Question 1

Optima Medico Corporation,a U.S. firm,signs a contract with Pharma Beneficial,Ltd.,a Canadian firm,to give Pharma the right to sell Optima's products in Canada. This is

Accepted Answer

This is a distribution agreement, where Optima Medico Corporation is granting Pharma Beneficial the right to distribute their products in Canada.

Question 2

International Media,Inc.,a U.S. firm,expands into global markets through a joint venture. In the venture,International Media shares responsibilities and

Accepted Answer

In a joint venture, parties share both the profits and the liabilities. Therefore, choice A is the best option.

Question 3

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

Accepted Answer

Expropriation is the act of a government taking private property for public use, with compensation to the owner. Confiscation is a similar concept but refers to the government taking property without compensation. Defalcation refers to misappropriation of funds or embezzlement, and dumping refers to selling products in a foreign market at a price lower than the domestic market, often resulting in unfair competition for local producers.

Question 4

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

Accepted Answer

The scenario describes direct exporting, where WiFi Corporation is directly exporting their goods to Bueno Computadores, Ltd. This does not fit the criteria for a distribution agreement, joint venture, or licensing.

Question 5

Without permission,a Russian firm names itself McDonald's and begins selling hamburgers and French fries in Russia. This is

Accepted Answer

Piracy refers to the unauthorized use of someone else's intellectual property, such as trademarks, without permission. In this case, the Russian firm has used the McDonald's name without permission, making it an act of piracy.

Question 6

Skye Pye Corporation,a U.S. firm,wishes to participate,but limit its involvement,in Middle Eastern markets. Skye Pye empowers Alem,Ltd.,a United Arab Emirates firm,to enter into contracts in certain countries on Skye Pye's behalf. This is

Accepted Answer

This is an agency relationship because Skye Pye is authorizing Alem, Ltd. to act on its behalf in certain countries. A distribution agreement would involve Skye Pye selling its products to Alem, Ltd. for resale, indirect exporting involves selling products to intermediaries who then sell them in foreign markets, and licensing involves granting permission for a foreign company to use Skye Pye's intellectual property.

Question 7

Business Universal Corporation,a U.S. firm,establishes a wholly owned subsidiary firm in Brazil. In this situation,Business Universal retains complete control and authority over

Accepted Answer

When Business Universal establishes a wholly owned subsidiary firm in Brazil, it means that Business Universal owns 100% of the subsidiary. Therefore, Business Universal retains complete control and authority over all of the subsidiary's operations.

Question 8

UniOil,a U.S. firm,owns property in Nicaragua. When the government of Nicaragua seizes the property,UniOil asks a U.S. court to order the property's return. The court rules that Nicaragua is exempt from the court's jurisdiction. This is

Accepted Answer

The doctrine of sovereign immunity provides immunity to foreign governments from being sued in U.S. courts. Nicaragua's government is therefore immune from UniOil's lawsuit seeking the return of its seized property.

Question 9

The U.S. corporation Burger Heaven makes a deal with an Icelandic firm that allows the Icelandic firm to use Burger Heaven's trade name in Iceland in return for a fee. This is

Accepted Answer

The deal between Burger Heaven and the Icelandic firm is known as a franchise. A franchise is a business model where a franchisee (in this case, the Icelandic firm) is granted the right to use the name, trademarks, and business processes of a franchisor (Burger Heaven) in exchange for a fee, ongoing royalties, or a combination of both.

Question 10

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

Accepted Answer

The agreement between Munchies Bistro Corporation and Manger au Brasserie, S.A. is a licensing agreement, where Munchies grants Manger the right to use their trademark in France.

Question 11

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 its goods...

Question 12

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

Accepted Answer

The flat rate tax on imported oil is a type of tariff. A tariff is a tax placed on imported goods to make them more expensive and less competitive with domestically produced goods. It is a common way for governments to protect their domestic industries and raise revenue.

Question 13

Significant business develops in Spain for Graphic Comix,Inc.,a U.S. firm. Graphic Comixappoints Comicas Graphico,Ltd.,a Spanish firm,to act as Graphic Comix's marketing representative in Spain. This is

Accepted Answer

This is an example of indirect exporting, where Graphic Comix is appointing a local firm in Spain to act as their marketing representative instead of directly exporting their products to Spain.

Question 14

World Metals,Inc.,a U.S. firm,wants to file a suit in the United States against a Venezuela government agency,alleging a violation of certain international laws. Under the Foreign Sovereign Immunities Act,the agency is

Accepted Answer

The Foreign Sovereign Immunities Act (FSIA) provides the legal framework for determining whether a foreign state (or one of its agencies) is immune from the jurisdiction of a U.S. court. However, the FSIA also contains exceptions that allow private parties to sue foreign states (or their agencies) in U.S. courts under certain circumstances. One of these exceptions is for cases involving commercial activity that has a sufficient connection to the United States. Since World Metals, Inc. is a U.S. firm and the alleged violation of international law has some connection to the United States, it is likely that the Venezuela government agency would not be immune from the jurisdiction of U.S. courts under the FSIA. Therefore, choice A is the best answer.

Question 15

AgriWorld,a U.S. firm,owns property in Kenya. The government of Kenya seizes the property. AgriWorld claims that this is confiscation. The government of Kenya claims that it is expropriation. The burden of proof lies with

Accepted Answer

The answer of AgriWorld,a U.S. firm,owns property in Kenya. The...

Question 16

Hong 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

Dumping refers to a situation where a company exports its goods to another country at a lower price than its normal value, which is usually below the cost of producing the goods. This is done to gain a competitive advantage in the market and can be harmful to domestic industries in the importing country. In this case, Hong Ltd. is selling its goods in the United States at a price lower than the fair value, which qualifies as dumping.

Question 17

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

Accepted Answer

The act of state doctrine is a legal principle that prevents courts of one country from determining the validity of public acts committed by a foreign government within its own territory. In this case, Ecuador's seizure of Resourced Oil's assets would be considered a public act of the state, and therefore the act of state doctrine may prevent the U.S. court from ruling in favor of Resourced Oil.

Question 18

Northwest Resources,Inc.,and Midwest Commodities Corporation are exporting firms that join together to export a line of products. Northwest Resourcesand Midwest Commodities apply to Commerce Bank for a loan to fund their effort. Under federal law,Commerce and other U.S. banks are

Accepted Answer

Under federal law, U.S. banks are encouraged by credit guaranties to lend funds to exporting firms. Therefore, option A is the correct choice.

Question 19

The government of Japan sets a limit on the amount of rice that can be imported from the United States. This is

Accepted Answer

A limit set by a government on the amount of a certain product that can be imported is called a quota. A dumping duty is a tax imposed by a government on imported goods that are priced lower than the domestic market price. An antidumping duty is a specific type of dumping duty applied to goods that are being sold below cost in the exporting country. A tariff is a tax on imported or exported goods.

Question 20

Global Holdings,Inc. owns property in Kazakhstan. The Kazakhstan government seizes the property. In order for the seizure to be considered an expropriation and not a confiscation,the Kazakhstan government must

Accepted Answer

In order for a seizure to be considered an expropriation, it must involve the government taking ownership or control of private property, either partially or fully, for a public purpose. However, unlike a confiscation, an expropriation requires that the government pays prompt, adequate and effective compensation to the owner of the property. Therefore, in this case, the Kazakhstan government would need to pay just compensation to Global Holdings in order for the seizure to be considered an expropriation. The other choices are not relevant to the definition of expropriation.

Quiz 19: International Law in a Global Economy