Deck 28: Doing Business in a Global Economy

Question 1

Bluenose Inc, a company based in Halifax, entered into a contract with Pampas Ltd, an Argentinian company. Bluenose agreed to deliver a container of domestic beer to Buenos Aires in Argentina. Bluenose shipped the container under an order bill of lading which names Bluenose. That means that

A) Pampas is named on the bill of lading.
B) Pampas gained ownership of the beer as soon as it was placed aboard the ship.
C) if Bluenose later endorses the bill of lading, that document, like all negotiable instruments, can then be transferred free of the equities.
D) Bluenose must already have received payment from Pampas.
E) Pampas will receive ownership of the goods when the bill of lading is endorsed by Bluenose and delivered to Pampas.

Answer 1

E

Question 2

An EXW contract means that

A) the goods weighed precisely the right amount at the time of shipment.
B) the cost of shipping is calculated by comparing the weight of the container when empty and when full.
C) the goods were shipped in excellent working condition.
D) the seller must deliver to the buyer's place of business.
E) the buyer must collect the goods from the seller's place of business

Answer 2

E

Question 3

Mosaya Inc is a Montreal- based mosaic and tile company that imports tiles from Portugal. Under the contract of sale, the seller's obligation is to deliver the tiles from Portugal to Canada "CIF (INCOTERMS 2000) Montreal." This means that

A) the seller must deliver the goods to the port in Lisbon, at which point it is the responsibility of Mosaya to arrange for onward passage of the goods to Montreal.
B) the seller is required to make the goods available at their place of business for onward passage by Mosaya to Montreal.
C) the seller must deliver the goods to the port in Montreal, at which point risk of loss and ownership pass to Mosaya.
D) the seller must deliver the goods to the port in Lisbon, at which point the risk of loss and ownership will pass to Mosaya.
E) the seller must arrange and pay for the delivery the goods to the port in Montreal, but risk passes to Mosaya when the goods are loaded on the ship.

Answer 3

E

Question 4

St Stevenz is a new Vancouver furniture designer with a scent for style. The company typically sends most of its furniture to foreign destinations "FOB (INCOTERMS 2000) (insert name of ship) Vancouver," but their new in- house lawyer discovers that transportation and insurance will be much lower if shipments are sent "EXW Vancouver." Why would that be? Under an EXW contract

A) St Stevenz will only be obligated to arrange for transportation to a ship at the Port of Vancouver, but not to pay for insurance against loss of the goods while they are in transit to the port.
B) St Stevenz will be obligated to pay for transportation to a ship at the Port of Vancouver and insurance against loss of the goods while they are in transit to the port, but the rates are less under an EXW contract.
C) St Stevenz will be obligated only to pay to transport the goods to a shipping terminal in Vancouver.
D) St Stevenz will not be obligated to arrange for transportation to a ship at the Port of Vancouver, but only to make the goods available to the buyer at its premises.
E) St Stevenz will be obligated only to insure against loss of the goods while they are in transit to the port, but the buyer will have to pay to transport the goods to the port.

Question 5

The typical contract for the international sale of goods will involve

A) a bill of lading, but not a commercial invoice or a letter of credit.
B) an insurance certificate and a bill of lading, but not a commercial invoice.
C) only an agreement of purchase and sale for the goods, and a letter of credit.
D) only a commercial invoice, but not a bill of lading or an inspection certificate.
E) a sales agreement, a letter of credit, a bill of lading, an insurance certificate, and several other documents.

Question 6

Manju lives in Vancouver and would like to take advantage of a business opportunity to import finished saris from a tailoring company in Fiji. In order to avoid the possibility of a dispute between herself and the tailoring company ending up in a Fijian court, she should

A) make no reference to the agreement to the contract being subject to the laws of Fiji.
B) make reference in the agreement to disputes between the parties being resolved by binding arbitration before an arbitrator in Vancouver.
C) make no reference to any dispute settlement mechanism in the agreement with the Fijian company.
D) make no reference in the agreement to the contract being subject to the law of Canada.
E) make reference in the agreement to the contract being subject to the laws of British Columbia.

Question 7

Canfil is a Canadian communications specialist that focuses on manufacturing telecommunications equipment for export. It concludes a contract for the sale of five million metres of fibre optic cable to a telecommunications operator in Uruguay. The contract is made subject to "the laws of the Province of New Brunswick" where Canfil is located. On the way from the factory in Moncton to Montevideo, the capital of Uruguay, the cable is damaged while being moved by stevedores in Miami. When the damaged cable arrives, the Uruguayan buyer sues Canfil for the deficiency in a New Brunswick court. It is possible that the court may

A) ask a court in Miami to hear the matter.
B) arbitrate the dispute between the parties in the hope that they will reach a settlement.
C) declare that the intentions of the parties regarding where they wanted to litigate are unclear.
D) refuse to hear the parties because one of the parties is not Canadian.
E) declare that it is forum non conveniens because none of the elements of the damage arose in Canada, and impose a stay.

Question 8

Winnipeg Construction Ltd has entered into a contract with Malmo Steel in Sweden. The parties have agreed that their contract will be governed by the United Nations Convention on Contracts for the International Sale of Goods. That means that

A) the parties have decided use either the laws of Manitoba or the laws of Sweden to govern their agreement.
B) the parties' sale is governed by a set of rules set out in the convention.
C) the parties must use arbitration to settle any disputes that arise.
D) if a dispute arises between the parties, they must seek a resolution from the International Court of Justice.
E) the parties' agreement must comply with the terms of the WTO.

Question 9

Suppose Canada's tariff on grain threshers is 28 percent. This means that

A) importers of grain threshers into Canada must pay a duty equal to 28 cents on the dollar value of each machine they import into Canada.
B) exporters of grain threshers from Canada must pay a duty equal to 28 cents on the dollar as a countervailing duty on the export value of each machine they export.
C) importers of grain threshers into Canada must pay a duty equal to 28 cents on the import value of each machine they export from Canada.
D) exporters of grain threshers from Canada must pay a duty equal to 28 cents on the dollar on the export value of each machine they export.
E) exporters of grain threshers from Canada must pay a duty equal to 28 cents on the dollar as an anti- dumping duty on the export value of each machine they export.

Question 10

Kemal, who owns a candy manufacturing company in Turkey, wants to enforce an arbitral award he has received against a Toronto- based company in Ontario. The company could contest the validity of the arbitral award before the Ontario court on the grounds that

A) the contract was made by a minor, that is, someone under 18.
B) the award dealt with issues not referred to arbitration by the parties.
C) there was a substantial procedural irregularity in the arbitral proceeding.
D) the Toronto- based company never received notice of the arbitral proceeding.
E) all of the above.

Question 11

Canadian Shield Mining Co (CSMC) wishes to enter into a contract to perform work on land owned by Haole Inc in Hawaii. A question has already arisen, however, as to the appropriate means to settle any disputes that may arise. Haole Inc insists that the contract should contain an arbitration clause. Which of the following statements is TRUE?

A) Canadian companies must receive government approval before signing contracts that contain arbitration clauses.
B) Arbitrations must be conducted by judges, but those judges need not be resident in the jurisdiction of either party.
C) Because of recent changes, disputes can normally be heard in court as quickly as they can be resolved through arbitration
D) An arbitration award can be appealed in exactly the same ways as a court judgment.
E) It is usually easier to have an arbitration award enforced in a foreign jurisdiction, than it is to have a judicial award enforced.

Question 12

Bank X agrees to open a letter of credit on Jerry's behalf in favour of Fruta, a Bulgaria- based manufacturer of jams and preserves, that Jerry wants to use as payment for a shipment of inventory headed for Canada. The letter is confirmed by Liberty Bank, a bank based in Sofia, Bulgaria, that is Fruta's principal banker and creditor. This letter of credit is "irrevocable and confirmed." Which statement best describes the rights and obligations of the parties?

A) Jerry can revoke the letter of credit at any time.
B) Bank X may revoke the letter of credit if Fruta does not present documents conforming to the requirements of the letter of credit.
C) Fruta will present documents conforming to the requirements of the letter of credit to Liberty Bank, which will pass them on to Bank X which will pay Fruta directly.
D) Fruta will present documents conforming to the requirements of the letter of credit to Liberty Bank, which will pass them on to Bank X, which will, in turn pass them on to Jerry. Jerry will pay Fruta directly.
E) Liberty Bank is obliged to pay Fruta so long as it receives documents conforming to the requirements of the letter of credit from Fruta. Liberty Bank will be reimbursed by Bank X.

Question 13

The Perfume River Trading Company exports rattan furniture from Vietnam to Canada. The furniture has been very popular and was recently picked up by several chain stores for their summer lines. Unfortunately, Canadian competitors, mainly makers of cheaper pine wood furniture, have claimed that the Perfume River Trading Company is illegally selling the imported furniture in Canada at a price below the cost of production. If true, the Perfume River Trading Company could potentially be

A) required to get an export permit.
B) subject to a review in the Federal Court of Appeal.
C) required to get an import permit.
D) subsidizing the production of rattan furniture in Vietnam.
E) dumping rattan furniture in the Canadian market.

Question 14

As seller may protect itself against risk in international business transactions by

A) using INCOTERMS to describe the obligations of the parties.
B) purchasing a contract of insurance covering the risk of loss of the goods while they are in transit and at the seller's risk.
C) ensuring that payment is by a confirmed letter of credit.
D) including in the contract of purchase and sale choice of law and choice of forum clauses.
E) all of the above.

Question 15

Lotus Inc of Vancouver contracts with Haw Wing On Co of Hong Kong for the purchase of Asian food products that it wants to resell to retailers in the Lower Mainland of British Columbia. The sales contract between the two entities specifies that the carrier of the goods shall issue a straight bill of lading in favour of Lotus Inc. Use of the term "straight bill of lading" indicates

A) that the bill of lading will require the endorsement of several parties before the goods can be delivered to the buyer, and do not become the property of the buyer until they reach that person.
B) that the bill of lading will have to be delivered "straight" to the shipper in order to tell them where the goods are to be taken.
C) that the bill of lading must be "straight," that is, made to correspond with the other shipping documents including the inspection certificate, certificate of origin, commercial invoice, and insurance certificate.
D) that the goods can only be delivered to the named buyer and no one else. In this case, the buyer normally becomes the owner of the goods as soon as they are shipped.
E) that the goods can only be delivered to the seller and no one else, principally for onward shipment.

Question 16

The difference between public international law and private international law is that

A) private international law is made in international conferences whereas public international law is only made by agreement.
B) there is no real difference. Both apply to the same things.
C) public international law is made in public while private international law is made "in private", ie secretly.
D) public international law concerns relations between states whereas private international law is the domestic law of a country that a court in that country applies to determine what domestic law applies to a private transaction that has elements related to more than one jurisdiction.
E) none of the above

Question 17

Borealis Inc, a company based in Edmonton, entered into a contract with Australis Ltd, a company based in Geelong, Australia. Australis was required to deliver two tonnes of white corridale roving wool at $50 Canadian per kilogram. The contract was stated to be "CIF (INCOTERMS 2000) Geelong." That means that

A) Australis must arrange and pay for shipping.
B) Borealis is responsible for arranging and paying for shipment of the goods to Geelong.
C) the parties were required by law to use INCOTERMS.
D) Borealis will acquire ownership and risk as soon as the goods are placed on board.
E) the party that purchases insurance will also be named as the beneficiary of the policy.

Question 18

In the context of shipping contracts, which of the following statements is TRUE?

A) CIF means contract, interest, freight
B) CIF means cost, interest, freight
C) CIF means cost, insurance, freight
D) FOB means future, ownership, board
E) FOB means freight, ownership, buyer

Question 19

Routine international transactions for the sale of goods generate risk because

A) the seller may have to worry about currency devaluations and political instability.
B) it is harder for the seller to evaluate the creditworthiness of the buyer.
C) it may not be clear which laws apply to a transaction.
D) disputes regarding a transaction may be litigated in foreign courts where the results are harder to predict.
E) all of the above.

Question 20

The principal difference between a straight bill of lading and a bill of lading made to order is that

A) a bill of lading made "to order" will allow a recipient to claim that they are defective, whereas a straight bill of lading will not.
B) a bill of lading made "to order" names the owner of the goods, whereas a straight bill of lading does not.
C) a bill of lading made "to order" will not allow a recipient to claim that they are defective, whereas a straight bill of lading will so allow.
D) a bill of lading made "to order" names the person who has ownership of the goods in transit, whereas a straight bill of lading names only the buyer.
E) a bill of lading made "to order" can be made out to anyone, whereas a straight bill of lading cannot.

Question 21

Canada has signed and ratified the UN Convention on Contracts for the International Sale of Goods. It applies within Canada

A) on a date yet to be determined by Parliament.
B) to the extent implemented in domestic law by legislation.
C) with permission of the United Nations.
D) fully.
E) not at all.

Question 22

Chris operates a software firm in Antigonish, Nova Scotia, that does business all over the world. In all of his contracts of sale he includes a clause that says "the law of the province of Nova Scotia applies to any dispute related to or arising under this agreement and the courts of the province of Ontario shall have exclusive jurisdiction over all such disputes." Some months later they have problems with Dov, a computer engineer in Haifa, Israel, who refuses to pay alleging that Chris did not perform some software installation and maintenance work correctly. Chris commences action against Dov in an Ontario court. Dov asks the Ontario Court to decide that the dispute should be heard in an Israeli court. The Ontario court is MOST likely to

A) dismiss Chris's case because the parties have chosen Nova Scotia law to govern the contract.
B) accept Chris's case because Ontario is a more important commercial jurisdiction than Nova Scotia.
C) accept Chris's case because the parties have agreed on the forum for the resolution of their disputes unless it finds that Israel is a more convenient forum notwithstanding the choice of forum clause in the contract because the dispute arose in Israel and some of the evidence and one of the parties are there. By contrast, the dispute has no connection with Ontario.
D) accept Chris's case because the parties have agreed on the forum for the resolution of their disputes under the contract.
E) dismiss Chris's case and refer the parties to arbitration because arbitration is preferable for international contract disputes.

Question 23

Tomas would like to export electronic equipment from Canada to Eastern Europe, where he grew up. He realizes that there are rich markets there, although he is unfamiliar with some aspects of the export trade. He asks the shipping agent what difference it would make if he shipped from Halifax or a US port, like Boston. One difference is

A) goods sent from American ports are only covered to Hague Rule insurance limits which are marginally higher than Hague- Visby limits.
B) shipments from American ports are covered by either the Hague or Hague- Visby Rules. Choice allows for lower insurance prices.
C) goods sent from American ports are only covered to Hague Rule insurance limits, which are lower than Hague- Visby limits.
D) shipments from Canadian ports are covered by either the Hague or Hague- Visby Rules. Choice implies higher insurance prices.
E) Canada applies the Hague Rules, which have higher insurance limits on shipments and therefore higher prices.

Question 24

Which of the following statements is MOST accurate? Public international law is

A) concerned with international relations between states.
B) evolves from the customary practices of states over time.
C) formed by treaties
D) applied by the International Court of Justice.
E) all of the above.

Question 25

In order to counteract subsidization by a European government of a particular European product that enters the Canadian market and is causing material injury to the Canadian industry producing like goods, the Canadian government may

A) impose a quota on other European products.
B) impose a countervailing duty that exceeds the subsidy, just to make sure that the foreign government does not try to subsidize again.
C) impose anti- dumping duties in excess of the subsidy to the extent that this should have the desired effect of lowering imports.
D) impose a countervailing duty equal to the subsidy.
E) impose anti- dumping duties equal to the subsidy.

Question 26

The principal difference between domestic and international law is that

A) domestic law applies within a particular geographic area, whereas international law applies between different provinces.
B) domestic law applies within Canada. International law governs Canada's relations with other states.
C) domestic law applies between different provinces, whereas international law applies within a particular geographic area.
D) domestic law does not apply in Canada. Only international law applies.
E) domestic law applies within Canada, but only to the extent permitted by private international law.

Question 27

SuperFit Inc is a Toronto- based distributor of weight and exercise equipment from around the world. One of its suppliers is Leko Inc, a manufacturer of high- end barbells and dumbbells, based in Tampere, Finland. Leko is paid for its sales to SuperFit by letter of credit. According to the autonomy principle,

A) if the goods do not conform to the contract, SuperFit can prevent payment under the letter of credit only if the bank autonomously confirms that the goods do not conform.
B) even if SuperFit believes that the goods do not conform to the contract, it cannot prevent payment under the letter of credit.
C) if the goods do not conform to the contract, SuperFit can prevent payment under the letter of credit.
D) if the goods do not conform to the contract, SuperFit can prevent payment under the letter of credit only if the non- confomity has nothing to do with the documents required to be presented under the letter of credit.
E) none of the above.

Question 28

From a legal point of view the Uniform Customs and Practices for Documentary Credits (UCP) are most accurately described as

A) something everyone follows who is filling out banking documents in the course of domestic transactions in Canada.
B) guidelines drawn up by the federal Ministry of Finance that banks are required to follow in international transactions.
C) regulations in Canada.
D) law in Canada.
E) generally accepted rules governing letters of credit that are typically incorporated by reference in letters of credit.

Question 29

Canuck Export Inc agreed to deliver goods to J Bull Importing Inc in England. A dispute has arisen between the parties. Which of the following statements is TRUE?

A) If the parties' agreement stipulates a choice of law, they are guaranteed that that clause will be enforced.
B) Courts in Canada and most other countries will give effect to a choice of law provision in the parties' contract.
C) The proper law of the contract will determine where the dispute must be resolved.
D) If a judge orders a stay, the parties will have to remain in the judge's jurisdiction and have their dispute resolved there.
E) If a judge applies the doctrine of forum non conveniens the parties will have to use arbitration because it is not convenient to hear the case in court.

Question 30

Rifah Co is exporting dates, nuts, and other dried goods from Lebanon to Sam's Importing in Halifax. Rifah insists that the shipping term in its sales contract is "FOB (INCOTERMS 2000) Ship "X" Beirut." This means that Rifah Co is responsible for

A) putting the goods on board Ship "X" in Beirut harbour, but risk of loss do not pass to the buyer until the goods reach Halifax.
B) putting the goods on board Ship "X" in Beirut harbour, where risk of loss passes to the buyer.
C) ensuring that the price of the goods does not fluctuate and that the goods arrive in appropriate condition.
D) making the goods available to Sam's Importing at its warehouse in Halifax, where risk of loss and ownership pass to the buyer.
E) making the goods available to Sam's Importing at Rifah's warehouse premises in the suburbs of Beirut, where risk of loss and ownership pass to the buyer.

Question 31

Helena is the owner of a Korean company that manufacturers car audio parts. Several months ago she received a favourable award in an arbitration in Seoul against a US car manufacturer for unpaid bills. The manufacturer has no assets in the US and Helena is looking at jurisdictions where the manufacturer has operations to enforce the award. She notices that Ontario is one of its prime assembly locations. The award would

A) probably be enforced by a court in Ontario.
B) only be enforced by the Federal Court.
C) probably be enforced by an arbitrator in Ontario.
D) probably be enforced by the International Court of Justice.
E) only be enforced by the International Chamber of Commerce in Canada.

Question 32

It can most accurately be said that the disciplines of the North American Free Trade Agreement (NAFTA) go beyond the WTO in providing for

A) development of the continental shelf.
B) the protection of the unemployed.
C) greater tariff reductions and enhanced investment protection.
D) disciplines on housing policy.
E) electronic commerce rules.

Question 33

The principle of strict compliance in relation to letters of credit in Canada provides that

A) the seller must present documents that strictly comply with the terms of the credit before he or she is entitled to receive payment.
B) the purchaser must strictly comply with the terms of the credit before he or she is allowed to obtain the goods from the shipper.
C) the buyer's bank is not allowed to pay anyone until it receives independent notification that the goods are received by the buyer.
D) the shipper is not permitted to give the goods to anyone but those identified in the letter of credit.
E) the seller's bank can demand strict compliance with the bank's policies when deciding whether to pay the seller.

Question 34

Great Plains Inc, a Canadian company based in Regina, Saskatchewan, entered into a contract with Good Hope Inc, a South African company. The agreement was signed while the president of each company was attending a conference in Geneva, Switzerland. Great Plains agreed to ship grain products to Good Hope's mining operations near Lima, Peru. A dispute has arisen regarding that agreement. Which of the following statements is TRUE?

A) The defendant cannot be forced to defend the claim in a jurisdiction that it has not chosen.
B) The parties' contract may provide that the dispute must be heard in the courts of a particular jurisdiction or by an arbitral tribunal.
C) The plaintiff has an absolute right to sue where it is convenient to do so.
D) The case must be heard in Saskatchewan, Switzerland, South Africa, or Peru.
E) The dispute must be heard by a court in Switzerland.

Question 35

Assuming that the general rules apply,which of the following statements is TRUE with respect to letters of credit?

A) Payment is premised upon delivery of the goods in satisfactory condition.
B) They can be used only for international sales.
C) The issue of compliance with the letter of credit is subject to the reasonable person test.
D) They reduce the buyer's risk in an international sale.
E) None of the above.

Question 36

The concept of "four contracts in one" includes, among other things, documents called

A) a contract of insurance and a contract of transportation.
B) a statement of price and an insurance policy.
C) a receipt and a letter of credit.
D) an indemnity and a contract of sale.
E) a tax receipt and a bill of lading.

Question 37

If Canada disputes the consistency of a foreign country's laws with its commitments under the World Trade Organization (WTO) agreements and wins, but the foreign country does nothing to change its laws or trade practices, the WTO may allow Canada to

A) take the matter to binding arbitration.
B) approach the United Nations.
C) retaliate by imposing trade barriers on selected goods from the offending country.
D) take military action against the offending country, but only to the degree that the offender has caused damage to the Canadian economy.
E) none of the above.

Question 38

Perry is making 100 000 lightweight sweaters at his Winnipeg factory for a clothing dealer in Los Angeles. The contract between them specifies that the price per sweater is "EXW." This means that

A) Perry is required to assume responsibility for shipping and pay the costs associated with the transportation. However, his responsibility for the goods ceases once the goods have "passed the ship's rail."
B) Perry must use a bill of lading when arranging for shipping the sweaters to his customer.
C) Perry is not required to assume any responsibility for the goods other than making them available to the customer at his place of business in Winnipeg.
D) Perry is not required to assume responsibility for shipping or pay the costs associated with the transportation. Nevertheless, his responsibility for the goods continues until they are delivered to his customer in Los Angeles.
E) none of the above.

Question 39

International trade is a federal responsibility, but provinces have a role to play in the regulation of international commercial matters because

A) of their power over property and civil rights which means that some rules regarding international trade must be implemented through provincial law, such as the United Nations Convention on Contracts for the International Sale of Goods.
B) they have traditionally had power over interprovincial and international trade.
C) of a federal- provincial agreement that they should.
D) they set standards for consumer protection that protect consumers both in Canada and abroad.
E) Canada's Constitution is silent as to the level of government with exclusive responsibility over international trade.

Question 40

Antony is a resident of Burlington, Ontario, and Jaffar is a resident of London, England. They contract to sell Antony's car to Jaffar, who is emigrating to Canada and will need it to get around once he arrives. The agreement of purchase and sale states that the contract between them is "subject to the laws of the Province of Ontario." This clause is

A) the choice of law clause.
B) required by Ontario law.
C) the proper law of the contract.
D) the dispute settlement clause.
E) the choice of forum and jurisdiction clause.

Question 41

Proctor Inc, a Dutch pharmaceutical manufacturer, takes a dispute it has against its Canadian distributor, Xilex, to arbitration in London, England. The arbitrator finds for Proctor and awards damages. Proctor seeks to enforce the award through the courts in Ontario and likely will be successful in doing so. Indeed, it may be accurately said that the arbitral award will likely be enforced in the same manner as a domestic court order.

Question 42

Canada and Argentina are members of the World Trade Organization (WTO). Argentina has been experiencing economic difficulties recently and halts imports of Canadian goods to save foreign exchange. This violates Argentina's obligations under the WTO Agreement. Canada may not impose trade barriers to Argentine goods in retaliation until the WTO had determined that Argentina is not in compliance with its obligations and grants Canada permission.

Question 43

There are more risks in international transactions and many of the risks present in domestic transactions are increased.

Question 44

What is "intermodal" transport and how are the associated problems with multiple bills of lading relating to different stages in intermodal transport the overcome?

Question 45

Canada objects to a recent measure that India has introduced on automobile manufacturing in the Indian market. In essence, the Indian government has announced that it is allowing automotive manufacturers that establish plants in India to import 500,000 foreign- made vehicles into the country duty free annually, giving them a substantial advantage over other automobile manufacturers that do not but want to export to India. Canada believes that its automobile manufacturers who do not so invest will be discriminated against, and decides to challenge the Indian measure before the World Trade Organization (WTO). What relief can it seek?

Question 46

Peace Inc is a Markham, Ontario- based company that does business with troubled regions, advising governments how to restore order and re- establish the rudiments of civil society. For a fee it will provide such things as tents and basic housing, mobile police stations, and sanitation supplies. Peace Inc consultants will also travel to these destinations to provide on- site advice. Peace Inc's standard contract terms require that its customers open an irrevocable confirmed letter of credit in favour of Peace Inc, usually in some third country in western Europe, in order to ensure payment. Explain how the autonomy principle would work in this context.

Question 47

The Uniform Customs and Practice for Documentary Credits and INCOTERMS are part of the law in Canada.

Question 48

Public international law traditionally deals with relations between countries, whereas private international law is domestic law of a country that is applied by courts of that country to determine what domestic law applies to a contract between private parties.

Question 49

Rapide Boots Inc is a Saskatchewan- based maker of heavy- duty winter boots. Recently it has been in talks with a potential Russian joint venture partner to manufacture boots in the former Soviet Union for use by Russian consumers. The joint venture would require Rapide to export some of its equipment to a pre- built plant in Siberia, where Rapide technicians would teach locals how to use it over a period of time. At the end of the period, all rights to the equipment transferred would vest in the joint venture. Rapide wants to know what it can do to protect its equipment in transit and its operation prior to the transfer of ownership.

Question 50

Renaissance Inc is sending several giant pumps from Vancouver to Niamey, the capital of Niger, a country in Africa. Niamey is located some 1000 kilometres from the coast and because the price of airfreight for such heavy equipment would be prohibitive, the pumps are being sent by sea and land. They leave Vancouver aboard a ship, are transferred to trucks at Cotonou, the capital of B e´nin, and are transported overland to the border of Niger, and onward to Niamey. A single standard- type bill of lading would be adequate for the purposes of the trip.

Question 51

El Banco Sem is a Uruguayan bank that issues a letter of credit to its customer, Industrias la Plata SA, to pay for machinery imported from Canada. The autonomy principle implies an "autonomous" condition into the contract that requires Banco Sem to inspect the goods before it can make payment to the Canadian exporter or its bank. Inspection ensures that the goods are as they are described in the contract.

Question 52

Foreign goods which are subsidized and exported to Canada causing material injury to the industry in Canada selling like goods may be subject to countervailing duties.

Question 53

Prinz Corp, a Canadian water technology manufacturer, and Noor Systems Inc, a Jordanian infrastructure conglomerate, enters into a contract for Prinz to supply water engineering expertise to several Noor- led water treatment projects (desalination plants, sewage networks etc) in various countries in the Middle East. It would be prudent for the two companies not to include a choice of law clause in their master contract since the contract will be performed in a number of countries at once.

Question 54

Maple Importers Inc wants to buy food items manufactured by Plovidiv Fruit Processors Inc, a Bulgarian producer of jams, preserves, and other fruit- based products. In the typical transaction, Maple Importers Inc will request that its bank open a letter of credit in favour of itself so that it can pay for the imports from Bulgaria.

Question 55

NorthOr is a Canadian "small cap" mining company that has been granted a concession by the Turkish government to prospect at sites in eastern Turkey. NorthOr's concession agreement with the government specifies that it will be dealt with "according to Turkish law." Any court interpreting the agreement would invariably apply Turkish law.

Question 56

Al- Shams Inc is an Egyptian exporter of fine cotton goods. It exports to many countries around the world, each time doing so by concluding a bill of exchange with the INCOTERM "CIF destination" in order to ensure that the goods arrive where they are supposed to go.

Question 57

Cukor Inc is a fish processor in Estonia, which is making inroads in many foreign markets because of its high quality and low prices. Cukor Inc is able to do this, in part, because it receives a hefty subsidy annually each year from the Estonian government, which sees fisheries exports as one of the bases for Estonia's future economic growth. Canadian fish processors have been watching Estonians fish exporters, like Cukor, dramatically increase their share of the Canadian market and are worried. They wonder what they can possibly do. Advise.

Question 58

The federal government may legislate in violation of international law.

Question 59

Red Express Pty Ltd is based in Darwin, Australia, and serves as a customs agent and freight forwarder for various shipments being exported to various points overseas, mostly in Southeast Asia. Occasionally some packages destined for foreign points come through Red Express' office that are simply too small to involve a written contract. Out of a concern for its reputation for good service Red Express forwards them on and waits for payment. Inevitably there are a few people who try to make life difficult for Red Express, refusing to pay and waiting for the company to launch suit against them in the Australian courts. They could successfully assert that because there was no written contract between the parties, and in particular no choice of law or jurisdiction clause, the Australian courts cannot hear the dispute.

Question 60

Canadian Motor Traction Ltd exports motor vehicles specially modified for the use of physically handicapped adults from its plant in Yarmouth, Nova Scotia, to customers abroad. Each contract is denominated and priced "EXW," meaning that Canadian Motor Traction takes responsibility for delivery until the vehicles "pass the ship's rail" at the port of embarkation, at which point ownership and risk of loss pass to the buyer.

Question 61

Explain the significance of the INCOTERM "EXW" and illustrate with an example.

Question 62

Explain how the typical sale of goods contract works in an international transaction to minimize business risk.

Question 63

Pro- ex Inc is an Edmonton- based company that offers satellite topographic and prospecting services. Companies pay Pro- ex a fee. In return, Pro- ex surveys a given area of land anywhere around the world by satellite. The powerful Pro- ex satellite can produce high resolution images of the earth. It can also identify trace elements of valuable minerals in the ground. Turk Minerals S.A. is a new company formed to prospect in Turkmenistan, a newly independent country in Central Asia formerly part of the Soviet Union. Turk Minerals contracts with Pro- ex for its services over a large concession in northern Turkmenistan. The contract is made subject to "the laws of the province of Alberta." Explain whether this means that Alberta law will apply in Turkmenistan.

Question 64

What is the difference between the GATT, the WTO, and the NAFTA?

Question 65

Marina is a hardware exporter in France. Her company makes fine hardware, principally hinges, door stoppers, and decorative handles, for French- style furniture. She is new to the business, however, and on a recent business trip to Canada concludes an agreement with The Furniture Shoppe, a trendy Toronto furniture and hardware importer. The contract was essentially concluded on the back of a napkin at a Toronto restaurant and the next day, while one of The Furniture Shoppe's secretaries was entering the agreement into the computer, a choice of law clause was forgotten. Assuming that all was correct, Marina and her new customer did not verify the agreement. It was only later that they realized the contract lacked a choice of law clause. In the event of a dispute between them, explain how a court in Canada would determine the choice of law.

Question 66

Explain the principle of strict compliance regarding letters of credit and why it is important in a typical international transaction for the sale of goods.

Question 67

What is international law and how does it differ from domestic Canadian law?

Question 68

Dervis Floral Ltd of Montreal imports flowers from several countries every night. Large batches of boxed flowers arrive from Colombia, Chile, and other warm weather countries at Dorval International Airport on winter evenings and are quickly distributed to florist shops throughout the city for sale the next day. Any potential delay is critical since flowers are a perishable product. Dervis includes the following proviso in all its contracts with suppliers abroad: "the courts of Montreal shall have jurisdiction over any disputes arising under this contract." Explain what this clause does and when it will not apply.

Question 69

Wort Inc manufacturers heavy roadbuilding equipment in Yarmouth, Nova Scotia. Over the years it has acquired an excellent reputation and now has clients worldwide. Recently it was contacted by the government roadbuilding authority in Senegal, a country in West Africa, and asked for a quote on the price of a road grader delivered to Dakar, Senegal. Wort replied, stating that a road grader would be $750 000 "CIF Dakar." Explain what the responsibilities of the parties under the INCOTERM "CIF" would be in this instance.

Question 70

Petra is contemplating a business deal with a Jordanian company, importing Jordanian hand- loomed carpets into Canada. She is concerned with the possibility of glitches in the deal and of ending up in a Jordanian court. She knows nothing about Jordanian law, has heard that Jordanian courts are notorious for delays, and does not relish the prospect of having to hire Jordanian lawyers. As her Canadian lawyer, draft a short memo outlining the possibility of including an arbitration clause in the agreement with the Jordanian company and three advantages of doing so.