Chapter 46. International Business Law
1. The International Monetary Fund was established in 1945 to promote international monetary cooperation and now
has approximately 50 member countries.
a. True
b. False
2. In a foreign distributorship arrangement, the foreign distributorship in the importing country purchases the goods from
the manufacturer in the exporting country.
a. True
b. False
3. Under U.S. law, the CISG does supersede the UCC whenever the CISG applies.
a. True
b. False
4. The Wall Street Reform and Consumer Protection Act of 2010 extends the extraterritorial reach of the antifraud
provisions of the 1933 and 1934 securities acts with respect to actions brought by the United States and the SEC.
a. True
b. False
5. The Constitution authorizes the president to enter into treaties having the legal force of a federal statute without
having to go through the legislative process or without having to receive advice or consent of the federal legislative
branch of government.
a. True
b. False
6. Like domestic law, international law can be easily enforced, because international courts have compulsory
jurisdiction.
a. True
b. False
7. Parties to an international sales contract may expressly exclude CISG governance from their contract.
a. True
b. False
8. Under the doctrine of sovereign immunity, domestic courts, in certain circumstances, will exercise jurisdiction over a
foreign state or its instrumentalities.
a. True
b. False
9. Businesses which wish to safeguard their technology while doing business in the international sector would not want
to consider the use of wholly owned subsidiaries.
a. True
b. False
10. The United States has, in 1993, withdrawn from participation in the General Agreement on Tariffs and Trade
(GATT).
a. True
b. False
11. Confiscation of property by a foreign government for nonpublic purposes without adequate payment violates
generally observed principles of international law.
a. True
b. False
12. Expropriation of property by a foreign government for a public purpose with the payment of just compensation, but
without the consent of the owner violates generally observed principles of international law.
a. True
b. False
13. A foreign agent is used by multinational enterprises to take title to merchandise and bear the risks connected with
international sales.
a. True
b. False
14. International law is derived from the Code of Federal Regulations and international legal tribunals.
a. True
b. False
15. NAFTA established a free trade area for the United States, Mexico, and Central America.
a. True
b. False
16. The choice-of-forum clause in an international business transaction will dictate what country’s law the forum will
apply should a legal dispute arise.
a. True
b. False
17. International courts have compulsory jurisdiction to resolve international disputes, and they have the authority to
resolve an international dispute even if the parties to the dispute do not specifically accept the court‘s jurisdiction over
the matter.
a. True
b. False
18. Although under GATT’s most-favored nation provision all signatories must treat each other as favorably as they treat
any other country, nations may give preferential treatment to developing nations and may enter into free trade areas.
a. True
b. False
19. One risk of investing in foreign states is the risk that the host nation’s government may take the investment property.
a. True
b. False
20. The concept of sovereign immunity provides that a nation’s judicial branch should not question the validity of the
actions a foreign government takes within its own borders.
a. True
b. False
21. Sovereign states and individuals may request and receive advisory opinions from the International Court of Justice.
a. True
b. False
22. Even if a U.S. company does not export goods, it is influenced by international business through competition from
other countries.
a. True
b. False
23. The International Court of Justice consists of nine judges, only two of whom can be from the same sovereign state.
a. True
b. False
24. The European Community (EC) preceded the European Union (EU) and worked to remove trade barriers between
member nations.
a. True
b. False
25. Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, and the Age Discrimination in
Employment Act do not apply to U.S. citizens employed abroad by U.S. employers or by foreign companies
controlled by U.S. employers.
a. True
b. False
26. A frequently used device to protect domestic business and achieve other social and political goals is the tariff, which
is a duty imposed on goods moving into or out of a country.
a. True
b. False
27. When a treaty and a right declared under a subsequent federal statute conflict, the treaty must prevail.
a. True
b. False
28. The General Agreement on Tariffs and Trade is now called the WTO.
a. True
b. False
29. Peterson, an American exporter, sells lumber to Hydeaki, a Japanese importer, using a documentary letter of credit.
In this situation, the correspondent bank will be in Japan.
a. True
b. False
30. One of the objectives of NAFTA is to promote conditions of fair competition in the United States, Canada, and
Mexico.
a. True
b. False
31. The European Community was formed through a merger between the Common Market, the European Coal and
Steel Community, and the European Atomic Energy Community.
a. True
b. False
32. An objective of the EU is to promote economic and social progress among member states.
a. True
b. False
33. The judicial branch for the United Nations is called the International Court of Justice.
a. True
b. False
34. International contracts should specify the contract’s official language and define all of the significant legal terms
used.
a. True
b. False
35. The Overseas Private Investment Corporation (OPIC):
a. is a private company that analyzes and monitors the political climate of countries in which American
companies do business.
b. offers insurance to American companies to diminish the risks of expropriation of their property in the countries
in which they do business.
c. was successful in lobbying Congress to repeal the Foreign Sovereign Immunities Act which had, in the past,
prevented American companies from seeking relief from countries which had expropriated their property.
d. None of these.
36. Under the Foreign Sovereign Immunities Act, a foreign state is:
a. immune from all suits in the United States.
b. immune from suits in the United States involving public acts, but not commercial acts.
c. not immune from any type of suit in the United States.
d. None of these.
37. The Foreign Corrupt Practices Act of 1977 (FCPA):
a. makes it unlawful for an American company to pay money gifts to a foreign official for the purpose of
influencing the official‘s acts or decisions.
b. requires that American companies in foreign countries adhere to the same health and safety standards in that
country as they do in the U.S.
c. outlaws American business from engaging in business in countries, which, as determined by the Department,
have governments “repugnant to American law and social values.”
d. None of these.
38. Under the provisions of the Foreign Sovereign Immunities Act:
a. all foreign governments are immune from suit by U.S. citizens.
b. U.S. citizens in U.S. courts can always sue most foreign governments.
c. a car used by a foreign embassy in Washington can be seized to settle a judgment against a driver.
d. U.S. courts may take jurisdiction in a suit against a foreign country for commercial acts by that government
that have a direct effect in the United States.
39. Since its inception in 1946, the U.N. Secretariat has registered and published approximately how many treaties that
expressly or indirectly concern international business?
a. 100
b. 550
c. 30,000
d. 75,000
40. The Sherman Act:
a. protects U.S. exports from privately imposed restrictions seeking to exclude U.S. competitors from foreign
markets.
b. would not apply to an act committed in the United States by a foreign corporation.
c. would not apply to an act overseas by a 100 percent-owned foreign subsidiary of an U.S. corporation.
d. never applies to acts committed outside the U.S.
41. The European Community was the predecessor to the:
a. ICJ.
b. GATT.
c. CISG.
d. EU.
42. Which of the following is true with regard to securities regulation?
a. Foreign issuers who issue securities in the United States are exempt from the registration requirements of the
1933 Act.
b. Some foreign issuers may avoid registration under the 1934 Act by providing the SEC with copies of all
information material to investors that they have made public in their home country.
c. Antifraud provisions of U.S. securities laws do not apply to securities sold in foreign commerce if the courts
have found either conduct or effects in the U.S. relating to a violation of securities law.
d. U.S. securities laws have no application to foreign issuers.
43. What is “dumping“?
a. The disparaging of the products of a competitor in international trade.
b. A company’s selling of its product cheaper in its home market than in its export market.
c. A company’s engaging in overproduction in order to flood a market so as to drive down prices.
d. A company’s selling of its product for less than normal value in a foreign market.