35. Pursuant to EC Council Directive 86/653, an economic conditions alarm is sounded by the principal for the benefit of
his or her agent:
a. To give six-months prior notice of an increase in the agent’s sales quota.
b. When the inflation rate of the host country threatens to precipitate a price increase.
c. When currency exchange rates rise to a level that makes business unprofitable.
d. When sales forecasts indicate that the agent’s volume of business will be significantly lower than normally
expected.
36. 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.
37. Advertising of sexually explicit messages would be most severely regulated in which of the following countries:
a. Denmark.
b. Sweden.
c. The United States.
d. Saudi Arabia.
38. 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.
39. 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.
40. The FCPA was passed in the United States in the 1970s largely because:
a. The law was based on a draft law written by the United Nations.
b. U.S. public opinion and world disdain over disclosures of hundreds of unethical payments to foreign officials
by U.S. firms.
c. An attempt by the U.S. Congress to provide a more predictable and easily understood law for U.S. firms
operating abroad.
d. The law was requested by many U.S. corporations in order to allow them to compete more effectively in
foreign markets.
41. The FCPA prohibits U.S. firms from paying bribes to:
a. Foreign competitors.
b. Purchasing agents of foreign firms with whom U.S. firms do business.
c. Foreign government officials.
d. The clerk in a telephone office in Paris who is trying to place an overseas call for you.
e. Two of the above.
42. The government agency responsible for prosecuting violators of the FCPA is:
a. Department of International Judicial Review.
b. SEC
c. Department of Justice.
d. b and c.
43. Under the EU’s directive on agency relationships, whenever a principal makes a sale in a territory or a market sector
reserved for the agent, the principal must pay the agent a commission, whether or not the agent actually participated
in the sale, no matter what the agency agreement provides. This is know as a(n):
a. economic condition alarm.
b. economic commission.
c. commission override.
d. permanent commission.
44. Which of the following statements about dependent agents is true?
a. The office in which the dependent agent is unimportant and is not subject to the host country‘s tax laws.
b. A dependent agent is considered an employee for purposes of the host country‘s labor laws.
c. A principal is not liable to third parties for a dependent agent’s misdeeds.
d. All of the above.
45. If an agent sells a line of American-made children’s toys to a European toy store chain and it is later discovered that
the toys are dangerous to children, the agent is not held accountable because this is an example of:
a. product liability.
b. just cause.
c. a commission.
d. None of the above.
46. One of the founding concepts of libertarian capitalism is caveat emptor, which means:
a. truth in advertising.
b. let the buyer beware.
c. always maximize profits.
d. sales potential.
47. In advertising, a vague or exaggerated claim such as “20% less fat” is called:
a. caveat emptor.
b. false witness.
c. puffing.
d. None of the above.
48. Some countries have enacted “language laws” in advertising in order to:
a. preserve the purity of the country‘s primary language.
b. require advertisers to be clear and honest about their products.
c. protect children from inappropriate language.
d. All of the above.
49. In advertising, products such as tobacco and alcohol that are deemed to be corrosive to society are called:
a. “temptation” products.
b. illegal products.
c. “sin” products.
d. None of the above.
50. Under the FCPA, the “routine governmental action exception” is also known as the:
a. “accepted payments” exception.
b. “grease payments” exception.
c. “necessary payments” exception.
d. None of the above
51. Under the FPCA, U.S. courts have jurisdiction over a person who commits an FCPA violation:
a. only if the person is a U.S. citizen.
b. if the person commits the act while in the territory of the United States, whether or not he or she is a U.S.
citizen.
c. regardless of where the act is committed or the citizenship of the person.
d. None of the above.
52. An American manufacturer is setting up a manufacturing plant in China. A Chinese telecommunications worker has
asked the American firm’s agent to pay him a fee of $500 for setting up Internet service in the new plant. Under the
FCPA, if the American agent pays the fee, it will be considered:
a. perfectly legal; the Chinese telecommunications firm deserves to be paid for its services.
b. questionable; the American agent should confirm that this is the appropriate amount and person to pay for the
service.
c. totally illegal; it is obviously a bribe.
d. None of the above
53. Provide examples of the ways in which a U.S. advertiser is subject to more and less regulation when advertising
abroad.
54. Describe the ways that advertising regulation or consumer protection laws theoretically might differ in market
economies as compared with non-market economies. Are there examples of this theory in practice?
55. Compare and contrast U.S. and European regulations aimed at advertising to children.
56. 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)?
57. 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?
58. Evaluate the foreign political ramifications of bribery (witness the scandals and resignations in countries such as
Japan, the Netherlands, and Italy in the 1970s, not to speak of the tremendous political impact in the developing
countries). Does corruption interfere with the foreign policy of the United States, exerting influence that may be
counter to U.S. policy?
59. 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?
60. Draft a contract with a foreign representative. Include a provision regarding termination and payment for services
under such circumstances.
61. Imagine how a developing economy would wish to address truth in/deceptive advertising. Draft a position paper.
62. Outline the main legal issues attendant to a major American toy manufacturer’s worldwide advertising campaign.
63. Draft an internal memo or company rule regarding permissible and forbidden actions/payments in dealing with
foreign contracts.
64. Scenario
A wire transfer of $200,000 to the Minister of Contracting of Gambia made by Bordeaux Builders, Inc., a French
corporation, and originating from its corporate headquarters in New York in order to secure a construction contract.
65. Scenario
A birthday card and bottle of California wine sent annually by Woody Pulp, the chief executive officer of Pacific
Paper Products, Inc., a U.S. corporation, to his long-standing friend who is the Director of Government Procurement
for the Japanese government.
66. Scenario
A cash payment of $100 made by an agent of Chicago Chemicals Company, a U.S. corporation, to a processing
clerk in the Chilean Office of Business Licensing in order to expedite consideration of CCC’s application for
authority to conduct business operations in Chile.
67. Scenario
A cash payment of $250,000 made by Durdy Coal, Inc., a U.S. corporation, to DCI‘s agent with the instruction “put
this to good use on DCI‘s behalf” which in turn is paid to the State Importation Officer of the People’s Republic of
China in order to secure a Chinese import license.
68. 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.
69. Scenario
A $100,000 wire transfer made by Automobile Repair Parts, Inc., a California corporation, to the director of
contracting of Yoshiba International, a Japanese corporation, for the purpose of obtaining a supply contract from
Yoshiba.