Question 1

Agri Products Inc., a U.S. firm, signs a contract with Bao Ltd., a Chinese firm, to distribute Agri's products in China. The most likely reason for this deal is

Accepted Answer

The most likely reason for Agri Products Inc. to sign a contract with Bao Ltd to distribute its products in China is that China represents a substantial market for Agri. This suggests that Agri is seeking to expand its business abroad and take advantage of new opportunities in foreign markets.

Question 2

Restful Hotel Corporation, a U.S. firm, establishes a wholly owned subsidiary in Singapore. As a parent corporation, with respect to the subsidiary, Restful retains complete ownership of

Accepted Answer

A wholly owned subsidiary means that the parent corporation, Restful Hotel Corporation, retains complete ownership of all the facilities in Singapore.

Question 3

Airbud Corporation, a U.S. firm, signs a contract with Bueno Computadores Ltd., an Argentinean firm, for a shipment and payment for Airbud's goods. This is

Accepted Answer

This is direct exporting, as Airbud Corporation is selling and shipping its goods directly to Bueno Computadores Ltd. in Argentina.

Question 4

The United States taxes each barrel of imported oil at a flat rate. This is

Accepted Answer

The United States taxes each barrel of imported oil at a flat rate, which is called a tariff. A tariff is a tax imposed on imported goods and services, designed to make them more expensive than domestically produced ones, and to protect local industries from foreign competition.

Question 5

Coffee Company, a U.S. firm, owns property in the Dominican Republic. When the Dominican government seizes the property, the company asks a U.S. court to order the property's return. The court rules that the Dominican Republic is exempt from the court's jurisdiction. This is an application of

Accepted Answer

The court's ruling is based on the doctrine of sovereign immunity, which grants foreign countries immunity from the jurisdiction of U.S. courts. This immunity extends to their political subdivisions, such as the government of the Dominican Republic.

Question 6

Habitable Premises Corporation, a U.S. firm, owns property in India. The government of India seizes the property for a proper public purpose and pays the firm just compensation. This is

Accepted Answer

The scenario described is an example of expropriation, which is the taking of property by a government for a public purpose with just compensation. Confiscation involves the taking of property without compensation, the act of state doctrine refers to the principle that the courts of one country will not question the validity of acts performed by another country within its own territory, and the doctrine of sovereign immunity refers to the principle that a sovereign state is immune from lawsuits in foreign courts.

Question 7

Lunchies Corporation, a U.S. firm, signs a contract with Manger au Brasserie, S.A., a French firm, to give Manger the right to use the Lunchies trademark in restaurants in France. This is

Accepted Answer

This is a licensing agreement as Lunchies Corporation is giving Manger au Brasserie, S.A. the right to use its trademark in exchange for compensation.

Question 8

Market Maker, Inc., a U.S. firm, can license a foreign manufacturing company to use its

Accepted Answer

Market Maker, Inc. can license a foreign company to use its patented intellectual property, trade secrets, or trademarked brand, as all these are forms of intellectual property that can be licensed.

Question 9

Global Project, a U.S. firm, owns property in Hong Kong. The government of China seizes the property. The firm claims that this is confiscation. The government claims that it is expropriation. The difference concerns

Accepted Answer

Confiscation and expropriation are both forms of government seizure of property, but they differ in the purpose and compensation offered. Confiscation typically involves seizing property without compensation, while expropriation involves seizing property for a public purpose with fair compensation paid to the owner. In this case, the Chinese government's claim of expropriation suggests that it was seizing Global Project's property for a public purpose and may have offered compensation, whereas Global Project's claim of confiscation suggests that it was not compensated for the seizure. The location and nature of the government involved are not relevant to the distinction between confiscation and expropriation. The business of the firm and citizenship of its owners may be relevant in other circumstances, but are not directly related to the distinction in this case.

Question 10

Opti-Med Inc., a U.S. firm, signs a contract with Pharma Ltd., a Canadian firm, to give Pharma the right to sell Opti-Med's products in Canada. This is

Accepted Answer

This is a distribution agreement, where Opti-Med Inc. is giving Pharma Ltd. the right to distribute and sell their products in Canada.

Question 11

Finance Corporation, a U.S. firm, files a suit against Ghana in a U.S. court. Under the Foreign Sovereign Immunities Act, Ghana is immune from the jurisdiction of the court if Ghana has

Accepted Answer

Under the Foreign Sovereign Immunities Act, a foreign state is generally immune from the jurisdiction of U.S. courts unless a specific exception applies. The exceptions listed (A, B, C) are situations where immunity would not apply, meaning Ghana would not be immune. Therefore, the correct choice is D, as none of the choices describe a situation where Ghana would be immune.

Question 12

Equity International Inc., a U.S. firm, and Finance Invest Ltd., a firm in Great Britain, are parties to a contract with a forum-selection clause. The forum specified in the clause must be within the geographic boundaries of

Accepted Answer

The forum specified in a forum-selection clause can be anywhere mutually agreed upon by the parties, not limited to the geographic boundaries of their respective countries.

Question 13

Mont Blanc S.A., a French firm, imports its goods into the United States and offers those goods for sale at "less than fair value." Fair value is the price of Mont Blanc's goods in

Accepted Answer

The answer of Mont Blanc S.A., a French firm, imports...

Question 14

As part of a deal for power-generating equipment, Solar Wind Company and Thermal Gen Ltd. enter into a written contract that includes a clause providing for the arbitration of any dispute in the United States. Under the New York Convention, if a dispute arises, a court will compel arbitration if both parties are

Accepted Answer

Under the New York Convention, for an arbitration agreement to be internationally recognized and enforced, it is not necessary for both parties to be U.S. citizens. The key factor is that the parties are from different countries that are signatories to the convention. The option suggesting that both parties are not U.S. citizens aligns with the convention's applicability to international commercial agreements and disputes.

Question 15

Consolidated Corporation, a U.S. firm, wishes to participate, but limit its involvement, in Middle Eastern markets. Consolidated empowers Doha Ltd., an Egyptian firm, to enter into contracts in certain countries on behalf of Consolidated. This is

Accepted Answer

This is an agency relationship because Consolidated is empowering Doha Ltd. to act on its behalf in certain countries. With an agency relationship, the agent (Doha Ltd.) has the authority to act on behalf of the principal (Consolidated) in certain situations.

Question 16

Burger Heaven, a U.S. firm, makes a deal with a Canadian firm, Donny's Diners, that allows Donny's to use Burger Heaven's trade name in Canada in return for a fee. This is

Accepted Answer

The described arrangement is a licensing agreement, as Burger Heaven is allowing Donny's Diners to use their trade name in return for a fee. A distribution agreement would involve the distribution of goods, while a subsidiary would involve the creation of a new company. Direct exporting would involve a company selling its goods directly to foreign customers without the use of intermediaries.

Question 17

In international business, franchising involves

Accepted Answer

Franchising involves the granting of a license from a franchisor to a franchisee, allowing the franchisee to use the franchisor's business model, products, and services in exchange for royalties or fees. This is a common form of international business expansion.

Question 18

Venezuela seizes the assets of World Oil, Inc., a U.S. firm. World Oil's recovery from Venezuela in a U.S. court may be prevented by

Accepted Answer

The act of state doctrine is a principle that states that one country should not interfere with the internal affairs of another country. In this case, Venezuela's seizure of World Oil's assets would be considered an internal affair, and thus the act of state doctrine may prevent a U.S. court from ruling in favor of World Oil.

Question 19

Wei Ltd., a Chinese firm, imports its goods into the United States and offers those goods for sale at "less than fair value." This is

Accepted Answer

Selling goods at "less than fair value" is known as dumping.

Question 20

Sufficient business develops in France for Graphic Comics Inc., a U.S. firm, to appoint Comics Graphique Ltd., a French firm, to act as Graphic's marketing representative in France where they will put together ad campaigns to help drum up more business for Graphic. This is

Accepted Answer

This is an example of indirect exporting, as Graphic Comics Inc. is using a third-party representative (Comics Graphique Ltd.) to handle marketing and promotion in France.

Quiz 23: International and Space Law