Question 1

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.

Accepted Answer

Hiring an independent agent does not necessarily mean that the principal has opened an office in the host country. The tax implications depend on the nature of the relationship, the level of the agent's authority, and specific local laws, but merely hiring an agent does not automatically subject a company to the host country's tax laws as if it had established a physical presence there.

Question 2

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

Accepted Answer

False

Question 3

The United States is the only nation of the world that regulates advertising to children,such as tobacco advertisements

Accepted Answer

Several countries around the world have regulations on advertising to children, especially concerning harmful products like tobacco. These regulations vary in strictness and scope from country to country.

Question 4

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.

Accepted Answer

The FCPA's antibribery provisions are broad and do not provide a detailed list of specific conditions, but rather outline general prohibitions against corrupt payments to foreign officials to obtain or retain business.

Question 5

One of the main objectives of the FCPA is to prohibit foreign company representatives in the United States from bribing U.S.government,state,and county officials to obtain procurement contracts.

Accepted Answer

The main objective of the Foreign Corrupt Practices Act (FCPA) is to prohibit U.S. companies and individuals from bribing foreign officials to obtain or retain business, not to prohibit foreign company representatives in the United States from bribing U.S. government officials.

Question 6

As a result of the global financial collapse there has been a great deal of international cooperation and success in harmonizing the local foreign investment laws of most nations.

Accepted Answer

The global financial collapse has not led to significant harmonization of local foreign investment laws. While there have been some efforts towards cooperation, there is still a great deal of variation between countries' foreign investment regimes.

Question 7

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

Accepted Answer

It is true that truth-in-advertising is now a generally accepted business practice and laws prohibiting false advertising exist in many nations.

Question 8

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.Officials in those countries expected to be paid for granting certain favors and therefore can be exempted from the Foreign Corrupt Practices Act.

Accepted Answer

The statement is false. The Foreign Corrupt Practices Act prohibits U.S. companies and individuals from offering bribes to foreign officials, regardless of whether it is considered a common practice in that country. There are no exemptions for officials in countries where bribery is customary.

Question 9

The Electra-Amambay case involved a local Paraguayan firm that was terminated for "just cause" from representing a Brazilian company.

Accepted Answer

The Electra-Amambay case involved a dispute over the termination of a concession contract for electricity distribution, not the termination of a local firm representing a Brazilian company.

Question 10

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.

Accepted Answer

EC Council Directive 86/653/EEC on the coordination of the laws of the Member States relating to self-employed commercial agents does not specify that an agent accrues sales commissions only when they have substantially participated in the events leading up to the customer's purchase. Instead, it generally outlines the rights and obligations of commercial agents and principals, including commission entitlements, but does not strictly limit commission to cases of substantial participation.

Question 11

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

Accepted Answer

Most American lawyers are not trained or knowledgeable about the foreign marketing regulations and advertising laws of other countries. It is better to consult a lawyer who specializes in international law or a legal expert who is familiar with the laws of the specific country in question.

Question 12

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.

Accepted Answer

When a company forms an agency relationship with its sales representatives, the company is responsible for the acts of the agent, and can be sued for damages incurred through the acts of the agent against a third party. This is a fundamental principle of agency law.

Question 13

The FCPA is a multilateral agreement among member nations of the WTO to combat the practice of global bribery.

Accepted Answer

The FCPA is a United States law that regulates bribery of foreign officials by U.S. companies and individuals, and its jurisdiction extends beyond the borders of the U.S. It is not a multilateral agreement among member nations of the WTO. However, many other countries have enacted similar laws and joined international conventions to combat global bribery, such as the OECD Anti-Bribery Convention.

Question 14

The former communist countries of Eastern Europe have no advertising restrictions on tobacco and alcohol targeting teenagers.

Accepted Answer

Many former communist countries in Eastern Europe have implemented advertising restrictions on tobacco and alcohol, including those targeting teenagers. For example, in Poland, advertising of tobacco products is banned in areas where children and young people may be present, and in Hungary, there are strict regulations on tobacco advertising on television and in print media. However, it is still possible for some countries in the region to have limited advertising restrictions or inadequate enforcement of existing regulations.

Question 15

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 an imprisonment term of up to five years.

Accepted Answer

Payments made to foreign officials to expedite routine governmental actions are often referred to as "facilitation payments" and are generally not subject to the same penalties as bribery under the Foreign Corrupt Practices Act (FCPA), though they may still be illegal under local laws.

Question 16

One of the key criticisms of the accounting provisions of the FCPA is its failure to define a standard for materiality.

Accepted Answer

The statement is true. Many critics have pointed out that the FCPA does not provide a clear definition of what constitutes materiality in accounting practices.

Question 17

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.

Accepted Answer

The statement is false. The payment does not need to be made directly to the foreign official from the firm. Indirect payments or payments made through intermediaries can also result in liability for the firm under foreign bribery laws such as the Foreign Corrupt Practices Act (FCPA) in the United States.

Question 18

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

Accepted Answer

This statement is true. The Foreign Corrupt Practices Act (FCPA) prohibits bribery of foreign officials, and corporations can be held liable for illegal payments made by third-party sales agents on their behalf.

Question 19

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

Accepted Answer

Many countries, including the United States, Canada, and Australia, have regulations in place that require pre-clearance of children's television advertising to ensure that it meets certain standards for content and appropriateness for the target audience. This is done to protect children from potentially harmful or misleading advertising messages, and to ensure that advertisers are held accountable for their messaging.

Question 20

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

Accepted Answer

The Foreign Corrupt Practices Act (FCPA) primarily focuses on prohibiting the payment of bribes to foreign officials to assist in obtaining or retaining business. While it does have accounting transparency requirements, it does not specifically mandate disclosure of all payments made abroad as fees to sales agents. The emphasis is on preventing bribery and ensuring accurate record-keeping to reflect transactions.

Quiz 16: Marketing: Representatives,Advertising,and Anti-Corruption