Legal Environment of International Business Exam Questions
Course Introduction
The Legal Environment of International Business examines the complex framework of laws, regulations, and ethical considerations that shape cross-border commercial activities. This course explores the sources and principles of international law, including treaties, conventions, and customary practices, with a focus on their impact on global business operations. Topics include international dispute resolution, contracts, trade regulations, intellectual property rights, and compliance with multinational legal standards. Through case studies and real-world examples, students will develop an understanding of the legal risks and opportunities inherent in conducting business internationally, preparing them to navigate challenges in a dynamic 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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Sample Questions
Q1) 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
Q2) Currency exchange risk cannot be managed because the fluctuations of currencies cannot be predicted.
A)True
B)False
Answer: False
Q3) 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
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Page 3
Chapter 2: International Law and the Worlds Legal Systems
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Sample Questions
Q1) The International Chamber of Commerce created a forum for the settlement of disputes: Multinational Arbitration Society (MAS).
A)True
B)False Answer: False
Q2) In Islamic law,"gharae" prohibits any gain not clearly outlined at the time of the contract.
A)True
B)False Answer: True
Q3) International business law draws from both public and private law as related to business transactions.
A)True
B)False Answer: True
Q4) The World Court is a major force in settling world disputes.
A)True
B)False
Answer: False
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Chapter 3: Resolving International Commercial Disputes
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Sample Questions
Q1) Choice of forum clauses fix in advance where the case will be heard by contract.
A)True
B)False
Answer: True
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) The results of a mediation are not binding on either party.
A)True
B)False
Answer: True
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Chapter 4: Sales Contracts and Excuses for Nonperformance
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Sample Questions
Q1) Contract laws in socialist countries tend to be:
I. Detailed, mechanical, and cumbersome.
II. Enforced by private companies operating on behalf of the state. Which of the following is correct?
A) Both I and II.
B) Neither I nor II.
C) I only.
D) II only.
Q2) A buyer of goods has no obligation under the CISG to examine goods promptly when received and give notice of an error in shipment.
A)True
B)False
Q3) A seller in France has a disagreement over a sales contract with a U.S.buyer.The case could be heard in either country.If the French seller starts looking for the best or most favorable court to have his case heard,it is known as:
A) Legal Precedent.
B) Multiple Selection.
C) Unfair Advantage.
D) Forum Shopping.
6
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Chapter 5: The Documentary Sale and Terms of Trade
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Sample Questions
Q1) Both negotiable instruments and negotiable documents serve as substitutes for money.
A)True
B)False
Q2) A carrier is entitled to release a shipment covered by a negotiable bill of lading to a holder in possession of a clean copy of the bill of lading only if the holder also presents a written guarantee of ownership.
A)True
B)False
Q3) When would and would not a bill of exchange constitute bearer paper?
Q4) A clean bill of lading does not protect the buyer from receiving damaged goods.
A)True
B)False
Q5) 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.
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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Sample Questions
Q1) Draft a sample of bill of lading,ensuring that you have addressed the concerns in Z.K.Marine.
Q2) Ocean carriers are liable if cargo is damaged as a result of errors in the navigation of the ship.
A)True
B)False
Q3) An ocean carrier is liable for its failure to use due diligence in providing a seaworthy ship at the beginning of the voyage.
A)True
B)False
Q4) Draft an air waybill or consignment note for inland carriage.
Q5) The type of marine insurance policy that allows the exporter to issue a certificate of insurance on a form provided by the insurance company is called:
A) Unlimited policy.
B) Shipment specific policy.
C) Discretionary policy.
D) None of the above.
Q6) Compare and contrast the liability of air carriers and sea carriers.
Page 8
Q7) 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 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.
Q2) "Bill of exchange" and "international draft" are two names for the same type of negotiable instrument.
A)True
B)False
Q3) Letters of credit drawn with no specified expiration date are required to be submitted within 21 days or a discrepancy occurs.
A)True
B)False
Q4) Letters of credit are recognized in all modern legal systems of the world.
A)True
B)False
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 Commerce Clause vests the federal government with limited control over foreign commerce.
A)True
B)False
Q2) One argument in favor of a strong executive branch in international affairs is that the nation must "speak with one voice."
A)True
B)False
Q3) Consider the interaction between and contradictions of the NAFTA Implementation Act and the U.S.Constitution's Treaty Clause.
Q4) A convention is a multilateral agreement on matters usually related to commercial issues of common concern.
A)True
B)False
Q5) 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
10
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Chapter 9: Gatt Law and the World Trade Organization:
Basic Principles
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Sample Questions
Q1) When import regulations are readily available to importers and exporters,they are considered to be transparent.
A)True
B)False
Q2) The phrase to describe when a foreign government's import regulations are not made readily available to the public or are hidden or disguised in bureaucratic rules or practices is:
A) Not transparent.
B) Unfair trade practices.
C) Bureaucratic procrastination.
D) Limited access.
Q3) Tariffication is the process in which quotes,licensing schemes,and other nontariff barriers to trade are "converted" to tariffs.
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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Sample Questions
Q1) Section 301 of the Trade Act of 1974 permits the United States to unilaterally retaliate against foreign companies that discriminate against U.S.goods or services.
A)True
B)False
Q2) Thailand's import restrictions on cigarettes:
A) Were justified under GATT article XI as protection of domestic agriculture.
B) Were justified in the interest of public health.
C) Were not justified under GATT article XI as protection of domestic agriculture.
D) Were not justified because they violated the principle of free trade.
Q3) Under GATT,an exception from the national treatment provision is granted to allow governments to favor domestic suppliers.
A)True
B)False
Q4) Special 301 is used against countries that fail to protect U.S.intellectual property rights.
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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Sample Questions
Q1) When a petition for import relief is filed with the International Trade Commission,the ITC conducts an investigation and must consider all the following factors except:
A) Idling of productive facilities in the industry.
B) Unemployment in the industry.
C) Ability of industry to shift to production of other products.
D) Increase in imports.
Q2) The GATT Agreement on Safeguards permits a member state to increase tariffs on an imported product in order to allow a domestic manufacturer to successfully introduce a competitive product in the domestic market.
A)True
B)False
Q3) Which of the following statements best describes the Information Technology Agreement?
A) It has succeeded in eliminating tariffs on information technology products.
B) It eliminates tariffs on information technology products.
C) It has succeeded in eliminating non-tariff barriers that impede market access for information technology products.
D) The agreement was sponsored by WIPO.
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Chapter 12: Imports, Customs, and Tariff Law
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Sample Questions
Q1) Country-of-origin information impacts all of the following except:
A) The applicability of a countervailing duty.
B) The applicability of a quota.
C) The tariff classification of the article.
D) The rate of duty on an import.
Q2) All of the following indicate that a product has been substantially transformed except:
A) the product has a new name, character or use.
B) the product has been advanced in value.
C) the product underwent a change in tariff classification.
D) the product has been manufactured in one country and shipped to an intermediary country before coming to the U.S.
Q3) 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
Q4) With regard to rules to determine the origin of goods,compare and contrast the tests used under NAFTA and non-NAFTA nations.
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Chapter 13: The Regulation of Exports
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Sample Questions
Q1) Export controls have been extended by the president through the issuance of executive orders pursuant to the IEEPA.
A)True
B)False
Q2) Formulas,blueprints,and technical data are subject to controls when exported.
A)True
B)False
Q3) Controls have been abolished on all commodities going to Russia.
A)True
B)False
Q4) Items that are not classified on the Commerce Control List may be exported without an in individual export license.
A)True
B)False
Q5) The U.S.export control system is conflicted: on the one hand,advocates of free trade argue for the most limited restrictions,while national security advocates press for relatively more restrictions.
A)True
B)False
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Chapter 14: North American Free Trade Law
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Sample Questions
Q1) An example of a sectoral issue is:
A) A dispute regarding the tariffs on a product.
B) An issue concerning a particular area of the economy.
C) An issue concerning the environmental effects of a product.
D) A dispute regarding quotas.
Q2) Regarding trade in services under NAFTA:
A) No NAFTA country can require a North American service provider to have a residence or office within its border.
B) The most important impact of NAFTA's financial services provisions is that they open Mexican financial service industries to investment by Canada and the United States.
C) NAFTA does not affect regulations applied to purely domestic truck or bus transportation.
D) NAFTA eliminated all tariffs on telephones, cellular phones, and trade in communications equipment in 2004.
E) All of the above are correct.
Q3) NAFTA was built on the U.S.-Canada Free Trade Agreement.
A)True
B)False
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16
Chapter 15: The European Union and Other Regional Trade Areas
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Sample Questions
Q1) The EU functions to eliminate barriers to trade by making mergers and acquisitions more difficult.
A)True
B)False
Q2) Because no dissenting opinions are issued,no ruling is made by the Court of Justice until all judges are in agreement.
A)True
B)False
Q3) The Commission of the European Communities v.Italian Republic involved the importation of vegetable fats labeled as "chocolate substitutes."
A)True
B)False
Q4) Compare and contrast the EU with NAFTA.
Q5) The trend for regional economic integration is apparent worldwide.
A)True
B)False
Q6) The Treaty of Lisbon prevented member states from leaving the EU.
A)True
B)False
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Chapter 16: International Marketing Law: Sales
Representatives, Advertising, and Ethical
Issues
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Sample Questions
Q1) Sales representatives that perform specific acts at the specific direction of the company they represent are considered:
A) Agents of the company.
B) Principals of the company.
C) Independent contractors of the company.
D) None of the above.
Q2) In Germany,the attitudes toward exaggeration in advertising are:
A) Not highly regulated,
B) Highly regulated,
C) The law is uncertain and in a state of change,
D) Best illustrated by the Carbolic Smoke Ball case.
Q3) The Adler v.The Federal Republic of Nigeria case involved:
A) The details of scheduling created by agent within principal's general requirements.
B) The U.S. principal creates a marketing program and the agent carries it out.
C) The agent organizes, pursues, and sets the schedule for the marketing program.
D) Whether the local agent should be paid on a commission basis.
E) The Foreign Corrupt Practices Act.
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Page 18
Chapter 17: Licensing Agreements and the Protection of Intellectual Property Rights
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Sample Questions
Q1) Transfer agreements in Japan and some newly developed countries such as Korea require:
A) Approval by the government.
B) Negotiation between the foreign licensor and the government.
C) Notification to the government.
D) Assurance that the agreement has not be entered into corruptly.
Q2) The importation of foreign-made trademarked merchandise into the U.S.for sale in competition with the U.S.trademark owner's own merchandise made in the U.S.is referred to as:
A) Copycat competition.
B) Gray marketing.
C) Reverse trade advantage.
D) Black marketing.
Q3) Governments in developing countries usually encourage the use of licensed intellectual property by diligently enforcing laws designed to protect it from theft or other means of exploitation.
A)True
B)False
Q4) Compare and contrast TRIPS with IPR in the U.S.or another country (for example,India).
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Chapter 18: Takings and National Controls on Foreign Direct Investment
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Sample Questions
Q1) As a general rule,firms are responsible for the torts committed by their foreign subsidiaries but not by their foreign branch offices.
A)True
B)False
Q2) Where the government expropriates property,the former owner will receive:
A) The same amount of compensation as a victim of nationalization.
B) A higher amount than a victim of nationalization.
C) A lower amount than a victim of nationalization.
D) A, B, or C.
E) A or B.
Q3) Under the modern traditional theory,the sovereign may nationalize foreign-owned property only where:
A) It is done promptly.
B) It is done in a reasonable manner.
C) It is done after the foreign firm has been convicted of criminal behavior in the host country.
D) It is done in a nondiscriminatory fashion.
Q4) Write a treaty provision regarding the taxation of e-commerce.
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Q5) Compare and contrast the traditional and modern traditional theory of takings.
Chapter 19: Labor and Employment Discrimination Law
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Sample Questions
Q1) A number of foreign countries,especially those with a two-tiered board structure,require substantial employee representation on the board of directors.
A)True
B)False
Q2) In the United States,employers must have a good cause and give adequate notice before dismissing an employee.
A)True
B)False
Q3) The European Union treaties prohibit discrimination on the basis of:
A) Religion.
B) Ethnic Background.
C) Nationality.
D) All of the above.
Q4) Europeans tend to feel that over a period of time,employees acquire a property interest in their jobs.
A)True
B)False
Q5) Draft a covenant identifying international standards regarding discrimination in employment.
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Chapter 20: Environmental Law
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Sample Questions
Q1) Developing nations generally favor
A) Creation of a permanent trade and environment committee in the WTO.
B) An ad valorem tax on all imports to promote environment-friendly development in poorer nations.
C) Transfer of environmentally appropriate technology for little or no charge.
D) A and B.
E) B and C.
Q2) The Basel Convention on Transboundary Movements of Hazardous Wastes has been adopted by over 150 nations.
A)True
B)False
Q3) What is meant by the "polluter pays" principle? How is it consistent with free market economics?
Q4) Reflecting on the "Circle of Poison," draft a bill regarding pesticide exports.
Q5) Before a U.S.firm can export hazardous waste to a foreign country,they must have written consent from that government delivered to the U.S.Environmental Protection Agency.
A)True
B)False
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Chapter 21: Regulating the Competitive Environment
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Sample Questions
Q1) Under the European Commission's block exemption,the parties whose agreements fall under certain exempted categories only have to seek de minimis approval for their transactions to be considered exempt under competition law.
A)True
B)False
Q2) Because The Sherman Act is a U.S.statutory law,it cannot be used to regulate or bring an action against a foreign company.
A)True
B)False
Q3) During the 1980s,the U.S.government vigorously enforced American antitrust laws.
A)True
B)False
Q4) The analytical framework established by American antitrust law distinguishes between actions that are wrong per se and actions to which the rule of reason applies.
A)True
B)False
Q5) In what instances would both the U.S.and EU extraterritorial jurisdiction of competition laws apply? Would only one apply?
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