Business Law Chapter 12 Questions

D

The Hague Service Convention is a treaty that was formulated to A. provide foreign subsidiaries with fewer formalities in their creation and operation. B. allow the parent companies of foreign subsidiaries to have greater control over the subsidiaries. C. make it easier for Central American countries to trade with the Netherlands. D. to assure that defendants sued in foreign jurisdictions would receive actual and timely notice of suit. E. to restrict the service of process abroad in order to reduce the number of lawsuits filed against foreign firms.

A

[12-01] According to the U.S. Export Control and Related Border Security Assistance Program, which of the following should be considered a red flag by exporters? A. a customer who is willing to pay cash for high-value shipments B. a customer who has extensive background in the relevant business C. shipments that are directed to entities that are connected to a buyer D. shipments that contain spare parts E. an end-user purchasing goods for domestic use

A

[12-01] An expropriation is also considered to be a confiscation of property when A. the owner of property is not fairly compensated. B. a property owned by a foreign company is seized by the U.S. government. C. a property is purchased through corrupt payments. D. a property is seized under the Racketeer Influenced and Corrupt Organizations Act. E. the owner of the property is charged under the Foreign Corrupt Practices Act.

A

[12-01] Corporations and other business entities that violate the Foreign Corrupt Practices Act are subject to a fine of up to ______. A. $2,000,000 B. $5,000,000 C. $100,000 D. $500,000 E. $10,000,000

C

[12-01] In the United States, the counterpart of expropriation is called the ______. A. procedural due process B. due process clause C. power of eminent domain D. power of judicial restraint E. establishment clause

B

[12-01] The Wassenaar Arrangement, an organization supported by 33 countries, has come into existence to help control A. monetary value fluctuations encountered by nations when conducting international trade. B. the spread of military and dual-use technology to unstable areas of the world. C. and regulate the quality of food being traded between nations with different individual quality control regulations. D. price gouging by dominant countries when dealing with smaller or weaker countries. E. the impact of corruption on international trade, investments, and business policies.

A

[12-01] Usually in expropriation, the expropriating government also assumes ownership of a property, so the process includes ______ as well. A. nationalization B. immunity C. rescission D. restitution E. exclusion

C

[12-01] Which of the following is a risk associated with the sale of U.S. strategic products and technology abroad? A. import controls B. material controls C. export controls D. sales controls E. transaction controls

B

[12-01] Which of the following statements is true of export controls? A. They are widely popular among developed nations. B. They make successful business deals more difficult. C. They involve the confiscation of foreign-owned property by a government. D. They are imposed by the International Court of Justice on all the developed nations. E. They are designed to restrict the power of eminent domain.

D

[12-01] Which of the following statements is true of the Foreign Corrupt Practices Act of 1977? A. It prosecutes any foreign official body that bribes American officials. B. It is designed to restrict excessive import of goods. C. It prohibits American citizens from doing business with countries that have a high level of corruption. D. It is designed to stop bribery of foreign officials. E. It governs the corrupt practices of foreign companies.

C

[12-01] Which of the following statements is true of the criminal penalties imposed for violations of the Foreign Corrupt Practices Act? A. They are only imposed on foreign officials. B. They are only imposed on foreign companies. C. Fines imposed on individuals may not be paid by their employer. D. Fines imposed on individuals do not exceed $10,000. E. If corrupt payments are made through intermediaries, only the intermediaries are fined.

E

[12-01] ______, as used in the context of international law, is the seizure of foreign-owned property by a government. A. Nationalization B. Possession C. Mandatory arbitration D. Export control E. Expropriation

A

[12-02] Generally, international law is classified as ______. A. public international law or private international law B. criminal international law or civil international law C. international common law or international tort law D. international tort law or international contract law E. international business law or international property law

A

[12-02] Most international contracts contain choice of law and forum provisions to A. eliminate the uncertainty in determining which nation's court may hear a case if there is a contract dispute. B. avoid prosecution by the World Court. C. abide by the new amendments of the Foreign Corrupt Practices Act. D. eliminate the possibility of being inspected by the United Nations Commission on International Trade Law. E. reduce the possibility of a contract breach due to international trade disputes.

B

[12-02] The Charter of the United Nations sets forth as its primary goal to A. combat corruption and corrupt practices in all countries. B. save succeeding generations from the scourge of war. C. ensure that justice is delivered at all levels in all member countries. D. implement a just and fair international law that guides international commercial transactions. E. minimize all forms of trade disputes.

D

[12-02] The International Court of Justice A. is made up of seven judges representing the most developed countries of the world. B. allows all nations to initiate a case before it. C. renders, on average, seventy contested decisions per year. D. has no enforcement authority against countries that breach international law. E. has been a major force in settling disputes since it began functioning.

A

[12-02] The International Court of Justice is also called the ______. A. World Court B. Peace Court C. World Chancery Court D. Court of International Acclaim E. World Trade Court

A

[12-02] The World Trade Organization was created by the ______. A. General Agreement on Tariffs and Trade B. North American Free Trade Agreement C. Convention on the International Sale of Goods D. World Bank E. International Court of Justice

D

[12-02] The ______ encourages international trade by maintaining stable foreign exchange rates and works closely with commercial banks to promote orderly exchange policies with members. A. World Bank B. World Trade Organization C. United Nations Commission on International Trade Law D. International Monetary Fund E. Convention on International Sale of Goods

A

[12-02] The ______ promotes economic development in poor countries by making loans to finance necessary development projects and programs. A. World Bank B. World Trade Organization C. United Nations Commission on International Trade Law D. International Monetary Fund E. Convention on International Sale of Goods

B

[12-02] Which of the following General Agreement on Tariffs and Trade principles refers to countries not favoring their domestic products over imported products? A. Elimination of trade barriers B. National treatment C. Nondiscrimination D. Extradition E. Expropriation of burdens

A

[12-02] Which of the following General Agreement on Tariffs and Trade principles refers to reducing tariffs and other restrictions in foreign products? A. Elimination of trade barriers B. National treatment C. Nondiscrimination D. Extradition E. Expropriation of burdens

E

[12-02] Which of the following is one of the major institutions of the European Union? A. The Secretary Council B. The International Court of Justice C. The United Nations D. The House of Representatives E. The Council of Ministers

D

[12-02] Which of the following statements is true of private international law? A. It is often predictable and certain. B. It examines relationships between nations. C. It examines relationships created by noncommercial transactions. D. It utilizes international agreements to resolve business disputes. E. It restricts the types of businesses that individuals can conduct.

B

[12-02] Which of the following statements is true of sources of international law? A. Public international law uses rules that are binding only on specific countries in the international community. B. Public international law examines relationships between nations. C. Private international law examines relationships between private individuals. D. Private international law utilizes U.S. law to resolve international business disputes. E. Public international law determines the type of goods sold in every country.

E

[12-02] Which of the following statements is true of the Commission of the European Union? A. It coordinates the policies of the member states in a variety of areas from economics to foreign affairs. B. It is composed of elected representatives from the five most powerful member states. C. It plays an active role in drafting legislation that has an impact on the daily lives of its citizens. D. It is the only institution of the EU that has control over the annual budget of the EU. E. It consists of individuals who represent the will and interests of the entire European Union.

A

[12-02] Which of the following statements is true of the Council of Ministers of the European Union (EU)? A. It coordinates the policies of the member states in a variety of areas from economics to foreign affairs. B. It is composed of elected representatives from the six most powerful European countries. C. It decides the nature and parameters of EU law. D. It is the only institution of the EU that has control over the annual budget of the EU. E. It plays an active role in drafting legislation that has an impact on the daily lives of its citizens.

C

[12-02] Which of the following statements is true of the International Court of Justice? A. Private parties and corporations that have access to the court may directly present their claims. B. Using legal devices, firms and individuals can compel the U.S. government to press claims on their behalf before the Court. C. Only countries that have submitted to the Court's jurisdiction may be parties. D. The Court has enforcement authority and does not rely on diplomacy or economic sanctions against countries. E. It is compulsory for all countries to accept the Court's jurisdiction, whether or not the use of the Court suits their interests.

B

[12-02] Which of the following statements is true of the Security Council? A. It does not have the power to authorize military action. B. It has the power to sever diplomatic relations with other nations. C. It is composed of every nation represented in the United Nations. D. It was solely created to develop standardized commercial practices and agreements. E. It does not have any real power in the United Nations.

D

[12-02] Which of the following statements is true of the World Trade Organization? A. It is administered by the International Court of Justice. B. It is authorized by the Security Council. C. It has the authority to regulate world trade in any manner it desires. D. It restricts tariffs on textiles, apparel, and forest products. E. It funds the International Monetary fund.

C

[12-02] ______, one of the major institutions of the European Union (EU), decides the nature and parameters of EU law. A. The Parliament B. The Commission C. The Court of Justice D. The Council of Intervention E. The Council of Ministers

B

[12-03] The ______, passed in 1993, provides for a dispute settlement mechanism that makes it easier to resolve trade disputes between the United States, Mexico, and Canada. A. Convention on the International Sale of Goods B. North American Free Trade Agreement C. Central America-Dominican Republic Free Trade Agreement D. Foreign Corrupt Practices Act E. General Agreement on Tariffs and Trade

B

[12-03] Which of the following countries is a member of the Central America-Dominican Republic Free Trade Agreement? A. Canada B. Costa Rica C. Mexico D. Belize E. Panama

A

[12-03] Which of the following statements is true of the Convention on the International Sale of Goods? A. It does not resolve all areas of contract law. B. It encourages international trade by maintaining stable foreign exchange rates. C. It promotes economic development in poor countries by making loans to finance necessary development projects and programs. D. It applies to consumer sales for personal, family, and household use. E. It implements export controls on trade goods.

C

[12-03] With respect to the sale of goods, the Convention on the International Sale of Goods (CISG) states that A. if the parties to a contract are located in countries that have adopted the CISG, then parties are not subject to local laws. B. all contracts for the sale of goods must be in the oral form. C. contracts for the sale of goods need not be in writing. D. the parties to a contract should sign the contract in the presence of attorneys. E. only contracts concerning sale of goods above $500 must be in writing.

D

[12-04] A joint venture takes place when a company A. chooses to grant a foreign firm the means to produce and sell its product. B. launches another company which it partially or completely owns in a foreign country. C. designates a national firm or an individual of the host country as its legal representative. D. invests in a country by engaging in business with an entity from that country. E. invests in two businesses that are related to each other in its home country.

D

[12-04] GRM Fast Food Corp., located in New York, grants Truffle Eateries, a chain of restaurants in Paris, permission to produce and sell GRM's famous pizzas. Truffle Eateries will launch GRM in Paris and sell its products. The international business arrangement of GRM Fast Food Corp. is an example of a ______. A. foreign subsidiary B. foreign direct investment C. a turnkey project D. franchise E. direct export

C

[12-04] In an international sales transaction, a buyer obtains a commitment from the issuing bank to advance a specified amount upon receipt, from a carrier, of a(n) ______. A. irrevocable letter of credit B. bill of exchange C. bill of lading D. identity note E. promissory note

E

[12-04] International sales transactions using ______ involve, in addition to a seller and buyer, an issuing bank in the buyer's country. A. a bill of lading B. a bill of exchange C. an irrevocable promissory note D. a negotiable instrument E. an irrevocable letter of credit

D

[12-04] Many foreign countries favor joint ventures because they A. eliminate the need for international arbitration. B. reduce the legal risk for domestic firms. C. eliminate the need for a bill of lading and an irrevocable letter of credit in foreign transactions. D. allow local individuals and firms to participate in the benefits of economic growth. E. decrease the need for export controls.

A

[12-04] Which of the following is a most likely reason for a firm to enter a licensing agreement? A. A licensing arrangement allows firms to enter a foreign market without direct foreign investments. B. For a firm to enter into a licensing agreement, it must have substantial capital. C. A licensing agreement does not require firms to follow the local laws where they operate. D. A licensing arrangement is used only if the firms have strong management skills and marketing strategies in the regions where they operate. E. A licensing agreement is a risk free method for firms to expand in foreign markets.

A

[12-04] Which of the following statements is true of a bill of lading? A. It is forwarded by a confirming bank to an issuing bank. B. It requires a buyer to pay a seller for goods prior to shipment. C. A buyer has to obtain the bill from an issuing bank in order to be paid by a confirming bank. D. It has to be provided by a buyer in order to request for a shipment of goods. E. A seller cannot ship his goods unless he has the bill.

C

[12-04] Which of the following statements is true of licensing arrangements? A. Licensing requires international businesses to make direct foreign investment to enter foreign markets. B. Licensing agreements are applicable only to patents, copyrights, and trademarks, and not to manufacturing processes. C. Licensing agreements must follow the local laws where they operate. D. Licensing risks are greater than the risks associated with foreign direct investment. E. Licensing technology requires substantial capital to expand a company's market.