978-0077733735 Lecture Notes

Type

Solution Manual

Book Title

Business Law with UCC Applications 14th Edition

ISBN 13

978-0077733735

April 10, 2019

Chapter 34 - International Law and the New World Order

Chapter 34

International Law and the New World Order

I. Key Terms

Associated persons National treatment principle (p. 899)

and forces (p. 889) New world order (p. 870)

Authorization for the Use of Neoconservatism (p. 873)

Military Force (p. 887) Neoliberalism (p. 873)

Chaotic events (p. 881) North American Free Trade

Civilization (p. 874) Agreement (NAFTA) (p. 900)

Commission on Science and Predictive political history (p. 870)

Technology for Development (p. 897) Preemptive war (p. 885)

Competent authority (p. 883) Preventative war (p. 885)

Covering laws (p. 872) Principle of honorable

Dispute Settlement Board surrender (p. 885)

(DSB) (p. 899) Principle of repentance (p. 884)

Dispute Settlement Understanding Principle of restoration (p. 885)

(DSU) (p. 899) Probability of success (p. 883)

Economic Security Council Proportionality (p. 883)

(ESC) (p. 897) Protective war (p. 885)

Economic zone (p. 880) Realism (p. 872)

Euro (p. 900) Realpolitik (p. 872)

European Union (EU) (p. 900) Reflexivity principle (p. 880)

General Agreement on Tariffs Right intention (p. 882)

and Trade (GATT) (p. 898) Secretariat (p. 890)

General Assembly (p. 881) Secretary General (p. 890)

Geneva Conventions (p. 889) Security Council (p. 891)

Idealism (p. 873) Tariff-based principle (p. 899)

International Court of Justice Theory of international

(ICJ) (p. 891) behavior (p. 870)

International Criminal Court Uncertainty principle (p. 880)

(ICC) (p. 895) UN Commission on International

International initial Trade Law (UNCITRAL) (p. 896)

conditions (p. 870) UN Convention on Contracts for

International Monetary Fund the International Sale of Goods

(IMF) (p. 898) (CISG) (p. 896)

Just cause (p. 882) Volition variable (p. 880)

Just war theory (p. 882) War Powers Resolution (p. 887)

Last resort (p. 883) World Bank (p. 898)

Liberal World order (p. 869)

Internationalism (p. 873) World Trade Organization

Most-favored nation (WTO) (p. 899)

principle (p. 899)

II. Learning Objectives

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Chapter 34 - International Law and the New World Order

1. Explain the process of predictive political history.

2. Identify and define the theories of international behavior.

3. Identify and define the various sets of global initial conditions.

4. Describe the mission of the International Criminal Court.

5. Identify the main goal of UNCITRAL.

6. State the differences between the UCC and the CISG.

7. Outline the structure of the World Trade Organization.

8. Relate the objectives of the Dispute Settlement Understanding.

9. Determine the major purpose of NAFTA.

10. Clarify the goals of the European Union.

III. Major Concepts

34-1 The New World Order

When a political scientist wants to use predictive political history to explain the past, to

predict the future, or to handle an international crisis, he or she must first determine the

present state of the global system (the international initial conditions or the new world

order) and then match that system to the correct set of covering laws under an accurate

theory of international behavior. The four theories of international behavior are

Realpolitik; idealism; neoconservativism; and neoliberalism. Each international

behavioral theory can be summarized by reducing it to several covering laws. A covering

law is a rule of behavior that follows consistently predictable pattern such that it can be

described as dictating normative decision-making processes. The four sets of initial

conditions are (1) economic initial conditions, (2) cultural initial conditions, (3)

ideological initial conditions, and (4) hybrid initial conditions.

34-2 International Law and War

War has many significant effects on the transaction of business in the international

marketplace. One of the key questions concerning the nature of war as it relates to

international business is whether the war is just. Ethical and legal philosophers in the

West have developed criteria for determining when a war can be considered legally and

morally correct. This theory is termed the just war theory.

34-3 The United Nations and the Global Community

The stated purposes of the United Nations are to advance human rights, to end war, to

enhance human achievement, to support peaceful international coalitions, and to promote

international fidelity to truth, justice, and the rule of law. The promotion of international

law has taken many forms within the structure of the United, Nations, including the

International Court of Justice, the UN Commission on International Trade Law, and the

UN Convention on Contracts for the International Sale of Goods. The International

Criminal Court also plays a key role in policing international justice.

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Chapter 34 - International Law and the New World Order

34-4 International Law, Finance, and Trade

To deal with issues of finance and trade on a worldwide scale, several international

organizations and agreements have emerged that are designed to make global dealings

work as smoothly as local ones. These include the International Monetary Fund, the

World Bank, the World Trade Organization, the North American Free Trade Agreement,

and the European Union.

IV. Outline

I. The New World Order (34-1)

A. Introduction

1. The phrase “new world order” is frequently used to describe situations on the global

stage that are unusual and unfamiliar.

2. The phrase can be used to describe the situation in which we find ourselves today.

3. A world order is a set of initial conditions that describes how nation-states relate to

one another on a global scale.

4. The use of the word new to describe that world order reveals that these initial

conditions have just emerged from a tectonic shift in international relations.

B. Patterns within the New World Order

1. In the new world order, patterns have yet to be determined.

2. Sometimes diplomatic errors and international incidents follow pattern shifts.

C. The Underlying Technique: Predictive Political History

1. Predictive political history is a technique for determining how world leaders will

probably act in a given world order when facing a crisis or mapping out a future

global strategy.

2. If a political scientist wants to apply predictive political history, he or she must first

determine the present state of the global system (the international initial conditions or

the new world order) and then match that system to the correct set of covering laws

under an accurate theory of international behavior.

D. The Theories of International Behavior

1. Realpolitik or realism

a. The international order can be described as a chaotic system.

b. The chief actors on the global scene are nation-states, with some having more

power.

c. National leaders customarily look for a rational (logical) way to sustain or widen

their own power.

d. In regard to special considerations, the power that leaders have is curbed by

NGOs.

2. Idealism or liberal internationalism

a. The global order is not fully chaotic but is instead controlled by the NGOs.

b. Nation-states share power with the NGOs.

c. Nation-states and NGOs seek power and control but do so in the interests of

international peace, by following international law and using military action only

within international coalitions.

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Chapter 34 - International Law and the New World Order

d. In regard to special considerations, the final best state of affairs that all

nation-states seek (or should seek) is the formation of a democratic or a

republican world government.

3. Neoconservativism

a. The global landscape is chaotic.

b. Nation-states are the chief actors and all foreign policy decisions must be made to

echo the “deepest values of liberal democratic societies.”

c. The United States must be involved in global affairs and, in doing so, must

promote democratic principles.

d. In regard to special considerations, neoconservatives voice a wariness for social

reengineering missions, suspicion about the usefulness of NGOs, and a belief in

the effectiveness of unilateral (as opposed to multinational) military crusades

including especially preemptive and preventative strikes

4. Neoliberalism

a. The global community scene is largely chaotic.

b. Nation-states and NGOs share the global power with international corporations.

c. International corporations cross frontiers and act to preserve their own existence,

as do nation-states; however, internationals act reasonably as they work to

generate higher profits.

d. Nation-states and international corporations act as collaborative partners and in

doing so, follow the morality of profit.

E. The Global Initial Conditions

1. Economic Initial Conditions

a. The economic new world order sees the international community as divided into

two sectors: (1) those nations that are economically stable and secure and, thus,

have healthy, functioning economies and (2) those nation-states that are

economically dysfunctional.

b. The goal is to overcome or eliminate disconnectedness between economically

stable and economically dysfunctional nations.

2. Cultural Initial Conditions

a. This view sees the globe as divided into eight distinct civilizations that are more

or less autonomous and more or less incapable of successfully cooperating with

more than one, or at the most two, other civilizations.

b. A civilization is a group of people in a series of different nation-states that share

common characteristics, including history, religion, tradition, beliefs, often

language, and sometimes ancestry.

c. One of the rules proposed is the prime directive of the civilizational world order,

that is, that each civilization should never interfere with the internal affairs of

another civilization.

d. Under this version of the new world order, international law has two goals: to

promote civilizational autonomy and to protect civilizational rights.

3. Ideological Initial Conditions

a. The ideological new world order sees nation-states grouped based on politics.

b. In this international environment, the job of international law is to help build and

protect a modern concert of democracies that would unite the democratic states

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Chapter 34 - International Law and the New World Order

into a treaty of mutual protection and act as a counterbalance to the new autocratic

empires.

4. Hybrid Initial Conditions

a. Bromfield proposes that the major global powers, including the United States,

Europe, Russia, China, Japan, and India, establish regional economic zones

among those nations closest to them.

b. Economic zones are unified but isolated sectors of economic activity based on

geographical areas designed to focus on the economic well-being of the nations in

each zone.

c. Once these zones were economically and politically secure, the members of each

zone would trade only with other nations within their respective zones which

would continue until the members of each zone developed economically secure

relationships among themselves.

d. Eventually, each zone could enter open trade agreements with nations outside the

four established zones, but only when those outside nations were ready to partici-

pate as economic equals.

5. Unlike the laws of physics or those of chemistry, the covering laws of predictive

political history are limited by the free will of the people who operate within that

system which is referred to as the volition variable.

6. Predictive political history might also be disrupted by the uncertainty principle in

which, for example, value judgments may affect a decision.

7. Predictive political history can also be disrupted by unexpected, uncontrollable

chaotic events.

II. International Law and War (34-2)

A. Introduction

1. War may affect international business.

2. When entering a contract that relies on the international marketplace, it is wise for all

parties to be aware of the international conditions in areas of the globe that could

affect the contract.

3. If a court in the U.S. deems an international crisis foreseeable, the loss suffered by the

parties affected by the crisis will not be offset by the court.

B. The Just War Theory

1. The just war theory has been invoked for defending and for questioning the morality

of many armed conflicts.

2. The theory focuses on certain areas.

a. It establishes the following criteria for deciding whether a war can be morally

justified:

(a) Just cause.

(b) Right intention.

(d) Probability of success.

(e) Proportionality.

(f) Last resort.

b. It institutes criteria for the proper conduct of a war.

c. It adds a set of criteria that establish the rules of conduct that must be followed

after a war ends.

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Chapter 34 - International Law and the New World Order

C. Preemptive and Protective War

1. A nation-state starts a preemptive war to stop another nation-state’s imminent attack

on the first nation-state.

2. A nation-state begins a preventative war to stop another nation-state from reaching a

point that it would be capable of attacking the first nation.

3. In 2002 preemptive war became an active strategic policy of the United States.

4. During the administration of President Barack Obama, the United States launched a

protective war aimed at assisting civilians in Libya.

5. In dealing with questions of the legality of a war, the U.S. generally defers to the

judgment of the United Nations.

6. Title VII of the United Nations Charter places most of the decision making process in

relation to military action in the hands of the United Nations Security Council.

7. The War Powers Resolution is designed to limit the power of the president as

Commander-in-Chief of the Armed Forces to commit American troops to the field

and to maintain those troops in the field contrary to Congressional approval.

8. The Authorization for the Use of Military Force (AUMF) is an act passed in 2002 by

Congress in the wake of the 9/11 attacks and addresses the right of the U.S. to use

self-defense and force to prevent future acts of international terrorism against the U.S.

9. In 2015 the president presented a reengineered version of the AUMF act of 2002,

which had not yet been acted upon as of the printing of the text, giving the president

the authority to use military action to oppose ISIS and any associated persons and

forces, and making other changes.

D. Substantive and Procedural Issues

1. The Geneva Conventions attempt to deal with many of the problems brought on by

the nature of warfare in the modern era such as issues concerned with prisoners of

war and occupation forces.

2. Substantive changes in the law of war and international relations are frequently

complicated by procedural and analytical questions.

3. The fact that a convention has been written and adopted does not mean that it will be

properly applied.

4. U.S. courts have established some guidelines for interpreting international agreements

such as the Geneva Convention.

III. The United Nations and the Global Community (34-3)

A. The Structure of the United Nations

1. The United Nations is an enormous, complicated organization that is made up of

many agencies, organizations, courts, and commissions.

2. The three major governing bodies are the Secretary General, The General Assembly,

and the Security Council.

a. The Secretary General is the chief administrator of the United Nations.

b. The General Assembly is made up of all of all the member nations of the UN.

c. The Security Council deals with crises that involve threats to international peace.

B. International Law and the United Nations

1. The United Nations respects the sovereignty of each member state which is both a

strength and a weakness.

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Chapter 34 - International Law and the New World Order

2. The International Law Commission is responsible for leading the way in the

development and codification of international law which must be joined voluntarily

by each nation-state.

3. One of the principal vehicles for the establishment of international law and justice is

the International Court of Justice (ICJ).

a. The ICJ is made up of fifteen judges.

b. Only sovereign nations have legal standing to initiate a case before the ICJ.

c. Subject matter jurisdiction in the ICJ is outlined within the UN Charter and legal

questions may involve the interpretation of treaties and international conventions.

4. In order to deal with crimes against humanity, an official International Criminal Court

(ICC) was set up by the Rome Statute of the International Criminal Court.

a. Unlike the ICJ, the ICC is not an official agency of the United Nations.

b. The objective of the court is to preside over trials involving genocide, war crimes,

and other human rights violations.

c. A key difference between the ICJ and the ICC is that the ICC has jurisdiction over

individual defendants.

d. The ICC does not have original jurisdiction over a defendant.

(a) The defendant’s own government prosecutes the defendant before the ICC

claims jurisdiction.

(b) Should the defendant’s government fail to bring legal action, the ICC can

then step into the case.

e. The ICC can only hear cases involving citizens of countries that ratified the

original treaty that created the Court, and the United States has not ratified the

treaty.

C. Economic Regulation and the United Nations

1. In 1996 the General Assembly of the United Nations authorized the creation of the

UN Commission on International Trade Law (UNCITRAL).

a. The commission consists of thirty-six nations chosen to represent the primary

social, economic, legal, and geographical areas of the globe.

b. The goal of the commission is to cultivate the organization and integration of

international law in relation to international trade.

2. The UN Convention on Contracts for the International Sale of Goods (CISG) became

effective in 1988 and applies only to sales between businesses located in different

countries.

a. The agreement specifically excludes contracts involving goods purchased for use

by individuals or families.

b. The CISG affects the formation of an international trade contract as well as the

rights and duties that arise under such contracts.

c. The CISG does not deal with the validity of such contracts nor with the liability of

the seller for harm caused by the goods.

d. The CISG involves only those contracts between merchants.

3. The efforts extended by the United Nations to monitor and regulate economic

conditions in the global marketplace are evident in the existence of a number of

organizations including the Economic and Social Council (ECOSOC), the UN

Conference on Trade and Development (UNCTAD), regional agencies such as the

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Chapter 34 - International Law and the New World Order

Economic Commission for Africa and the Economic Commission for Europe, and

other agencies.

4. The Division for Science and Technology was created in response to

recommendations made by the eighth conference of the United Nations Conference

on Trade and Development (UNCTAD) and the Ad Hoc Working Group of the

International Commission on Science and Technology.

a. The Division of Science and Technology was created to coordinate the activities

of several agencies that had previously been charged with handling issues of

international cooperation in the sharing of science and technology for economic

development.

b. Many experts urge an even more unified response in this regard.

D. An Economic Security Council

1. The Commission on Global Governance, a twenty-six member international

organization, has suggested streamlining the surveillance of international economic

efforts under the auspices of an Economic Security Council (ESC).

2. The ESC would be a singe, unified international agency under the management of the

United Nations that would monitor the economic activities of the member nations of

the UN and implement long-term strategic planning to promote sustainable

development.

3. The ESC would not take the place of existing international agencies.

IV. International Law, Finance, and Trade (34-4)

A. The International Monetary Fund and the World Bank

1. The International Monetary Fund (IMF) is designed to serve as a way for financially

strapped nations to secure loans that will help them engage in programs of sustainable

economic growth and development.

2. The World Bank has a mission that is quite similar to the mission of the IMF.

3. The difference is that the IMF is dedicated to helping all nations, developed,

developing, and undeveloped, with fiscal problems, while the World Bank works

exclusively with the poorest nations in the international community.

B. The World Trade Organization

1. After the end of World War II, the primary trading nations of the international

community met to work out the details of a major trade agreement.

2. The agreement, named the General Agreement on Tariffs and Trade, had as part of its

original plan the creation of an International Trade Organization.

3. The International Trade Organization was never established, but conferences

continued to be held, resulting in the creation of the World Trade Organization

(WTO)

4. The World Trade Organization was designed to serve as the corporate nucleus for the

management of international trade relationships.

5. The WTO replaced GATT.

6. All agreements, treaties, and trade obligations created under GATT have been

included in the WTO.

7. The structure of the WTO involves three levels:

a. The Ministerial Conference.

b. The General Council.

c. The Secretariat.

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Chapter 34 - International Law and the New World Order

8. The WTO has established certain overall principles that regulate how member nations

must treat one another in the world of international trade.

a. The national treatment principle states that WTO nations must apply the same

standards to imports that they apply to domestic goods.

b. The most-favored nation principle maintains that all member nations must apply

the same privileges, advantages, and benefits to all other member nations in

relation to similar imports.

c. The tariff-based principle asserts that the only way that member nations can

regulate the imports of other nations is through tariffs.

9. The Dispute Settlement Board (DSB) of the WTO was established to provide a forum

for the settlement of trade disputes among member nations.

C. The North American Free Trade Agreement

1. The North American Free Trade Agreement (NAFTA) is a trading coalition that

includes the United States, Canada, and Mexico.

2. The goal of the coalition is to establish a trading market in North America free from

the burdens imposed by internal tariff barriers.

D. The European Union

1. One of the most significant events to impact international law and commerce lately

was the inauguration of the European Union (EU).

2. In order to adopt the euro, Europe’s common currency, in addition to being a member

of the European Union, a country must also have other characteristics such as a stable

inflation rate.

3. The EU has been active in the development of cyber-commerce directives in order to

head off proposed legislative initiatives in the individual member nations.

V. Background Information

A. Cross-Cultural Notes

1. Taiwan is not a member of the United Nations, and its membership is opposed by

China. For more information, see “Taiwan’s UN Dilemma: to Be or Not To Be”

from the Brookings Institution at

http://www.brookings.edu/research/opinions/2012/06/20-taiwan-un-winkler.

2. Croatia joined the European Union in 2013. Information regarding other prospective

members to the European Union is available from the BBC at

http://www.bbc.com/news/world-europe-11283616.

B. Historical Notes

1. In regard to a Nuremberg Trials Project, the Harvard Law School library has

approximately one million pages of documents relating to the trial of leaders of Nazi

Germany before the International Military Tribunal and to trials of other accused war

criminals before the United States Nuremberg Military Tribunals. The library is in the

process of digitizing these documents. Information regarding the project and some

distribution without the prior written consent of McGraw-Hill Education.

Chapter 34 - International Law and the New World Order

documents and other information are available at

http://nuremberg.law.harvard.edu/php/docs_swi.php?DI=1&text=overview.

VI. Related Cases

1. Judgments, advisory opinions, and Orders from the International Court of Justice are

available at http://www.icj-cij.org/docket/index.php?p1=3&p2=5. For example, a

judgment of September 24, 2015, involving a dispute between Bolivia and Chile

pertaining to access to the Pacific ocean, rejected a preliminary objection raised by

Chile and found that the court had jurisdiction to entertain an application filed by

Bolivia in 2013.

VII. Teaching Tips and Additional Resources

1. The Internet site for the United Nations is at http://www.un.org/. Additional

information regarding the United Nations such as its history and other information is

available at http://www.un.org/en/aboutun/index.shtml.

2. Additional information regarding the International Court of Justice including recent

press releases can be found at http://www.icj-cij.org/homepage/index.php?p1=0.

3. The website for the International Criminal Court is at

https://www.icc-cpi.int/en_menus/icc/Pages/default.aspx. The structure of the court is

at https://www.icc-cpi.int/en_menus/icc/structure%20of%20the

%20court/Pages/structure%20of%20the%20court.aspx.

4. The Internet site for the World Bank can be found at http://www.worldbank.org/. An

interesting list of questions regarding the World Bank is at

http://web.worldbank.org/WBSITE/EXTERNAL/PROJECTS/0,,contentMDK:20264

002~menuPK:572065~pagePK:41367~piPK:279616~theSitePK:40941,00.html.

5. Additional information on the International Monetary Fund can be found on its web

site at http://www.imf.org/external/index.htm.

6. Information for students and young professionals is available from the World Trade

Organization at http://www.wto.org/english/forums_e/students_e/students_e.htm. Key

information by country is available at

http://www.wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm.

7. The U.S. Department of State has a site devoted to the European Union at

http://www.state.gov/p/eur/rt/eu/, with links to information including the identities

and backgrounds of member countries.

8. Discuss with students the problems of intellectual property infringement outside the

United States. The United States Patent and Trademark Office has information

regarding the protection of intellectual property, including information regarding

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Chapter 34 - International Law and the New World Order

international protection, at

http://www.uspto.gov/about/stratplan/ar/2006/30204_intel_policy.jsp.

9. An article from NPR titled “How NAFTA Changed American (and Mexican) Food

Forever” is available at

http://www.npr.org/sections/thesalt/2015/02/13/385754265/how-nafta-changed-ameri

can-and-mexican-food-forever.

10. A great deal of information regarding the European Union is available from the

website of the CIA at

https://www.cia.gov/library/publications/the-world-factbook/geos/ee.html.

11. For an extensive treatment of the just war theory in the twenty-first century, see Just

War against Terrorism by Jean Bethke Elshtain (New York: Basic Books, 2003).

12. Inform students that before the International Court of Justice (ICJ) can hear a

contentious case, all of the parties to the proceedings must have recognized the

court’s jurisdiction.

13. Present the students with these questions: Why should the United States feel the need

to trade with other nations when so much can be grown and manufactured right in our

own country? Do other countries need us as trading partners more than we need

them?

14. Invite a representative of an international trade organization or a public relations

representative from a multinational corporation to speak to the class about world

trade.

15. Have students research facts and statistics about the current U.S. policy on tariffs and

free trade in order to participate in a class discussion. The point of the discussion

should lead to the following question: Will there eventually be free trade throughout

the world?

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Solution manual

978-0077733735 Lecture Notes

Business Law with UCC Applications 14th Edition