Deck 16: International Business Law

Question 1

Memorial Stone Carvers makes special imports of marble from Italy.It has just found out that it may have been overpaying customs duties because the wrong rate may have been applied.Under which of the following statutes would it be able to appeal the customs officer's duty rate decision?

A)The Customs Act.
B)The Customs Tariff Act.
C)The General Agreement on Tariffs and Trade.
D)The Special Import Measures Act.
E)The Arbitration Act.

Answer 1

The Customs Act.

Question 2

Hip Hip Hooray is a Vancouver-based children's clothing manufacturer whose unique designs,excellent quality,and interesting fabrics have allowed the company to sell across Canada with great success.Hip Hip Hooray now wants to expand into foreign markets.The company was founded and is run by two mothers who could not find what they wanted for their own kids and so made it themselves,and they do not have a huge organization behind them.They want to ensure they can protect their reputation but they are unsure whether their production arm can expand fast enough if their sales take off.Discuss the advantages and disadvantages of the various forms of international trading arrangements that Hip Hip Hooray might use.

Answer 2

Hip Hip Hooray can either become involved in both manufacturing and marketing its clothes in a foreign country,manufacture in Canada to sell elsewhere,or licence manufacturers outside Canada to make and sell its designs.
If the company wants to manufacture in Canada but have a foreign company distribute in other countries,it can set up a distribution agreement with a distributor in the particular country.This would allow continued control over quality while the established distribution network in the foreign country would avoid the need for Hip Hip Hooray to establish a sales force or involve itself as an employer in that country.Since the agreement will govern all aspects of the relationship,it has to be very carefully drawn up and must address all matters relevant to the distribution of Hip Hip Hooray's goods and the protection of its interests.For example,it should cover such matters as what will be distributed where;a detailed set of obligations to be met by the distributor (size of sales force,what the distributor will do,size of inventory,limitations on cutting third-party deals,sales volume to be met,etc. )and by Hip Hip Hooray (quality standards,advertising materials,catalogues,samples,delivery times,etc. ),as well as how any disputes will be dealt with,and insurance and transportation matters.If the right distributor is picked,this is a very effective means for Hip Hip Hooray to achieve its expansion goals.
The alternative of setting up its own sales force or even its own manufacturing plant is probably too onerous for Hip Hip Hooray since it involves a huge financial investment and knowledge of a whole new set of national and local laws.However,it would give the company total control and easy access to that market.
Alternatively,Hip Hip Hooray could enter into a joint venture with a firm within that country,which would reduce the amount of involvement,financial and otherwise,required while giving the company access to the foreign market as a corporation producing within the market.Foreign share ownership may,however,be an issue in that country,and Hip Hip Hooray will have less control than if they were operating on their own.
Hip Hip Hooray might want to consider a licensing agreement with an established manufacturer in the foreign location,which would bring the company royalties and control over quality without the manufacturing responsibility there.Hip Hip Hooray would have to make sure its trade name/mark,fabric,and clothes designs would be protected there,so the company will need expert advice about copyright,trademarks,possibly industrial design,and licensing agreements.This might work well for Hip Hip Hooray since it would avoid all the manufacturing and distribution problems associated with the other possibilities.However,as a newcomer to the market,the royalties the company could command would probably bring much less profit and it would have more difficulty controlling quality or distribution problems.This could have a disproportionate effect on Hip Hip Hooray's reputation,as it is not an established name in the foreign market.

Question 3

A sight draft

A)is a bill of exchange that is effective when it is seen by the buyer.
B)is a bill of exchange prepared by the buyer.
C)allows the buyer to keep control and title to the goods once the seller receives them.
D)allows the seller to keep control and title to the goods until the seller is assured of payment.
E)is signed by both the seller and the buyer.

Answer 3

allows the seller to keep control and title to the goods until the seller is assured of payment.

Question 4

The European Union is an example of a social and monetary union.

Question 5

Canadian Farm Machinery entered into a contract with High Seas Transportation that set out the responsibilities of High Seas in delivering 100 tractors to Argentine Produce.Argentine has not yet paid for the tractors.
A Canadian company has a patented product and seeks to have it produced overseas.The company wants to minimize its investment required abroad and its degree of exposure to foreign legislation.In this case,the far-and-away best choice would be to opt for a licensing arrangement.

Question 6

Canadian Farm Machinery entered into a contract with High Seas Transportation that set out the responsibilities of High Seas in delivering 100 tractors to Argentine Produce.Argentine has not yet paid for the tractors.
This document is called a bill of lading.

Question 7

You are the world's leading manufacturer of computerized,range-finding equipment and you want to export your products to Libya and North Korea.With which of the following might you need to concern yourself?
(i)The Customs Act.
(ii)The Export and Import Permits Act.
(iii)A foreign distribution agreement with your foreign contact.
(iv)A force majeure clause in a distribution contract.
(v)Bills of lading.
(vi)Political risk insurance.

A)i and ii.
B)i,ii,iii,and v.
C)ii,iii,iv.and vi.
D)All of these except i.
E)All of these except ii.

Question 8

Gift Importers has a contract with a Philippine government exporting agency for the purchase of numerous handmade artefacts.Since neither party was comfortable having the courts of the other party's country adjudicate any disputes between them,the contract contains a clause that identifies the procedure by which a third party acceptable to both would settle any disputes.
If a dispute resolution procedure is not part of the original contract,neither the Philippine government nor Gift Importers can impose it on the other at a later date.

Question 9

Gift Importers has a contract with a Philippine government exporting agency for the purchase of numerous handmade artefacts.Since neither party was comfortable having the courts of the other party's country adjudicate any disputes between them,the contract contains a clause that identifies the procedure by which a third party acceptable to both would settle any disputes.
In order to protect itself from an after-the-fact application of Philippine law that,for example,would remove or alter some of the protections for Gift Importers in the contract,Gift Importers should insist on a clause by which the third party that is to resolve disputes would operate in a country other than Canada or the Philippines and under internationally recognized rules.

Question 10

The Bill of lading in an international commercial transaction is a contract between the _________________ and the ___________________.It serves as a _____________________ and a __________________.

A)importer,carrier,sight draft,title document
B)shipper,carrier,contract of carriage,negotiable instrument
C)shipper,carrier,title document,contract of carriage
D)importer,shipper,title document,sight draft
E)none of these.

Question 11

Canadian Farm Machinery entered into a contract with High Seas Transportation that set out the responsibilities of High Seas in delivering 100 tractors to Argentine Produce.Argentine has not yet paid for the tractors.
If this contract,along with any other required documents,and a sight draft are sent to Argentine Produce's bank,the bill of lading will not be released to Argentine Produce until it pays Canadian Farm Machinery,thus protecting Canadian Farm Machinery's ownership rights if Argentine does not pay.

Question 12

Gross domestic product is an important measure of everything we consume,investments,government spending,and the difference between our exports and our imports.

Question 13

Canadian Farm Machinery entered into a contract with High Seas Transportation that set out the responsibilities of High Seas in delivering 100 tractors to Argentine Produce.Argentine has not yet paid for the tractors.
This document will set out information by which customs officials will be able to set the tariff classification and the applicable rate.

Question 14

You are exporting your Canadian-made microchips to Romania for the first time.Describe the steps you can take to protect yourself from financial loss in case something happens to the shipments.The chips will be only partially paid for at the time they are shipped.

Question 15

Of the following,the most important document(s)in an international contract for the sale of goods between a raw material supplier in Nova Scotia and a factory in Spain would be

A)the commercial invoice.
B)the UNCITRAL documents.
C)the contract of affreightment.
D)the bill of lading.
E)customary documents under the Vienna Convention.

Question 16

Canada's biggest trading partner is

A)China.
B)Mexico.
C)Great Britain.
D)India.
E)United States.

Question 17

A time draft is an instrument with a credit aspect to it.

Question 18

Canadian Farm Machinery entered into a contract with High Seas Transportation that set out the responsibilities of High Seas in delivering 100 tractors to Argentine Produce.Argentine has not yet paid for the tractors.
The Export and Import Permits Act,in part,protects Canadian business from the "dumping" of foreign goods into Canada.

Question 19

Gift Importers has a contract with a Philippine government exporting agency for the purchase of numerous handmade artefacts.Since neither party was comfortable having the courts of the other party's country adjudicate any disputes between them,the contract contains a clause that identifies the procedure by which a third party acceptable to both would settle any disputes.
This procedure is known as commercial arbitration.

Question 20

A Canadian company is considering negotiations to create a licensing agreement with a German company for the manufacture of patented Canadian products in Germany.What items do you feel are vital for the final agreement to contain in order that it can be functional at law and in practice?

Question 21

Seacoast Fisheries & Canning of Signal Bay,Nova Scotia,entered into a contract with SEAINTORG,a Russian government-owned foreign trade organization for marine products,to process and can Russian offshore catch.Due to the movement of fish up the Canadian coast,SEAINTORG suspends the agreement,and has its catch canned by operations in Newfoundland.What alternatives are open to SFC other than Canadian courts,and how does the process operate?

Question 22

General Mfg.& Tool Co.(GMT)is a small company producing industrial machinery,including a special computer-controlled milling machine capable of producing ball bearings that can meet the tiniest known industrial specifications.Many firms using this machine sell their output to defence contractors in the United States and Canada,but the output finds its way into a great many consumer goods as well,such as VCRs and automobiles.You are approached as a trade consultant by the president of GMT,and asked to make recommendations about licensing the production of the machines in South-East Asia.Describe what steps GMT should take to determine the exportability of ots licence,and describe the major advantages of licensing.Further describe for GMT what any good licensing agreement should contain.

Question 23

Discuss your own interpretation of,response to,and opinion about the extraterritorial application of a nation's laws.

Question 24

Haglund Manufacturing Co.of Dartmouth,Nova Scotia is a maker of nautical navigation devices,and has developed some interesting new technology in the field.It is considering a business relationship with Schiffgebau Werk,in Hamburg,Germany,which has some vacant land and trained but surplus employees.When the president of Haglund last visited Hamburg,he noted that other vacant commercial properties existed as well.Identify the range of options available to Haglund for entry into the German market with its products.Compare and contrast the advantages and disadvantages of each.What would you suggest to Haglund if the company is cash-poor and risk-adverse? What if Haglund has reasonable resources and has considerable experience in international trade?

Question 25

Describe the characteristics of a social and monetary union,provide an example of one,and give a more specific description of the social and monetary union that you identify.