168. World Inc. wanted to sell sugar-free candy made by Sweets (a U.S. company) to an Italian company, Ferraro. The
goods were to be paid for by an irrevocable letter of credit issued in the name of World. The letter of credit stated
that drafts must be accompanied by a bill of lading, packing list, FDA approvals, and certificates of insurance.
Drafts were to be presented to C Bank before March 15, 2009. After shipping the candy to Ferraro, World
presented the Bank with the required documentation on March 21, 2009. The Bank should:
a. pay the draft as required by the letter of credit because it is irrevocable
b. pay the draft because all the required documentation is in order
c. pay the draft because Ferraro would be unjustly enriched if it received the goods and did not pay for them
d. not pay the draft because the letter of credit is irrevocable
e. none of the other choices
169. Repatriation is concerned with the:
a. removal of a company‘s products to its home nation
b. removal of a company’s products to foreign nations
c. ability of a business to return money earned in a foreign nation to its home nation
d. ability of a foreign company to transfer assets on a stock exchange other than its home exchange
e. ability of a business to relocate to a foreign nation
170. Repatriation is concerned with the:
a. removal of a company‘s products to its home nation
b. removal of a company‘s products to foreign nations
c. ability of a business to relocate to a foreign nation
d. ability of a foreign company to transfer assets on a stock exchange other than its home exchange
e. none of the other choices
171. The ability of a business to return money earned in a foreign country back to its home country is called:
a. repatriation
b. exchange control
c. exchange ability
d. credit fluidity
e. currency transferability
172. The ability of a business to return money earned in a foreign country back to its home country is called:
a. currency transferability
b. exchange control
c. exchange ability
d. credit fluidity
e. none of the other specific choices are correct
173. The practice of creating an artificial price to use in its accounts when a firm sells goods from a division located in
one country to a division within the U.S. is referred to as:
a. artificial pricing
b. pseudo pricing
c. transfer pricing
d. false market pricing
e. internal market pricing
174. The practice of creating an artificial price to use in its accounts when a firm sells goods from a division located in
one country to a division within the U.S. is referred to as:
a. artificial pricing
b. pseudo pricing
c. internal market pricing
d. false market pricing
e. none of the other choices are correct
175. A payment clause:
a. specifies the method in which payment is to be made
b. specifies the manner in which payment is to be made
c. specifies the currency in which payment is to be made
d. may address inflation problems or currency exchange rates
e. all of the other choices
176. The of an international contract states the manner in which payment is to be received and the currency in
which it is made. a.
payment clause b.
monetary clause
c. choice of language clause
d. choice of currency clause
e. force majeure clause
177. The of an international contract states the manner in which payment is to be received and the currency in
which it is made.
a. force majeure clause
b. monetary clause
c. choice of language clause
d. choice of currency clause
e. none of the other choices are correct
178. The of an international contract sets out the official language by which the contract is to be interpreted.
a. payment clause
b. communication clause
c. choice of language clause
d. choice of wording clause
e. force majeure clause
179. The of an international contract sets out the official language by which the contract is to be interpreted.
a. payment clause
b. communication clause
c. force majeure clause
d. choice of wording clause
e. none of the other choices are correct
180. Meiller Co. had a dispute with a Peruvian client over the wording in a contract. The issue ended up in federal court
in Miami. The judge ruled that the Spanish version of the contract was controlling. To avoid such problems in the
future, what should Meiller do?
a. fully develop the payment clause in the contract
b. more carefully study the cultures of the country in which the client is located
c. have the contract translated into the two languages and include a choice of language clause designating
English as the official language
d. sell the goods using letter of credit and make sure the client meets all requirements of the letter of credit
e. there is nothing to be done since many contracts must be written in more than one language
181. In an international contract, a force majeure clause:
a. specifies the contingencies in the event of a specified occurrence contemplated by the parties during the
negotiation of the contract
b. protects contracting parties from problems arising from problems beyond their control
c. is triggered solely by economic rather than social and political activities and events
d. an integral part of the arbitration provision when third world governments are involved in the contract
e. is not a part of international contracts for the sale of services
182. In an international contract, a force majeure clause:
a. specifies the contingencies in the event of a specified occurrence contemplated by the parties during the
negotiation of the contract
b. may not be included in a contract for the sale of services
c. is triggered solely by economic rather than social and political activities and events
d. an integral part of the arbitration provision when third world governments are involved in the contract
e. none of the other choices
183. The in international contracts protects contracting parties from problems beyond their control.
a. payment clause
b. communication clause
c. choice of language clause
d. unforeseen happenings clause
e. force majeure clause
184. The in international contracts protects contracting parties from problems beyond their control.
a. payment clause
b. communication clause
c. choice of language clause
d. unforeseen happenings clause
e. none of the other choices are correct
185. A forum selection clause is concerned with choosing:
a. an appropriate bank from which to draw a letter of credit
b. a country in which to locate a manufacturing plant
c. the country in which a dispute over the contract is to be litigated
d. which language will be controlling if disputes concerning the interpretation of a contract arise
e. the proper method of payment for a contract
186. A forum selection clause is concerned with choosing:
a. an appropriate bank from which to draw a letter of credit
b. a country in which to locate a manufacturing plant
c. the proper method of payment for a contract
d. which language will be controlling if disputes concerning the interpretation of a contract arise
e. none of the other choices
187. The in international contracts selects the court or place of arbitration in which disputes must be resolved.
a. payment clause
b. communication clause
c. choice of language clause
d. forum selection clause
e. force majeure clause
188. The in international contracts selects the court or place of arbitration in which disputes must be resolved.
a. payment clause
b. communication clause
c. choice of language clause
d. force majeure clause
e. none of the other choices of correct
189. Which of the following government actions may result in a financial loss for American companies operating
overseas?
a. nationalization
b. confiscation
c. expropriation
d. any of the other choices
e. foreign government are not allowed, under international law, to harm financial interests of foreign investors
190. When a country takes over a foreign investment or, at times, an entire industry in a country it is known as:
a. nationalization
b. confiscation
c. expropriation
d. any of the other choices
e. foreign government are not allowed, under international law, to harm financial interests of foreign investors
191. When a country takes over a foreign investment or, at times, an entire industry in a country it is known as:
a. foreign government are not allowed, under international law, to harm financial interests of foreign investors
b. confiscation
c. expropriation
d. any of the other choices
e. none of the other choices are correct
192. Nationalization has been seen in which of the following countries:
a. Saudi Arabia
b. Iran
c. Russia
d. England
e. nationalization has been seen in all of these countries
193. Nationalization has NOT been seen in which of the following countries:
a. Venezuela
b. Iran
c. Russia
d. England
e. nationalization has been seen in all of these countries
194. BT (American) is considering opening a factory in the Ukraine. The Ukraine political environment is a concern. To
protect itself in case of nationalization by the Ukraine government, BT should:
a. seek a guarantee from the World Bank
b. not be concerned; overseas investments are protected by the Export Administration Act
c. not be concerned; overseas investments are protected by the Export Trading Company Act
d. buy an “all risk” insurance policy to cover losses in case of nationalization of specified property
e. demand a higher rate of return because projects with the Ukraine and Third World countries are inherently
risky
195. Treaties or conventions between countries can ease litigation related to international commerce by:
a. allowing for proper notice of the suit to the foreign party
b. allowing appropriate service of process
c. providing methods for documentation certification
d. providing procedures for taking evidence
e. all of the other specific choices are correct
196. Which of the following results in judicial forums’ general ineffectiveness with regard to resolving international
commerce disagreements:
a. cost considerations
b. jurisdictional barriers
c. length of time to litigate
d. legal uncertainties
e. all of the other specific choices are correct
197. The International Court of Justice has the power to decide international disputes. However, standing to bring suit is
limited to:
a. aggrieved individuals⎯except businesses⎯with no acceptable neutral forum for dispute resolution
b. aggrieved parties⎯but only in commercial transactions⎯with disputes that cannot be resolved by arbitration
c. aggrieved parties⎯both individuals and businesses⎯but only if they have a specific clause in their contract
calling for resolution by the International Court
d. only those countries that are part of the world community⎯no individuals or businesses have standing
e. only those countries that are part of the world community and which do not have a well-defined judicial
system
198. The International Court of Justice has the power to decide international disputes. However, standing to bring suit is
limited to:
a. aggrieved individuals⎯except businesses⎯with no acceptable neutral forum for dispute resolution
b. aggrieved parties⎯but only in commercial transactions⎯with disputes that cannot be resolved by arbitration
c. aggrieved parties⎯both individuals and businesses⎯but only if they have a specific clause in their contract
calling for resolution by the International Court
d. only those countries which do not have a well-defined judicial system
e. none of the other choices
199. Camerican contracted with a Turkish company, Hursik, to buy 20,000 tons of tomatoes. Hursik breached its
contract with Camerican and sold its products to another buyer for more money. Camerican could sue Hursik in
Turkey, or trying to get Hursik into a U.S. court. Camerican might have reduced dispute resolution difficulties by:
a. relying on World Bank import guarantees
b. requiring that an arbitration clause be placed in its sales agreement
c. contracting for a smaller quantity of product from the Turkish supplier
d. entering into an agreement with U.S. suppliers since they do not breach their contracts
e. nothing could have been done by Camerican to avoid its dispute resolution problems
200. Because foreign judicial forums may not be very effective in resolving many international commercial disputes,
many companies look to to resolve these disputes.
a. mediation
b. risk selection clauses
c. arbitration
d. the United Nations
e. the Private Court of Justice
201. The International Court of Justice has:
a. 15 judges, with no two judges from the same country
b. 15 judges, 7 of which are from the Netherlands
c. 10 judges, with no two from the same country
d. 10 judges with no more than two from the same country
e. 12 judges who serve for life
202. The International Court of Justice has:
a. 12 judges who serve for life
b. 15 judges, 7 of which are from the Netherlands
c. 10 judges, with no two from the same country
d. 10 judges with no more than two from the same country
e. none of the other choices are correct
203. The doctrine of sovereign immunity allows:
a. a foreign nation to try all cases involving its nationals before an international tribunal
b. a domestic business to take all claims against a foreign sovereign before the International Court of Justice
c. a domestic court to give up jurisdiction it holds over a foreign enterprise
d. a foreign court to bring the U.S. government to trial in all cases involving government departments
e. a foreign country to seize the property of businesses if the seizure is for a public purpose and the country
pays the business just compensation
204. The allows a court to give up its right to jurisdiction over foreign enterprises or countries.
a. doctrine of neutrality
b. doctrine of litigation
c. doctrine of sovereign immunity
d. doctrine of arbitration
e. doctrine of noninvolvement
205. The allows a court to give up its right to jurisdiction over foreign enterprises or countries.
a. doctrine of neutrality
b. doctrine of litigation
c. doctrine of noninvolvement
d. doctrine of arbitration
e. none of the other choices are correct
206. Before the 1979 Iranian uprising, Lumax had a plant in Iran. The Iranian government allowed Lumax to send
products and profits out of the country. The new government confiscated Lumax‘s plant. The company sued the
government of Iran in a U.S. courts: the forum choice of the parties in case of any dispute. A U.S. court will likely
hold:
a. that Iran has committed an lawful act and need not compensate Lumax
b. that Iran and the U.S. must resolve their differences in a neutral forum such as the courts of Switzerland
c. that Lumax may sue the government of Iran under the provisions of the Foreign Sovereign Immunities Act
d. that Iran must compensate Lumax according to international nationalization laws
e. for Lumax and allow the company to attach assets held by the Iranian government in the U.S.
207. The legal doctrine of foreign sovereign immunity is concerned with:
a. the ability of foreign countries create new courts
b. the degree to which foreign countries maintain trade laws
c. barring foreign investors from collecting damages in host countries
d. barring US courts from exercising jurisdiction over foreign governments or their agencies
e. none of these
208. Refer to Fact Pattern 22-1. When Naida asks you what financial risks she might face in the international arena you
should mention the possibility of:
a. harsh treatment by foreign sovereigns
b. currency exchange rate fluctuations
c. hostile legal forums
d. less favorable laws for foreigners
e. all of the other choices
209. Refer to Fact Pattern 22-1. Naida opens a shop in Paris, and exports her clothes to France from her Joliet, Illinois
plant. If France taxes Naida’s clothing upon entry into the country, France has imposed:
a. an export duty
b. an immigration fee
c. a tariff
d. an exercise fee
e. a licensing fee
210. Refer to Fact Pattern 22-1. Naida opens a shop in Madrid, and has incomplete pieces of her clothes sent to Spain
from her Joliet plant. The materials go to an area where they are assembled into completed clothing. The finished
products are shipped to Madrid. The Spanish government taxes the finished clothes once they leave the area. This
is known as:
a. a qualified trade area
b. a foreign-trade zone
c. a duty-free port
d. a non-aligned trade zone
e. a developing port area
211. Refer to Fact Pattern 22-1. Naida moves manufacturing operations to the Philippines. Under Philippine law, Naida
does not have to use flame-retardant fabric in her clothing, as she must in the US. If Naida attempts to ship clothing
from her Philippines plant into Los Angeles, customs officials will:
a. charge her a higher entry fee because her clothes do not meet U.S. safety standards
b. do nothing because the U.S. trades with the Philippines on a most favored nation basis
c. allow the clothes through customs but will issue Naida a citation
d. bar the clothes from entering the U.S. because they fail to meet U.S. safety standards
e. bar the clothes from entering the U.S. because they do not meet international safety standards
212. Refer to Fact Pattern 22-1. If Naida keeps her Joliet plant, and ships her clothes from the U.S. to Paris, Madrid,
and other cities, she may be subject, in the U.S., to:
a. import restrictions
b. tariff controls
c. export regulations
d. ad valorem taxes
e. licensing fees
213. Refer to Fact Pattern 22-1. Suppose instead of shipping clothing overseas, Naida wanted to ship a sophisticated
piece of guided missile software. Naida would probably be subject to the limitations imposed by which piece of U.S.
legislation?
a. the Export Administration Act
b. the Smoot-Hawley Act
c. the Tariff Import Act
d. the Advanced Technologies Act
e. all of the other choices pieces of legislation would apply
214. Refer to Fact Pattern 22-1. Naida signs an agreement with an Italian firm stating that it will manufacture some
clothing, and that Naida will sell it in shops she establishes in various Italian cities. Such an arrangement is best
described as:
a. a wholly owned subsidiary
b. a franchise
c. a joint venture
d. a corporation
e. a licensing agreement
215. Refer to Fact Pattern 22-1. Naida hires a contractor in Moscow to supervise building a new store. To pay the
subcontractors, Naida goes to her bank (an international bank with a branch office in Moscow) and signs an
agreement stating that the bank will pay the subcontractors upon presentation of documentation that their work is
completed. Naida has arranged for:
a. repatriation of her money
b. currency exchange insurance
c. a countertrade sale
d. letters of credit
e. a buy-back arrangement