Deck 16: International Marketing Law: Sales Representatives, Advertising, and Ethical Issues

Question 1

The United States is one of the few nations of the world that regulates advertising to children.

Answer 1

False

Question 2

In order to be liable for illegal payments made to foreign officials,the payment must be made directly to the official from the firm receiving the favors granted.

Answer 2

False

Question 3

A principal who hires an independent agent within a host country is viewed as having opened an office and is then subject to the host country's tax laws.

Answer 3

False

Question 4

Illegal payments routed through a foreign sales agent to foreign officials may result in criminal prosecution of the corporation employing the agent.

Question 5

There has been a great deal of international cooperation and success in harmonizing the local foreign investment laws of most nations.

Question 6

Payments made to foreign officials by an individual for the purpose of expediting or securing the performance of a routine or clerical governmental action are subject to fines up to $100,000 and/or a jail term of up to five years.

Question 7

The Electra-Amambay case involved a local Paraguayan firm that was representing a Brazilian company.

Question 8

The antibribery provisions of the FCPA specifically and clearly define the conditions that must be violated in order to prosecute an individual or corporation for bribery of foreign officials.

Question 9

The FCPA is a multilateral agreement among member nations of the United Nations.

Question 10

The distinction between independent and dependent agents is important because tax and labor law considerations are determined by the designated relationships.

Question 11

A company that forms an agency relationship with its sales representatives can be sued for damages incurred through the acts of the agent against a third party.

Question 12

The FCPA requires that individuals and corporations meet disclosure requirements for all monies sent abroad as payment for fees owed to their sales agent.

Question 13

The formerly communist countries of Eastern Europe have no advertising laws.

Question 14

Many countries require pre-clearance of children's television advertising.

Question 15

A dependent agent relationship allows for greater quality control but reduces the level of profit that accrues to the principal.

Question 16

Most American lawyers can give competent advice on foreign advertising laws.

Question 17

Under the provisions of EC Council Directive 86/653,an agent accrues sales commissions on deals that occur within his territory only when she or he has substantially participated in the events leading up to the customer's purchase.

Question 18

One of the main objectives of the FCPA is to prohibit foreign companies in the United States from bribing U.S.government officials.

Question 19

Truth-in-advertising is now a generally accepted business practice and laws prohibiting false advertising exist in many nations.

Question 20

Although bribery of government officials is considered a corrupt practice in the U.S.,many countries traditionally considered it to be a standard operating procedure and officials in those countries expected to be paid for granting certain favors.

Question 21

Advertising abroad must comply with the legal guidelines established in the home country.

Question 22

An independent agent is often characterized by which of the following:

A) Principal is involved in working out details of the agent's work organization.
B) The agent is always subject to a change in instructions.
C) The agent works for many clients.
D) The agent is paid on an hourly or salaried basis.
E) All of the above.

Question 23

Under the FCPA,a payment can be illegal if it is made:

A) Corruptly, knowingly, and to expedite the performance of a routine governmental action.
B) Corruptly, negligently, and to expedite the performance of a routine governmental action.
C) Criminally, intentionally, and in order to obtain or retain business.
D) Corruptly, knowingly, and for assistance in obtaining business.
E) Any payment that is illegal under local law is illegal under the FCPA.

Question 24

The FCPA was passed in the United States in the 1970s largely because:

A) The law was based on a draft law written by the United Nations.
B) U.S. public opinion and world disdain over disclosures of hundreds of unethical payments to foreign officials by U.S. firms.
C) An attempt by the U.S. Congress to provide a more predictable and easily understood law for U.S. firms operating abroad.
D) The law was requested by many U.S. corporations in order to allow them to compete more effectively in foreign markets.

Question 25

Documentation submitted to the Department of Justice for review under the FCPA is considered confidential and sensitive to national security.

Question 26

Pursuant to EC Council Directive 86/653,an economic conditions alarm is sounded by the principal for the benefit of his or her agent:

A) To give six-months prior notice of an increase in the agent's sales quota.
B) When the inflation rate of the host country threatens to precipitate a price increase.
C) When currency exchange rates rise to a level that makes business unprofitable.
D) When sales forecasts indicate that the agent's volume of business will be significantly lower than normally expected.

Question 27

Under EC Directive 86/653,an evergreen contract occurs when the agency relationship has:

A) Lasted for three or more years.
B) Been continued beyond the original fixed term with no formal renewal.
C) Been terminated by giving a three-month written notice.
D) All of the above.

Question 28

The Adler v.The Federal Republic of Nigeria case involved:

A) The details of scheduling created by agent within principal's general requirements.
B) The U.S. principal creates a marketing program and the agent carries it out.
C) The agent organizes, pursues, and sets the schedule for the marketing program.
D) Whether the local agent should be paid on a commission basis.
E) The Foreign Corrupt Practices Act.

Question 29

Corporate penalties for violating the FCPA include:

A) Fines of no more than $100,000.
B) Fines up to $2,000,000.
C) Revocation of the firm's license to do business in a foreign country.
D) Punitive damages.
E) Two of the above.

Question 30

Some cultures are less tolerant of vagueness and exaggeration in advertising than others.

Question 31

Only payments in excess of $5,000 are subject to criminal prosecution under the FCPA.

Question 32

In a prosecution for violating the FCPA,the defendant's conduct will be excused if he or she can prove that the payment was paid as a result of extortion by the foreign official.

Question 33

Advertising of sexually explicit messages would be most severely regulated in which of the following countries:

A) Denmark.
B) Sweden.
C) The United States.
D) Saudi Arabia.

Question 34

In Germany,the attitudes toward exaggeration in advertising are:

A) Not highly regulated,
B) Highly regulated,
C) The law is uncertain and in a state of change,
D) Best illustrated by the Carbolic Smoke Ball case.

Question 35

Individual penalties for violating the FCPA include:

A) Imprisonment of up to five years and a fine of up to $100,000.
B) Imprisonment of up to fifteen years and a fine of up to $10,000.
C) Fines, imprisonment, and discharge from the corporation.
D) Fines, imprisonment, and revocation of the right to travel in the foreign country.
E) None of the above.

Question 36

Which of the following is prohibited in more countries?

A) False advertising.
B) Advertising to children.
C) Sexually explicit advertising.
D) Advertising in a foreign language.

Question 37

The FCPA prohibits U.S.firms from paying bribes to:

A) Foreign competitors.
B) Purchasing agents of foreign firms with whom U.S. firms do business.
C) Foreign government officials.
D) The clerk in a telephone office in Paris who is trying to place an overseas call for you.
E) Two of the above.

Question 38

In order to avoid a charge of violating the FCPA,commissions and other payments to a foreign sales agent should conform to customary rates normally paid to agents of that kind in the foreign nation.

Question 39

It is a defense to a prosecution under the Foreign Corrupt Practices Act that:

A) The amount paid was under $5,000.
B) Adequate records were kept to accurately reflect the transaction.
C) The payment was considered legal under the local law of the country in which the payment was made.
D) The payment was made to expedite the performance of a routine governmental action, such as processing paperwork needed for a travel visa.
E) The U.S. defendant can show that the payment was made in the routine course of business.

Question 40

Sales representatives that perform specific acts at the specific direction of the company they represent are considered:

A) Agents of the company.
B) Principals of the company.
C) Independent contractors of the company.
D) None of the above.

Question 41

The government agency responsible for prosecuting violators of the FCPA is:

A) Department of International Judicial Review.
B) Department of Treasury.
C) Department of Justice.
D) All of the above.

Question 42

Draft a contract with a foreign representative.Include a provision regarding termination and payment for services under such circumstances.

Question 43

Outline the main legal issues attendant to a major American toy manufacturer's worldwide advertising campaign.

Question 44

Evaluate the foreign political ramifications of bribery (witness the scandals and resignations in countries such as Japan,the Netherlands,and Italy in the 1970s,not to speak of the tremendous political impact in the developing countries).Does corruption interfere with the foreign policy of the United States,exerting influence that may be counter to U.S.policy?

Question 45

Imagine how a developing economy would wish to address truth in/deceptive advertising.Draft a position paper.

Question 46

Draft an internal memo or company rule regarding permissible and forbidden actions/payments in dealing with foreign contracts.

Question 47

Are the actions undertaken by the companies or individuals in the following scenarios legal or illegal pursuant to U.S. law? Please explain each of your answers.
Scenario
A cash payment of $100,000 by Michigan Machinery Manufacturers,Inc.,a U.S.corporation,to both of the candidates running for election to the office of president of Nigeria and delivered simultaneously with the company's bid for a government contract.

Question 48

Are the actions undertaken by the companies or individuals in the following scenarios legal or illegal pursuant to U.S. law? Please explain each of your answers.
Scenario
A cash payment of $100 made by an agent of Chicago Chemicals Company,a U.S.corporation,to a processing clerk in the Chilean Office of Business Licensing in order to expedite consideration of CCC's application for authority to conduct business operations in Chile.

Question 49

Presume that you are the chief operating officer of a United States company that is considering retaining a representative in Germany.What are the relative merits of deciding whether to retain a dependent or independent agent?

Question 50

Are the actions undertaken by the companies or individuals in the following scenarios legal or illegal pursuant to U.S. law? Please explain each of your answers.
Scenario
A birthday card and bottle of California wine sent annually by Woody Pulp,the chief executive officer of Pacific Paper Products,Inc.,a U.S.corporation,to his long-standing friend who is the Director of Government Procurement for the Japanese government.

Question 51

Are the actions undertaken by the companies or individuals in the following scenarios legal or illegal pursuant to U.S. law? Please explain each of your answers.
Scenario
A wire transfer of $200,000 to the Minister of Contracting of Gambia made by Bordeaux Builders,Inc.,a French corporation,and originating from its corporate headquarters in New York in order to secure a construction contract.

Question 52

Describe the ways that advertising regulation or consumer protection laws theoretically might differ in market economies as compared with non-market economies.Are there examples of this theory in practice?

Question 53

Provide examples of the ways in which a U.S.advertiser is subject to more and less regulation when advertising abroad.

Question 54

Are the actions undertaken by the companies or individuals in the following scenarios legal or illegal pursuant to U.S. law? Please explain each of your answers.
Scenario
A $100,000 wire transfer made by Automobile Repair Parts,Inc.,a California corporation,to the director of contracting of Yoshiba International,a Japanese corporation,for the purpose of obtaining a supply contract from Yoshiba.

Question 55

Evaluate the socioeconomic impact of corruption in developing countries.For instance,does corruption merely cause an African dictator to buy tractor parts from Country A instead of Country B,or does it cause him to buy helicopter gun ships or AK-47s instead of syringes and pharmaceuticals for infant health care at his country's modest hospitals?

Question 56

In what ways are advertising regulations pertaining to "sin" products in the U.S.more or less liberal than those in Europe (and/ or other regions)?

Question 57

Compare and contrast U.S.and European regulations aimed at advertising to children.

Question 58

Are the actions undertaken by the companies or individuals in the following scenarios legal or illegal pursuant to U.S. law? Please explain each of your answers.
Scenario
A cash payment of $250,000 made by Durdy Coal,Inc.,a U.S.corporation,to DCI's agent with the instruction "put this to good use on DCI's behalf" which in turn is paid to the State Importation Officer of the People's Republic of China in order to secure a Chinese import license.