44. How does a distributor differ from an agent?
a. The agent pays royalties to the multinational enterprise.
b. The distributorship shares profits with the multinational enterprise.
c. The distributor takes title to the merchandise it receives and thereby bears many of the risks connected with
commercial sales.
d. The distributor has the power to enter into contracts on the principal’s behalf, but the agent does not.
45. The CISG was developed by the:
a. UNCITRAL.
b. National Conference of Commissioners on Uniform State Law.
c. EU.
d. World Trade Organization.
46. Which of the following statements is true?
a. The International Court of Justice renders binding decisions and advisory opinions to the many nations that
submit their disputes to it.
b. The International Court of Justice is the judiciary branch of the United Nations, and its judges are elected by a
majority of both the U.N. General Assembly and the U.N. Security Council.
c. The International Court of Justice was formed as the judiciary branch of the EC.
d. The International Court of Justice is very useful, in part because nations as well as private individuals and
corporations may be parties to an action before the court.
47. The World Trade Organization (WTO):
a. is an agency providing insurance to firms involved in international trade.
b. is a general international antitrust agreement.
c. seeks to facilitate the flow of trade by establishing agreements on potential trade barriers.
d. has successfully rid international trade of tariffs.
48. The U.S. belongs to multinational treaties that try to coordinate the application of member nations’ intellectual
property laws. A principal treaty protecting intellectual property is:
49. The ICJ is:
a. the Internal Court of Justice of the U.N. to deal with disputes within the United Nations organization.
b. a U.S. Court created specifically to deal with international contracts.
c. the judicial branch of the United Nations, having voluntary jurisdiction over nations.
d. one of the many Regional Trade Communities.
50. Which of the following is not an exception to the act of state doctrine?
a. A sovereign waives its right to raise the act of state defense.
b. A foreign sovereign contracts to sell a service.
c. A foreign sovereign’s decides to grant a license to export a natural resource.
d. There is a claim to property based on the assertion that a foreign state confiscated the property in violation of
the principles of international law.
51. How is “sovereign immunity” interpreted under U.S. law today?
a. It gives absolute immunity to a foreign nation from all U.S. laws.
b. It gives immunity to foreign governments for commercial activity carried on in the U.S. by the foreign
government.
c. It exempts the public acts of a foreign government, such as those involving diplomatic activity, from all U.S.
laws.
d. All of these.
52. The act of state doctrine:
a. allows foreign countries to be liable for their torts.
b. allows state governments in the United States to ignore treaties entered into by the United States.
c. provides that the judicial branch of a nation should not question the validity of actions taken by a foreign
government within that foreign sovereign’s own borders.
d. is a very recent addition to U.S. law.
53. A(n) is a clause apportioning the liability and responsibilities of the parties in the event of an unforeseeable and
unavoidable occurrence, such as a typhoon, tornado, or other disaster.
a. act of state
b. OPIC
c. letter of credit
d. force majeure
54. Which of the following is true about the European Union (EU)?
a. The EU is the predecessor to the European Community.
b. An objective of the EU is to promote economic and social progress and to establish an economic and
monetary union among member nations.
c. The EU has officially admitted Japan to full membership.
d. The EU has ten full member nations and almost forty million citizens.
55. The International Anti-Bribery and Fair Competition Act of 1998 expands the FCPA to include:
a. influencing any act or decision of a foreign official, political party, or political official for the purpose of
influencing any decision of that person or party in his or its official capacity.
b. payments made to “secure any improper advantage” from foreign officials.
c. all foreign persons who commit an act in furtherance of a foreign bribe while in the foreign country.
d. inducing a foreign official to use his influence to affect a decision of a foreign government to assist a domestic
concern in obtaining business.
56. The international organization which seeks to stabilize currency exchange is the:
a. United Nations Exchange Branch.
b. International Court of Justice.
c. United States Treasury.
d. International Monetary Fund.
57. International agreements in the form of treaties:
a. require approval by a majority vote of the United States Senate.
b. require approval by a two-thirds vote of the United States Senate.
c. require no approval from Congress.
d. are explicitly mentioned in the U.S. Constitution as a power given solely to Congress.
58. In international business transactions, a documentary letter of credit:
a. is a method of payment of goods that reduces the seller’s risk from the possibility that the goods will be
shipped, but not paid for.
b. is a type of bill of lading.
c. is a guarantee by the seller‘s bank that it will pay the price of the exported goods if the seller breaches the
contract.
d. All of these.
59. Export controls or restrictions usually result from:
a. national defense considerations.
b. foreign policy considerations.
c. the desire to protect scarce national resources.
d. All of these.
60. From a commercial standpoint, which of the following is considered the most important international treaty?
a. The ICJ
b. The EC
c. The WTO
d. The IMF
61. Americana Printing wishes to sell its products in a foreign country. However, it also wishes to retain some input over
its operation in that country for quality control reasons. Which of the following forms of business would be the best
for Americana?
a. A foreign distributorship
b. Direct sales
c. A licensing agreement
d. Creating a subsidiary in the foreign country
62. Assume a foreign nation has seized all of the property of an American corporation. The foreign nation has assumed
ownership of the property for a public purpose and has paid the American corporation what it believes to be fair
compensation. Under these facts, the seizure of property is best described as:
a. expropriation.
b. confiscation.
c. force majeure.
d. eminent domain.
63. A foreign company partially owned by the foreign government, manufactures televisions in the foreign country. The
cost to the company for the manufacture of the product in the U.S. is the equivalent of $100. Because of excess
production, the firm exports 5,000 sets to the United States where they are sold for $120 each. If the nearest rival
U.S.-made set sells for $150, the action of the company:
a. constitutes price-fixing.
b. violates the WTO anti-dumping provisions.
c. violates the Sherman Act, because of the involvement of the foreign government in the company.
d. appears to be legal.
64. Assume that Denmark, a member of the European Union, is contemplating the enactment of a protective tariff for its
fledgling CD industry due to domestic political and economic pressures. Assume further that the EU has a tariff that
it has also enacted for all CD manufacturers within the EU that is considerably lower than the one that is being
proposed in Denmark. The policy behind the lower EU tariff is to promote freer trade even at the risk of destroying
some of the weaker manufacturers in that organization. In this situation:
a. Denmark could enact the higher tariff since EU members give up no authority to the organization in regulating
trade and business practices.
b. Generally, when EU economic policies and rules conflict with the laws of member nations, EU law will
prevail. Thus, Denmark’s tariff may be illegal.
c. Denmark could petition the United Nations Council of Economic Policy and if it concurs with Denmark, the
EU tariff policy would be overridden.
d. Assuming Denmark is a signatory to WTO, it could retain its higher tariff since the purpose of WTO is to
protect domestic industries by promoting higher tariffs.
65. The United States and the country of El Guapo signed a treaty whereby the United States agreed to assist the Latin
American country in controlling drug traffic. The United States, following the treaty, seized 100 square meters of
land and bulldozed it, because it was a suspected haven of drug smuggling. The land in question was in El Guapo, but
belonged to an American citizen. Which of the following is most accurate?
a. The treaty will supersede any general Constitutional rights because the treaty gave specific authorization for
the act.
b. The act was not offensive to the Constitution, because it occurred in El Guapo.
c. Constitutional rights apply to people, not to property.
d. Constitutional rights supersede treaties.
66. The World Bank established the to encourage increased investment in developing nations.
a. Overseas Private Investment Corporation
b. World Trade Organization
c. Multilateral Investment Guarantee Agency
d. Commission on International Trade
67. Which of the following is an objective of the North American Free Trade Agreement?
a. Create trade barriers to the movement of goods and services across the borders.
b. Promote conditions of fair competition in the free trade area.
c. Decrease investment opportunities in the area.
d. Immediately eliminate all tariffs between the three countries covered by the agreement.
68. The Convention on Contracts for the International Sales of Goods (CISG) includes which of the following
provisions?
a. Interpretation and trade usage
b. Intellectual property rights
c. Obligations and remedies of sellers, but not buyers
d. Profitability
69. The Foreign Sovereign Immunities Act specifically provides that a foreign state shall be immune from neither federal
nor state court jurisdiction in certain circumstances. The circumstances include that the suit is based on:
a. a commercial activity conducted in the United States by the foreign state.
b. an act that the foreign state performed in the United States in connection with a commercial activity it carried
on elsewhere.
c. a commercial activity performed outside U.S. borders that directly affects the United States.
d. All of these.
70. The CISG specifically excludes sales of which of the following?
a. Goods bought for personal, family, or household use
b. Ships or aircraft
c. Electricity
d. All of these
71. Define and discuss the doctrine of “sovereign immunity.” Discuss the Foreign Sovereign Immunities Act of 1976.
72. An increasing number of Americans enjoy French truffles and are willing to pay a premium price for the product. If
the three leading French truffle firms meet in Paris and decide to raise prices in the American market by 15%, does
this act violate the Sherman Act?
73. Azurapi Corporation plans to start marketing products worldwide. What forms of multinational business enterprise
are available? What factors should influence the decision on the form to use?
74. The U.S. and the government of Mystic broke off diplomatic relations in a dispute over fishing rights. The U.S.
blocked exports to Mystic. Mystic in turn seized and expropriated the assets of several U.S. companies located
within the country. One of the companies, Continental Coffee, sued the U.S. government and the government of
Mystic charging violation of the U.S. Constitution on the grounds of deprivation of property without due process of
law. How will the company fare in its case against the U.S.? against Mystic? Explain your answer in detail,
providing reasons for your decision.
75. Kelly has been appointed the manager of a company that has just begun the direct export of its product. What
precautions should he take to assure that the company would in fact be paid for its products when the company has
never dealt with the buyer before and is new to the international legal environment?
76. What is the basic purpose of the World Trade Organization (WTO)?