Deck 30: International Business Transactions

Question 1

The best means of establishing the proper law for an international contract is

A)to accept the same country where the contract would be submitted for arbitration.
B)for the parties themselves to make express provision.
C)for the parties to leave it by default to the country of signing.
D)for the parties to leave it up to the rules of the court of jurisdiction.
E)for the parties to make it subject to a "neutral" law.

Answer 1

B

Question 2

A,based in Canada,has a contract with B,in Denmark,for the sale by A to B of certain goods.The contract specifies that A bears responsibility for shipping the goods and for insuring them.In this case,A and B have entered into

A)an EXW contract.
B)a CIF contract.
C)an FOB contract.
D)a DDP contract.
E)none of the above

Answer 2

B

Question 3

A large multinational Canadian manufacturing company has just bought a majority of shares in a similar company located in Spain.This is an example of

A)a limited investment in Spain.
B)a portfolio investment in Spain.
C)establishing a branch in Spain.
D)a conditional portfolio investment.
E)a direct foreign investment in Spain.

Answer 3

E

Question 4

A large Korean car manufacturer has just built a new model car which it is going to sell in Canada.In Korea the car will be sold for the Canadian equivalent of $25 000.00 but to get into the market in Canada the car will be sold for $15 900.00 Canadian.In this case,the company has engaged in

A)anti-dumping.
B)normal business practices.
C)export subsidization.
D)dumping.
E)a conspiracy.

Question 5

A,based in Canada,agrees to sell goods to B in Australia.The contract provides that B will manage shipment of the goods and A will deliver the goods to and load them on a carrier designated by B.In this case,A and B have entered into

A)a DDP contract.
B)a CIF contract.
C)an FOB contract.
D)an EXW contract.
E)none of the above

Question 6

Use this fact situation to answer the related questions that follow. A company in Canada has just entered into a contract for the sale of goods to a company in France;however,the contract is silent as to the law that will apply.
In this case,in the event of a dispute,a Canadian court will look at

A)where the negotiations for the contract were held.
B)the intention of the parties.
C)the type of goods being sold.
D)where the offer was made.
E)where the offer was accepted.

Question 7

Public international law is

A)law involving the relations between public officials of different countries.
B)law involving the relations between public entities from different countries.
C)law involving the relationships between states.
D)law involving the relations between citizens of different countries as it concerns their private activities.
E)law involving the relations between the citizens of different countries as it concerns their public activities.

Question 8

A buyer in British Columbia purchases equipment from a manufacturer in China.The contract between the parties stipulates that any dispute between the parties arising out of the transaction will be decided by an arbitrator in Switzerland.The buyer is not satisfied with the quality of the equipment and brings the dispute before an arbitrator in Switzerland.What law will the arbitrator apply to resolve the dispute?

A)the law of British Columbia
B)the law of Switzerland
C)the law that has the closest connection with the contract
D)the law of China
E)the law that the parties agree should apply

Question 9

Foreign investment occurs when

A)a branch of a business enters into trade relations with a foreign country.
B)the subsidiary of a business enters into trade relations with a foreign country.
C)a business invests money in a foreign business.
D)a business establishes a branch or subsidiary in a foreign country.
E)a business invests money in a foreign country.

Question 10

Use this fact situation to answer the related questions that follow. A,based in Ontario,enters into a contract with B,in Geneva,Switzerland,whereby B will manufacture and supply to A a certain quantity of watches.The negotiations first took place by faxes between Ontario and Geneva and were then held in person in Geneva.Most of the people connected with the negotiations and the contract live in Geneva and B's manufacturing plant is there.B manufactures the watches and then delivers them to A in Ontario.However,A refuses to accept them because they do not meet the specifications agreed on.There is a marked absence of the actual specifications in the contract,and it also does not contain a jurisdiction clause in the event of a dispute.Having rejected the delivered goods,A now goes out and buys the watches from a German manufacturer at twice the cost of the Swiss watches.
In this case,under Ontario law,A can institute an action in Ontario against B because

A)A is located in Ontario.
B)it would be a hardship for A to sue in Switzerland.
C)A suffered damages in Ontario.
D)B impliedly consented to Ontario as the appropriate forum.
E)none of the above

Question 11

Use the fact situation in Q12 to answer the related question that follows. The principle of law that allows a party to request a change of court of trial when it results in undue hardship is

A)forum non conveniens.
B)sempre fidelis.
C)caveat emptor.
D)res ipsa loquitur.
E)volenti non fit injuria.

Question 12

Unlike domestic contracts,international contracts are more likely to involve special problems,such as

A)complexities involving transportation,insurance,and financing.
B)the use of carriers,insurers,and banks.
C)the interference of foreign governments and their agents.
D)the usual buyer-seller language barrier.
E)those created by export houses and freight forwarders.

Question 13

An export sale normally requires at least

A)the insurance policy or certificate.
B)the contract of sale.
C)the bill of lading.
D)the invoice.
E)all of the above

Question 14

A,based in Canada,enters into a contract for the sale of goods to B in Germany.The contract provides that A is to make the goods available to B at A's own warehouse.In this case,the arrangement between A and B is

A)a DDP contract.
B)an FOB contract.
C)a CIF contract.
D)an EXW contract.
E)none of the above

Question 15

Use the fact situation in Q12 to answer the related question that follows. If A institutes an action in Ontario against B,what argument(s)will B most likely raise to transfer the action to Geneva to be heard by a Swiss court?

A)that the cost of bringing all of the parties from Geneva would be staggering
B)that the majority of the parties are in Geneva
C)that the negotiations were held in Geneva
D)that the manufacturing plant is in Geneva
E)all of the above

Question 16

International business transactions require,by definition,parties in

A)agreeing to bilateral treaties and trade agreements.
B)two or more different countries.
C)questions of public international law.
D)the NAFTA or the GATT treaties.
E)both private law and public law.

Question 17

Use the fact situation in Q4 to answer the related question that follows. When the Canadian court cannot determine which law will apply from the intention of the parties,among other things,the court will consider

A)the place of business of the parties.
B)the place of acceptance of the risk.
C)where the contract was to be performed.
D)where the contract was made.
E)all of the above

Question 18

When we speak of foreign presence,we mean that

A)a business invests in a foreign-owned company.
B)a business moves from one country to a foreign country.
C)a business establishes trade relations with a foreign country.
D)a foreign company buys out a local business.
E)a business establishes an agent or representative office in a foreign country.

Question 19

Use the fact situation in Q4 to answer the related question that follows. In the event that the Canadian court cannot determine which law will apply from the intention of the parties,it will

A)impose Canadian law on the parties.
B)impose international law on the parties.
C)impose the law of France on the parties.
D)impose the law of the country most connected to the contract.
E)nullify the contract as being too uncertain.

Question 20

In commercial arbitration,

A)the arbitration is presided over by an experienced arbitrator.
B)the arbitrator's decision will bind the parties.
C)the parties agree to resolve their dispute using this method.
D)the arbitrator's decision can be easily enforced.
E)all of the above

Question 21

A portfolio investment is essentially a passive investment,normally in the form of government or corporate bonds or listed securities.

Question 22

Export Industries Ltd. ,a Canadian corporation with a factory in London,Ontario,agrees to sell a customer in Germany 2000 microwave ovens FOB Lufnaia Airlines,Toronto,Pearson Airport.Which of the following statements is correct?

A)Export is only liable if their employees damage the goods prior to their arriving in Toronto.
B)Export is liable for the goods until they are loaded into Lufnaia Airlines.
C)The customer's insurance covers the goods from the time they are separated out and loaded at the London,Ontario,factory.
D)Export is liable until the goods leave Toronto on the airline.
E)Title passes when the goods leave the London factory.

Question 23

A free trade area is one in which customs duties are always imposed.

Question 24

Courts require that an action have some "connecting factor" or a "real and substantial connection" with the country or province in which the party seeks to bring the action.The question of whether a court will hear an action and allow a lawsuit to proceed in the court of that jurisdiction is called

A)ultra vires.
B)foreign jurisdiction.
C)parallel proceedings.
D)assume jurisdiction.
E)multiple proceedings.

Question 25

The invoice is of special importance in the international sale of goods.It not only provides information to the parties to the transaction,but also

A)provides information for the international electronic data exchange.
B)operates as a document of title.
C)facilitates the financing.
D)provides information to the customs authorities in the country of importation.
E)acknowledges that the goods have been picked up by the shipping company.

Question 26

Under Chapters 19 and 20 of NAFTA,in the event of a dispute,the Extraordinary Challenge Committee is the first body before which an arbitration is heard.

Question 27

Countertrade

A)requires consuming the goods acquired in exchange.
B)is where a seller agrees to accept trade credits instead of cash.
C)involves less risk than does the simple sale.
D)is not worthwhile where exchange controls exist.
E)is where payment is made in goods produced or procured by the buyer.

Question 28

The World Trade Organization provides two procedures for the resolution of disputes between countries.One way is to request the WTO Council to appoint a "panel" to adjudicate the dispute;the other way is

A)a consultation and,if necessary,conciliation procedure-essentially a diplomatic solution.
B)to turn over the matter to the International Mediation Review Board.
C)by arbitration through an international arbitration panel.
D)to submit to the International Compensation Board,who will review the matter and publish a report with their recommendations.
E)to refer the dispute to the Free Trade Commission for settlement.

Question 29

Conditions attached by a host country to a foreign investment are usually referred to as performance requirements.

Question 30

Notwithstanding that an action at law between contracting parties in different countries is brought in one country,the court of that country may decline jurisdiction on the basis of forum non conveniens.

Question 31

Dumping is the process where

A)a foreign firm sells goods in Canada at prices lower than it sells these same goods for in its own domestic market.
B)domestic producers of similar products cannot compete on price.
C)the government is required to impose countervailing duties.
D)a foreign government provides special benefits to its producer in order to assist them to export into Canada.
E)many consumers are alienated toward the product because of the quality.

Question 32

SlamDunk Inc. ,a Vancouver,B.C. ,firm,agrees to sell to SuperVideo Ltd.of Barcelona,Spain,500 video games with DDP terms.This means that SlamDunk will arrange for and pay the cost of shipping,the insurance,and the

A)export license.
B)brokerage fee.
C)inspection fee.
D)agent's commission.
E)import duties.

Question 33

The forum non conveniens principle allows a court to refuse to hear a proceeding because another jurisdiction is more appropriate or more closely connected to the matter.Factors relevant to determining which of the multiple forums is more appropriate include all of the following EXCEPT

A)the convenience,location,and expense for parties and witnesses in each forum.
B)the avoidance of multiple proceedings-that is,whether a foreign jurisdiction has already assumed jurisdiction.
C)the law to be applied to the dispute.
D)whether the plaintiff has been declared a frivolous and vexatious litigant.
E)the ability to enforce any resulting judgment.

Question 34

Foreign direct investment (FDI)is not normally conducted through the establishment of

A)a branch.
B)a subsidiary.
C)a hostile takeover.
D)a joint venture.

Question 35

Foreign direct investment to a Canadian investor

A)is where the investor's purpose is to have an effective voice in the management of the enterprise.
B)would involve owning the stock in a Canadian holding company.
C)is seldom obtained through the establishment of a foreign branch or subsidiary.
D)can be obtained by owning shares in a mutual fund devoting itself to foreign investments.
E)is where one owns stock listed on a foreign stock exchange.

Question 36

In Canada,a foreign corporation must be licensed or registered to acquire standing to bring a lawsuit in Canada.

Question 37

Aside from establishing a branch or subsidiary in a foreign country,an FDI is conducted by means of a partnership.

Question 38

The decision to invest in a foreign jurisdiction carries with it many risks.The possibility of the host country government assuming ownership of a foreign investor's assets is referred to as

A)forum non conveniens.
B)national party autonomy.
C)expropriation.
D)joint venture.
E)export subsidy.

Question 39

Where a Canadian company makes an investment in a foreign country,Canada is considered to be the "host" country.

Question 40

An export sale normally requires at least four documents.These include all of the following EXCEPT

A)the contract of sale.
B)the bill of lading.
C)the insurance policy or certificate.
D)the letter of credit.
E)the invoice.

Question 41

What test does Investment Canada apply in order to authorize a foreign acquisition of a large Canadian business?

Question 42

Explain the doctrine of forum non conveniens.

Question 43

A foreign plaintiff with no assets in Canada will likely be ordered to pay security for costs in an action at law commenced in Canada.Explain.

Question 44

What are "Incoterms"?

Question 45

Explain the greatest fear of a foreign investor who invests in a developing country.

Question 46

Before a court assumes jurisdiction over an international business dispute,the issue must have a connecting factor.

Question 47

Agricultural products fall within the scope of NAFTA.

Question 48

The GATT and the WTO aim to reduce customs duties.

Question 49

International transactions result in a wide variety of legal relationships.Name some of the contractual relationships.

Question 50

Anti-dumping duties may be levied when one country's goods are dumped in another country.

Question 51

Explain the purpose of the GATT and the WTO.

Question 52

Generally speaking,at least four documents are required for an export sale.Explain the most common documents.

Question 53

Explain how private,public,and public international law come into play in international transactions.

Question 54

In a countertrade,the seller agrees to accept payment in the form of goods procured or produced by the buyer.

Question 55

Explain the risk that a Canadian plaintiff takes in suing a foreign defendant in Canadian courts.

Question 56

Explain the advantages of commercial arbitration over litigation.

Question 57

What is the proper law of an international contract?

Question 58

Define and explain the term counter-trade.

Question 59

What information would you expect to see on the invoice used in an export transaction?

Question 60

Why is it sometimes important to determine the country of origin of a good imported into Canada?

Question 61

Today,under NAFTA,when a Canadian consumer purchases goods in the United States,he or she is required to pay Canadian customs and excise duties and tax on those goods when bringing them back into Canada.If this is the case,can it be said that such customs and excise duties and taxes make NAFTA something less than a free trade agreement?

Question 62

Explain the test that is applied in Canada before the foreign acquisition of a large Canadian business is authorized.

Question 63

Explain what a Canadian court would do to determine whether to permit the enforcement of a judgment obtained in a foreign country.

Question 64

In the exporting of services,one area of considerable risk is the transfer of technology and the sale or use of intellectual property.Explain,and give examples of how this is true.

Question 65

The WTO promotes the principle of "non-discrimination." What is the principle of non-discrimination? How does that principle affect "most-favoured nation treatment"? How does it affect quotas?

Question 66

When would a government typically impose measures to deal with dumping or export subsidization? What measures might this government take?