) The seller issues the bill of lading. A)True
B)False
Q3) In an effort to satisfy an important customer in Portugal,the seller is willing to pay all ocean freight charges and bear all risks of the journey to the port of Lisbon.The buyer,however,has agreed to pay all unloading charges.The exporter should quote his prices:
A) DES Lisbon.
B) FAS Lisbon.
C) CIF Lisbon.
D) DEQ Lisbon.
E) None of the above.
Q4) Air waybills are governed by the Uniform Commercial Code. A)True B)False
Q5) Another term for a negotiable bill of lading is a documentary draft. A)True
B)False
Q6) Draft a contract that includes shipping terms.
Page 7
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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) A consignee can prove a shortage by showing that the quantity of the cargo unloaded at the destination is less than that listed on the bill of lading.
A)True
B)False
Q2) Carriers can relieve themselves for liability for shortages to cargo by inserting provisions in their bills of lading that the amount of cargo loaded at the port of shipment was the "shippers load,stuff and count."
A)True
B)False
Q3) Goods moving under a straight bill of lading may be delivered either to the consignee or to the notify party.
A)True
B)False
Q4) Carriers transporting goods to Latin America may deliver the cargo to the party presenting the carta declaratoria.
A)True
B)False
Q5) Write an insurance policy for air or sea carriage.
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Chapter 7: Bank Collections, Trade Finance, and Letters of Credit
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Sample Questions
Q1) The form of counter trade that involves a sale of goods to a buyer who required as a condition of sale that the seller buys other goods produced in that country is called:
A) Contratrade.
B) Reverse trade.
C) Barter.
D) Counter purchase.
Q2) Weigh the benefits and detriments of counterpurchase,barter,and buy-back agreements.
Q3) Government agencies in the U.S.are not allowed to insure payments made to a U.S.bank if the underlying contract between the buyer and seller is entirely independent from the letter of credit.
A)True
B)False
Q4) Draft a letter of credit.
Q5) Under accounts receivable financing,the factor is protected from contract claims for defective goods by the holder in due course rules.
A)True
B)False
9
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Chapter 8: National Lawmaking Powers and the Regulation
of Ustrade
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Sample Questions
Q1) The power of Congress "to regulate commerce with foreign nations and among the several states" is found in:
A) Art. III, Sec. 1 of the U.S. Constitution.
B) Art. I, Sec. 8 of the U.S. Constitution.
C) The Declaration of Independence.
D) The Preamble to the U.S. Constitution.
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 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.
Q4) Compare and contrast the powers of Congress and the president with regard to the regulation of trade (for example,customs and imports).
Page 10
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Chapter 9: Gatt Law and the World Trade Organization:
Basic Principles
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Sample Questions
Q1) Assess the relative value of a reported U.S.appellate (or trial)decision and a WTO panel report in a trade dispute.
Q2) An embargo is a complete ban on trade with a foreign nation.
A)True
B)False
Q3) 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.
Q4) 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.
Q5) Compare and contrast direct and indirect nontariff barriers.
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Chapter 10: Laws Governing Access to Foreign Markets
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Sample Questions
Q1) The United States announced it would not impose sanctions on Japan after the U.S.and Japan reached an agreement intended to give U.S.telecommunication firms equal access to the Tokyo cellular phone market.
A)True
B)False
Q2) Under GATT,an exception from the national treatment provision is granted to allow governments to favor domestic suppliers.
A)True
B)False
Q3) Trade-related investment measures are those restrictions a nation places or foreign investment that adversely affect trade in goods or services.
A)True
B)False
Q4) Under the GATT 1994 Agreement on Agriculture:
A) Export opportunities for agricultural products are expected to increase.
B) Government subsidies are expected to be reduced.
C) Nontariff barriers will gradually be converted to tariffs.
D) Japan and Korea agreed to open their markets to farm products.
E) All of the above.
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Chapter 11: Regulating Import Competition and Unfair Trade
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76 Verified Questions
76 Flashcards
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Sample Questions
Q1) Scenario
An across-the-board reduction by the United States in the corporate tax rate.
Q2) 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.
Q3) Dumping does not require that the product be sold in the home country for less than the cost to produce it.
A)True
B)False
Q4) Under U.S. law, antidumping duties can be imposed where:
I. It is determined that a class of foreign merchandise is being, or likely to be, sold in the U.S. at less than fair value, and a domestic industry is injured as a result.
II. A domestic industry needs protection to update its technology to compete with the dumped product.
A) I only.
B) II only.
C) Both I and II.
D) Neither I nor II.
Page 13
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Chapter 12: Imports, Customs, and Tariff Law
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Sample Questions
Q1) An imported item substantially transformed in the United States by the importer before being sold to the ultimate purchaser need not be marked with a foreign country of origin.
A)True
B)False
Q2) Goods financed by the seller have duties assessed against the interest payable only if that amount is included in the purchase price of the goods.
A)True
B)False
Q3) Where the transaction value of merchandise cannot be determined,the U.S.Bureau of Customs and Border Protection will look to the dutiable value of identical merchandise imported under similar circumstances.
A)True
B)False
Q4) The owner,purchaser,or consignee of goods or a customs broker with a written power of attorney must enter goods delivered to a U.S.port of entry within five days of the arrive of the goods.
A)True
B)False
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Chapter 13: The Regulation of Exports
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32 Flashcards
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Sample Questions
Q1) Multilateral controls are typically subject to self-regulation (via each home country). Outline an (alternative)internationalized process to address situations where one partner to such an agreement believes that another partner to the agreement is not enforcing the agreement or is doing so unevenly.
Q2) The current law that controls the export of goods from a U.S.manufacturer to a foreign buyer also controls the re-export of those goods beyond the boundaries of the country of the original foreign buyer.
A)True
B)False
Q3) "Diversion" is when 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.
A)True
B)False
Q4) One current export control issue pertains to the level of control imposed on encryption software.
A)True
B)False
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Chapter 14: North American Free Trade Law
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Sample Questions
Q1) NAFTA encourages that standards and technical regulations not be used as a nontariff barrier.
A)True
B)False
Q2) Regarding the U.S.-Canadian dispute over softwood lumber:
A) The extraordinary challenge committee found that the "stump charges" violated NAFTA.
B) The extraordinary challenge committee found that the "stump charges" were justified.
C) The binational panel was justified in its decision that no countervailing duty was authorized by U.S. law.
D) The binational panel was justified in its decision to recommend countervailing duties against Canada.
Q3) Draft a new NAFTA clause regarding an environmental or labor protection issue (you may also wish to consider environmental measures applicable to investment).
Q4) A customs union is a free trade area with a common external tariff.
A)True
B)False
Q5) Create a regulation regarding reciprocity of professional licenses.
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Chapter 15: The European Union and Other Regional Trade Areas
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60 Verified Questions
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Sample Questions
Q1) The Four Freedoms include free movement of goods,services,capital and people.
A)True
B)False
Q2) The Treaty of Lisbon included all of the following except:
A) Renaming the EEC to the EU.
B) The right for states to withdraw from the EU.
C) A citizen's initiative process.
D) Elevation of the European Council to a primary institution within the EU.
Q3) After the passage of the Single European Act,the EU went from qualified voting to the requirement of unanimous consent.
A)True
B)False
Q4) Similar to the United States Supreme Court,decisions of the European Court of Justice are issued with the dissenting opinions of the minority ruling judges.
A)True
B)False
Q5) Compare and contrast EU directives with regulations,giving examples of each.
Page 17
Q6) Compare and contrast the European Court of Justice with the U.S.Supreme Court.
Q7) In what ways does MERCOSUR resemble the EU? The U.S.?
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Chapter 16: International Marketing Law: Sales
Representatives, Advertising, and Ethical Issues
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Sample Questions
Q1) The formerly communist countries of Eastern Europe have no advertising laws.
A)True
B)False
Q2) Scenario
A cash payment of $100,000 by Michigan Machinery Manufacturers,Inc.,a U.S.corporation,to both of the candidates running for election to the office of president of Nigeria and delivered simultaneously with the company's bid for a government contract.
Q3) Presume that you are the chief operating officer of a United States company that is considering retaining a representative in Germany.What are the relative merits of deciding whether to retain a dependent or independent agent?
Q4) Which of the following is prohibited in more countries?
A) False advertising.
B) Advertising to children.
C) Sexually explicit advertising.
D) Advertising in a foreign language.
Q5) Draft an internal memo or company rule regarding permissible and forbidden actions/payments in dealing with foreign contracts.
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Chapter 17: Licensing Agreements and the Protection of Intellectual Property Rights
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Sample Questions
Q1) IPRs include patents,trademarks,and copyright,but not trade secrets.
A)True
B)False
Q2) Which of the following regulatory schemes for technology transfer agreements is most indicative of a protectionist government policy?
A) Preapproval.
B) Notification/registration.
C) No regulation.
D) None of the above.
Q3) Under U.S.copyright law,an author's moral rights are not protected.
A)True
B)False
Q4) The TRIPS Agreement:
A) Became effective July 1, 1995.
B) Promises to create a more effective international system for protection of IPRs.
C) Requires every member of the WTO to abide by the Paris Convention and the Uniform Copyright Convention.
D) A, B, and C.
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Chapter 18: Takings and National Controls on Foreign Direct Investment
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Sample Questions
Q1) OPIC insurance does not provide coverage against the loss of assets by U.S.firms in the case of the nationalization of farms or factories held in a foreign country.
A)True
B)False
Q2) The establishment of a branch overseas will have few tax consequences under U.S.tax law.
A)True
B)False
Q3) Under the laws of most legal systems,governments do not have the authority to take private property for public use.
A)True
B)False
Q4) The political risk of investing in developed countries is roughly comparable with the risks of investing in the developing countries.
A)True
B)False
Q5) Write a treaty provision regarding the taxation of e-commerce.
Page 20
Q6) Compare and contrast the traditional and modern traditional theory of takings.
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Chapter 19: Labor and Employment Discrimination Law
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Sample Questions
Q1) In many European countries,workers have been granted a right of consultation about or notice before reducing the work force.The country that generally grants its workers the most rights of participation is:
A) Great Britain.
B) France.
C) Germany.
D) Italy.
Q2) In Japan,union leadership is a stepping stone to management.
A)True
B)False
Q3) Compare and contrast the employee discharge laws in the U.S.with those in Germany.
Q4) As compared to the United States,there has been greater litigation in Europe concerning discrimination than in the United States.
A)True
B)False
Q5) Draft a treaty between the U.S.and at least one other nation regarding international employment discrimination.
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Chapter 20: Environmental Law
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Sample Questions
Q1) Due to the doctrine of ipso facto,one legal uncertainty that foreign investors need not worry about is that environmental laws will be changed once they have invested or begun operations in a host country.
A)True
B)False
Q2) The real purpose of U.S.corporate average fuel economy standards was to make it difficult for Japanese luxury cars to compete in the U.S.market.
A)True
B)False
Q3) In what ways are regional environmental treaties superior to global treaties? Inferior to them?
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) Draft a memo enumerating and discussing the "environmental risk" facing companies wishing to invest in foreign states.
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Chapter 21: Regulating the Competitive Environment
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Sample Questions
Q1) "Blocking Legislation" in international antitrust action refers to:
A) Laws that block certain goods from entering a country.
B) Provisions that prevent the discovery of documents by foreign countries and bar enforcement.
C) Setting aside certain blocks of businesses exempt from antitrust laws.
D) None of the above.
Q2) 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.
Q3) Due to the fact that foreign competition law violations offer few,if any,damage awards,there is very little private litigation.
A)True
B)False
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