Chapter 23
International Law in a
Global Economy
N.B.: TYPE indicates that a question is new, modified, or unchanged, as follows.
N A question new to this edition of the Test Bank.
+ A question modified from the previous edition of the Test Bank.
= A question included in the previous edition of the Test Bank.
TRUE/FALSE QUESTIONS
A1. International law is a body of law that governs relations among nations.
A2. An international custom is a general practice accepted in the international arena as
law.
A3. A treaty is a contract or other agreement between two or more nations that must be
ratified by the United Nations to take effect.
A4. Legal systems around the globe are generally divided into common law and civil law
systems.
A5. Under the principle of comity, a foreign business that deals with a U.S. business may
be subject to U.S. law.
A6. Confiscation occurs when a government seizes private property for an illegal purpose
and without just compensation.
A7. Firms overseas have almost total legal protection against government acts in the
countries in which they operate, under the act of state doctrine.
A8. The doctrine of sovereign immunity can immunize a foreign nation from the
jurisdiction of U.S. courts.
A9. A foreign state is immune from the jurisdiction of U.S. courts as long as the state is
involved in commercial activity in the United States.
A10. The simplest way for a U.S. firm to do business in a foreign market is to export its
products directly to that market.
A11. A party to a licensing agreement generally agrees to pay royalties on some basis.
A12. Confiscating property without compensation does not normally violate principles of
international law.
A13. Few nations have restrictions on imports.
A14. Congress cannot impose any restrictions on exports except taxes.
A15. Restrictions on imports may include tariffs.
A16. Restrictions on imports may include quotas.
A17. Dumping is the sale of imported goods at “greater than fair value.”
A18. The chief aim of the European Union and other trade organizations is to minimize
trade barriers among their members.
A19. A foreign citizen can bring a civil suit in a U.S. court for a violation of a treaty of the
United States.
A20. U.S. antidiscrimination laws, as they affect employment relationships, generally do
not apply extraterritorially.
MULTIPLE CHOICE QUESTIONS
A1. The government of the United States and the governments of other nations have the
power to enforce their respective national laws within their borders. The power to
enforce international law within the borders of all nations rests with
a. no court or international organization.
b. the European Union.
c. the International Court of Justice.
d. the United Nations General Assembly.
A2. In the global environment of business, the law of a particular nation, such as Brazil, China,
or India, is classified as
a. environmental law.
b. global law.
c. international law.
d. national law.
A3. The Association of Southeast Asian Nations is a regional trade association that was
created through
a. a bilateral agreement.
b. a lateral agreement.
c. a multilateral agreement.
d. a unilateral agreement.
A4. China and India form an agreement to govern their commercial exchanges with one
another. This is
a. a bilateral agreement.
b. a lateral agreement.
c. a multilateral agreement.
d. a unilateral agreement.
A5. Yokima, Ltd., and Zenota, S.A., transact an international sale of goods. For these
parties, and other international buyers and sellers, the United Nations Convention on
Contracts for the International Sale of Goods spells out the duties that apply
a. if Article 2 of the Uniform Commercial Code does not apply.
b. if a dispute is submitted to the International Court of Justice.
c. if the parties have not agreed otherwise in their contracts.
d. under all circumstances.
A6. Chile has a civil law system. In theory, in this system, the courts
a. are obligated to follow the doctrine of stare decisis.
b. may not develop their own laws.
c. must create new rules of law.
d. must develop legal concepts by case law.
A7. Business Abroad, Inc., a U.S. firm, obtains a judgment in a U.S. court against Quang Tri,
Ltd., a Vietnamese business. Whether the court’s judgment will be enforced by a court
in Vietnam depends on the Vietnamese court’s application of
a. the act of state doctrine.
b. the doctrine of sovereign immunity.
c. the principle of comity.
d. the World Trade Organization .
A8. Sudan seizes the assets of Triage Medico, Inc., a U.S. firm. Triage’s recovery from
Sudan in a U.S. court may be prevented by
a. the act of state doctrine.
b. the doctrine of sovereign immunity.
c. the Foreign Corrupt Practices Act.
d. the principle of comity.
A9. Michael, a citizen of Ireland, and Nina, a citizen of the United States, enter into a
contract. When Nina breaches the contract, Michael obtains an award of damages in
an Irish court. He asks a U.S. court to enforce the award. The U.S. court defers to and
enforces the Irish court’s decree. This is
a. a travesty of justice.
b. the act of state doctrine.
c. the doctrine of sovereign immunity.
d. the principle of comity.
A10. Noggin Development Corporation, a U.S. firm, wishes to participate, but limit its
involvement, in Middle Eastern markets. Noggin empowers Ousai, Ltd., a Dubai firm, to
enter into contracts in certain countries on Noggin’s behalf. This is
a. a distribution agreement.
b. an agency relationship.
c. indirect exporting.
d. licensing.
A11. Significant business develops in Mexico for Natural Beauty Cosmetics, Inc., a U.S. firm.
Natural Beauty appoints Ojos, Ltd., a Mexican firm, to act as Natural Beauty’s marketing
representative in Mexico. This is
a. a joint venture.
b. franchising.
c. indirect exporting.
d. licensing.
A12. Diners Corporation, a U.S. firm, signs a contract with Essen, A,G., a German firm, to
give Essen the right to use Diners’ trademark in restaurants in Germany. This is
a. a distribution agreement.
b. a joint venture.
c. direct exporting.
d. licensing.
A13. Simpatico Business, Inc., a U.S. firm, expands into international markets through a
joint venture. In the venture, Simpatico shares
a. both the profits and liabilities.
b. none of the profits or liabilities.
c. the profits but not the liabilities.
d. the liabilities but not the profits.
A14. Continents Two Corporation, a U.S. firm, establishes a wholly owned subsidiary firm in
Argentina. In this situation, Continents Two retains complete control and authority over
a. all of the operation.
b. only the part of the operation in the United States.
c. none of the operation.
d. about half of the operation.
A15. Agro Co-op, Inc., and Bio Feed Corporation are exporting firms that join together to
export a line of products. Agro Co-op and Bio Feed apply to Charter Bank for a loan to
fund their effort. Under federal law, Charter and other U.S. banks are
a. encouraged by credit guaranties to lend such funds.
b. discouraged by administrative rules to make such loans.
c. asked by enforcement agencies to report such requests.
d. banned by statute from opening such credit lines.
A16. Senator Smith and other politicians want to restrict the flow of technologically
advanced products and data from the United States to other countries. To restrict or
encourage exports, Congress can
a. do nothing.
b. assess antidumping duties.
c. impose export taxes.
d. set export quotas.
A17. The United States taxes each barrel of imported oil at a flat rate. This is
a. an antidumping duty.
b. a dumping duty.
c. a quota.
d. a tariff.
A18. Wang Ltd., a Chinese firm, imports its goods into the United States and offers those
goods for sale at “less than fair value.” This is
a. confiscation.
b. defalcation.
c. dumping.
d. expropriation.
A19. Nick, or Nora, or any U.S. citizen, can bring a civil suit in a U.S. court against a foreign
entity
a. for a tort allegedly committed in the United States only.
b. for a tort allegedly committed in the United States or overseas.
c. for a tort allegedly committed overseas only.
d. under no circumstances.
A20. Qang and other foreign citizens allege human rights violations committed overseas by
the government of Burma on behalf of Railway Construction Company, a U.S. firm. To
seek redress for their injuries in a U.S. court, these citizens can
a. subject the private company to the provisions of the Sherman Act.
b. bring civil suits under the Alien Tort Claims Act.
c. file criminal complaints under Title VII of the Civil Rights Act.
d. do nothing.
ESSAY QUESTIONS
A1. When a nation moves from a state-controlled economy toward free enterprise, it
must develop a new set of business laws. If you could start from scratch, what kind of
business law system would you adopt—a civil law system or a common law system?
What factors should be considered in deciding the business regulations to impose?
A2. International Diversified Corporation (IDC) owns assets in Tagistan, a new country in
Asia. The government of Tagistan wants to nationalize all assets owned by foreign
firms and investors. What can IDC do? Can it at least obtain payment for the assets?