International Business Law A Transactional Approach 2nd Edition By Larry A. Test Bank

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WITH ANSWERS

International Business Law A Transactional Approach 2nd Edition By Larry A. Test Bank

CHAPTER TWO

THE ETHICS OF INTERNATIONAL BUSINESS

 

TRUE/FALSE

 

1. Domestic, but not multinational, businesses must confront ethical issues.

ANS: False

 

2. The theory of cultural relativism holds that it is possible to determine cross-cultural standards of right and wrong.

ANS: False

 

3. A rights and duties approach to ethics bases the morality of an action on its net benefit to society.

ANS: False

 

4. In its simplest formulation, utilitarianism holds that the rightness of an action can be determined by whether it produces more good than bad.

ANS: True

 

5. Stakeholders are all parties either directly or indirectly affected by the decision of a business firm.

ANS: True

 

6. The open discrimination against blacks sanctioned under South African law was known as Apartheid.

ANSWER. True

 

7. The Union Carbide Bhopal disaster occurred in Pakistan.

ANS: False

 

8. In Kantian ethics, absolute moral duties are know as categorical imperatives.

ANS: True

 

9. In the ethics of care, a business is considered to have a special obligation to its workers and community.

ANS: True

 

10. The school of thought known as the myth of the amoral businessperson argues that ethical business practices are inconsistent with long-term profitability.

ANS: False

 

11. The idea that corporations have social and environmental responsibilities beyond profit making is asserted in the Caux Round Tables Principles for International Business.

ANS: True

 

12. All corporations are legally and ethically obligated to apply host country standards to practices occurring within that host country.

ANS: False

 

13. American anti-trust laws do not apply to the activities of U.S. corporations operating in foreign countries.

ANS: False

 

14. Transparency International is a U.S. governmental agency dedicated to eliminating corruption.

ANS: False

 

15. Most countries have national laws that outlaw the payment of bribes to government officials.

ANS: True

 

16. Under the Foreign Corrupt Practices Act (FCPA), American companies are not liable for bribes made by its foreign agents.

ANS: False

 

17. In order to be liable for illegal payments by its agent to foreign officials, a firm must have actual knowledge that bribery has occurred.

ANS: False

 

18. A corporation may bring a civil suit against one of its competitors for violation of the Foreign Corrupt Practices Act (FCPA).

ANS: False

 

19. Minor payments to clerical employees of a foreign government or agency are not considered bribes under the 1988 Amendments to the Foreign Corrupt Practices Act (FCPA).

ANS: True

 

20. The 1988 Amendments to the Foreign Corrupt Practices Act (FCPA) limited the definition of foreign officials to employees of foreign governments and their agencies.

ANS: False

 

21. A company can violate the Foreign Corrupt Practices Act (FCPA) without committing any acts of bribery.

ANS: True

 

22. Under the U.S. Federal Sentencing Guidelines, a corporate or organizational entity cannot be held liable for criminal acts committed by its employees.

ANS: False

 

23. The Federal Sentencing Guidelines provide that a company that enacts an ethics or compliance program may receive more lenient treatment for statutory violations than one that does not.

ANS: True

 

24. ISO 9000 is a set of international, voluntary environmental management standards.

ANS: False

 

25. The development of international standards can reduce barriers to trade by harmonizing national standards and ensuring minimum levels of quality, labor, and environmental standards are being met.

ANS: True

 

26. The World Trade Organization (WTO) has set stringent labor standards that must be met in order for countries to gain free trade benefits.

ANS: False

 

27. Comparative advertising in more strictly regulated in the European Union than in the United States.

ANS: True

 

MULTIPLE CHOICE

 

1. The assessment of ethical issues in international transactions are influenced by:

1. Culture
2. Religion
3. Economics
4. All of the above

ANS: D

 

2. The theory that holds because each country or culture has different belief systems, then there is no transnational way to determine whether an action is right or wrong is:

1. Utilitarianism
2. Ethical relativism
3. Consequentialism
4. Distributive justice

ANS: B

 

3. The teleological or consequentialist approach to ethics is:

1. Utilitarianism
2. Rights and duties
3. Virtue ethics
4. Ethics of care

ANS: A

 

4. A Utilitarian analysis that attempts to monetize an ethical decision by placing a dollar value on the outcome is:

1. Benefit-cost analysis
2. Stakeholder analysis
3. Dominant consideration analysis
4. None of the above

ANS: A

 

5. When a firm faces a situation in which a certain standard or practice is considered ethical in the host country, but unethical in the home country, it is known as:

1. Conflict of relative development
2. Conflict of core values
3. Conflict of cultural tradition
4. Conflict of rights vs. duties

ANS: C

 

 

6. Immanuel Kant is associated which with of the following approach to ethics:

1. Virtue ethics
2. Rights and duties
3. Utilitarianism
4. Ethics of care

ANS: B

 

7. The employment at will doctrine provides that:

1. Employees may organize labor unions
2. Employers owe no duty of continued employment to workers
3. Employers must enter into collective bargaining before dismissing workers
4. None of the above

ANS: B

 

8. Motorolas corporate code of conduct represents a _______ approach to ethical conduct in international business:

1. Utilitarian
2. Virtue-based
3. Rights-based
4. All of the above

ANS: D

 

9. The idea that the only social responsibility of business is to increase profits is most closely associated with:

1. Milton Friedman
2. Adam Smith
3. John Kenneth Galbraith
4. Francis Fukuyama

ANS: A

 

10. The western concept of the dignity of all humans and the Japanese concept of society working together for the common good are embodied in the principles of which of the following organizations:

1. Transparency International
2. U.N. Global Impact Program
3. Caux Round Table
4. Amnesty International

ANS: C

 

11. The legal concept whereby home country laws are applied to the foreign activities of a corporation is known as:

1. Grant-back provisions
2. Voluntary restraint laws
3. Escape clauses
4. Extraterritoriality

ANS: D

 

12. The elimination of foreign bribery and corruption have been addressed by:

1. Foreign Corrupt Practices Act (FCPA)
2. Transparency International
3. Organization for Economic Cooperation and Development (OECD)
4. A & B only
5. All of the above

ANS: E

 

13. The Foreign Corrupt Practices Act (FCPA) prohibits U.S. firms from paying bribes to:

1. Foreign government officials
2. Foreign agents
3. Foreign competitors
4. A & B only
5. All of the above

ANS: A

 

14. Exceptions to the Foreign Corrupt Practices Act (FCPA) include payments that are:

1. For routine governmental action
2. Lawful under the written laws of the foreign government
3. For a reasonable and bona fide expenditure
4. A & C only
5. All of the above

ANS: E

 

 

 

15. Under the Foreign Corrupt Practices Act (FCPA), individuals may face imprisonment for up to:

1. Three years
2. Five years
3. Ten years
4. Fifteen years
5. None of the above

ANS: B

 

16. In Lamb v. Phillip Morris, Inc., the court held that:

1. No private right of action is available under the FCPA.
2. Direct evidence of actual intent to bribe is not required under the FCPA.
3. Third party bribery under the FCPA includes the use of agents.
4. All of the above
5. None of the above

ANS: A

 

17. A company can mitigate its penalties for violating the law under the Federal Sentencing Guidelines by:

1. Self-reporting the crime
2. Cooperating with government investigation
3. Having an existing compliance program
4. A & B only
5. All of the above

ANS: E

 

18. The base level of fines to be assessed under the Federal Sentencing Guidelines are based upon:

1. The seriousness of the offense
2. The culpability of the organization
3. The size of the organization
4. A & B only
5. All of the above

ANS: D

 

19. All regulated products in the European Union require a/an:

1. EU Ecolabel
2. ISO certification
3. CE mark
4.  All of the above
5. None of the above

ANS: C

 

 

 

 

20. A pro-labor device that requires companies to provide information and seek consultation with its workers on plant and workforce relocations is:

1. Evergreen statue
2. Works council
3. Labor clause
4. None of the above

ANS: B

 

21. The 1997 EU Directive on Comparative Advertising:

1. Prohibited all forms of comparative advertising.
2. Prohibited comparative advertising in Italy, Belgium, and Luxembourg, but allowed it in all other EU countries.
3. Required advertisers to demonstrate promptly the accuracy of comparative claims.
4. Allowed comparative advertising based on subjective factors.
5. None of the above

ANS: C

 

22. If a private party requests an Attorney General Opinion, the Foreign Corrupt Practices Act (FCPA) requires the Justice Department to issue an opinion:

1. Within 30 days after receiving the request
2. Within 60 days after receiving the request
3. Within 90 days after receiving the request
4. Within 6 months

ANS: A

 

23. The Foreign Corrupt Practices Act (FCPA) prohibition against offering bribes to foreign officials applies to:

1. U.S. corporations
2. U.S. citizens
3. Foreign subsidiaries of U.S. companies
4. A & B only
5. All of the above

ANS: D

 

24. The standard that provides a common framework for quality environmental management is:

1. ISO 9000
2. SA 8000
3. ILO 1919
4. ISO 14000

ANS: D

 

 

 

 

 

25. The Marketing Supervision Network is a multi-national effort to resolve:

1. International labor disputes
2. International advertising disputes
3. International environmental disputes
4. International trade disputes

ANS: B

 

 

 

ESSAY QUESTIONS

1. Compare and contrast the salient features of the four schools of ethical thought discussed in the text, especially as they apply to issues in international business ethics.

ANS: Answers will vary.

1. Discuss Milton Friedmans position that the only social responsibility of business is to increase profits. Do you agree or disagree with this position?  Provide support for your answer.

ANS: Answers will vary.

1. Describe the bribery provisions of the Foreign Corrupt Practices Act.  Who can be held liable under the Act? Discuss under what circumstances a payment made to a foreign official would not be considered bribery.

ANS: Answers will vary.

1. Discuss how the U.S. Federal Sentencing Guidelines reward organizations for establishing a legal and ethical compliance program.

ANS: Answers will vary.

1. Why might the adoption of international standards for goods and services be important?  What role is ISO playing in this process?

ANS: Answers will vary.

 

CHAPTER FOUR

INTERNATIONAL COMMERCIAL DISPUTE RESOLUTION

 

TRUE/FALSE

 

1. Litigation is the most common vehicle for dispute resolution in international commercial transactions.

ANS: False

 

2. A choice of law clause in a contract determines which countrys law would be applied in case of a transnational contractual dispute.

ANS: True

 

3. A forum selection clause in a contract determines what type of alternative resolution forums are available to parties in a dispute.

ASNWER: False

 

4. International commercial arbitration is not a viable alternative to litigation in most transnational disputes.

ANS: False

 

5. The service of process requirements are fairly harmonized throughout the countries of the world.

ANS: False

 

6. Service by mail is generally recognized by foreign court systems.

ANS: False

 

7. The purpose of the Hague Service Convention is to provide signatory countries the means to ensure an effective service of process in transnational commercial and civil matters.

ANS: True

 

8. Discovery is the process of gathering evidence from ones adversary and other third parties in a lawsuit.

ANS: True

 

9. The forum non conveniens doctrine holds that a U.S. court will find inadequate an alternative forum if that alternative forum does not provide the same legal remedies as a U.S. court.

ANS: False

 

10. Arbitral awards are often more easy to enforce than international litigation judgments.

ANS: True

 

11. The rule of reciprocity holds that a country will not enforce the judgments rendered in a foreign country that does not likewise enforce its judgments.

ANS: True

 

12. The rule of reciprocity is frequently used as a defense against the enforcement of foreign judgments.

ANS: False

 

13. The United States will generally not enforce foreign courts penal or tax judgments.

ANS: True

 

14. Comity is the rule of law in which one nation recognizes the legislative, executive, or judicial acts of another nation.

ANS: False

 

15. Foreign arbitral awards have been widely accepted and enforced through the adoption of the New York Convention.

ANS: True

 

16. Absent a choice of law clause in a disputed contract, generally the law of the state most closely connected to the agreement will govern.

ANS: True

 

17. Conflict of law rules are used by courts to determine the country with the closest connection to a case.

ANS: True

 

18. Arbitration tribunals usually require that a choice of law clause have some connection to the parties or contract involved in the dispute.

ANS: False

 

19. The doctrine of renvoi is when a court uses another countrys conflict of law rules that direct the court to apply its own countrys law.

ANS: True

 

20. A party to arbitration may appeal the arbitral decision to a court of law.

ANS: False

 

21. U.S. courts will generally void forum selection clauses as a usurpation of the courts jurisdiction.

ANS: False

 

22. A contractual clause that allows a party to request a revision in a contract because of a change in circumstances that places an excessive burden on one party is known as a Force Majeure clause.

ANS: False

23. A government approval clause requires that a government approve the terms of a contract before it is binding on the parties.

ANS: False

 

24. Liquidated damages clauses are pre-agreed damages that the parties agree to voluntarily pay upon breaching the contract.

ANS: True

 

25. Under the civil law, courts will recognize liquidated damage clauses that serve as a means of just compensation as well as a penalty to induce performance.

ANS: True

 

26. Litigation is the preferred method of dispute resolution in Japan.

ANS: False

 

27. The disadvantages of arbitration include limited pre-trial discovery and limited rights to appeal.

ANS: True

 

28. Foreign arbitration decisions need the cooperation of the court system in order to properly function.

ANS: True

 

29. A Med-Arb clause in a contract requires mediation or conciliation as a precursor to any arbitration.

ANS: True

 

30. Under the Convention for the International Sale of Goods (CISG), work stoppages and strikes are generally considered impediments and are sufficient causes for a party to fail to perform.

ANS: False

 

 

MULTIPLE CHOICE

 

1. A clause in an international contract which determines where a future lawsuit will be argued or settled is known as a:

1. Choice of law clause
2. Forum selection clause
3. Dispute resolution clause
4. Transnational recognition clause

ANS: B

 

2. The formal notification of a defendant that he needs to defend himself in court is:

1. Service of process
2. Jurisdictional process
3. Habeas Corpus
4. None of the above

ANS: A

 

3. In order to require a foreign party to defend itself in a suit brought in the United States, the service of process should meet the requirements of:

1. The United States
2. The foreign country of the party being served
3. Both A & B
4. None of the above

ANS: C

 

4. In cases where the court determines that there is a more convenient forum to hear the case, the court is applying:

1. The alter ego theory
2. The forum non conveniens doctrine
3. The stream of commerce doctrine
4. The specific jurisdiction doctrine

ANS: B

 

5. In Central Bank of the Philippines v. Ferdinand E. Marcos the court held that:

1. Foreign sovereign immunity, as provided for under the Foreign Sovereign Immunity Act, can be applied to officials of foreign governments and its agencies
2. Diplomatic immunity is a discretionary decision of the Executive branch through certification by the Department of State
3. Head of State immunity applies to all officials and agents of a foreign government
4. All of the above
5. None of the above

ANS: B

 

6. The Hague Evidence Convention provides for the use of all of the following methods of evidence collection except:

1. Letters of Request
2. Depositions
3. Diplomatic officers
4. Consular agents

ANS: B

 

 

7. In Hilton v. Guyot the Supreme Court held that a foreign judgment is entitled to enforcement if the defendant had an opportunity for a fair trial. A fair trial requires that a foreign court do all of the following except:

1. Possess personal and subject matter jurisdiction
2. Conduct trials using regular procedures
3. Act under a system of jurisprudence that offers an impartial administration of justice
4. Allow for the presentation of witnesses by the defense

ANS: D

 

8. Under the Uniform Foreign Money Judgment Recognition Act:

1. Reciprocity is considered a factor to consider when deciding whether to recognize foreign money judgments.
2. A foreign judgment is not due recognition while in the process of being appealed
3. The principle of comity requires that foreign judgments be recognized
4. None of the above

ANS: B

 

9. All of the following conventions have been effective in facilitating the enforcement of judgments internationally except:

1. Recognition and Enforcement of Foreign Judgments
2. Lugano Convention
3. Brussels Convention on Jurisdiction and Judgments in Civil and Commercial Matters
4. Inter-American Convention on the Extraterritorial Validity of Foreign Judgments

ANS: A

 

10. Alternate Dispute Resolution processes include all of the following except:

1. Mediation
2. Conciliation
3. Litigation
4. Arbitration
5. None of the above

ANS: C

 

11. If a court applies different governing laws to different parts of a contract, it is applying the principle of:

1. Choice of law
2. Conflict of law
3. Depecage
4. Renvoi

ANS: C

 

 

12. In evaluating the law of jurisdiction in tort claims, the Restatement (Second) of Conflicts of Laws says that all of the following factors are relevant except:

1. The place where a tort occurred
2. The place where the relationship of the parties is centered
3. The place where the injury occurred.
4. The place of negotiation
5. None of the above

ANS: D

 

13. The growth of arbitration in international business disputes can be attributed to:

1. New York Convention
2. Hague Convention
3. Lugano Convention
4. None of the above

ANS: A

 

14. Frequently cited advantages of arbitration over litigation include all of the following except:

1. Savings in time and expense
2. Confidentiality of the proceedings
3. Expertise of the arbitrators
4. Liberal discovery rules

ANS: D

 

15. Parties to a dispute may use which of the following organizations to control the arbitration process:

1. American Arbitration Association
2. International Chamber of Commerce
3. International Arbitration Committee
4. A & B only
5. All of the above

ANS: D

 

16. The New York Convention provides a narrow set of grounds for which a court may not enforce an arbitration award. All of the following are reasons for a court to vacate an award except:

1. Arbitration was held in the incorrect forum
2. The award was procured by corruption or fraud
3. The arbitrators have awarded on a matter not submitted to them
4. None of the above

ANS: A

 

 

17. As a dispute resolution device, mediation refers to the process whereby:

1. Two parties in a dispute agree to binding arbitration
2. Two parties in a dispute attempt to find a mutually satisfactory solution through the use of a third party
3. Two parties in a dispute agree to have their case heard by a mutually agreed upon court
4. None of the above

ANS: B

 

18. A clause in a contract which allows a party to terminate its obligations under the contract due to an event expressly designated by the parties is known as a:

1. Liquidated damages clause
2. Unforeseen events clause
3. Force Majeure clause
4. Hardship clause

ANS: C

 

19. In Iran Aircraft Industries v. Avco Corporation, the court held that:

1. The New York Convention required the court to enforce the foreign arbitration award against Avco
2. Foreign arbitration awards may be denied by U.S. courts if the losing party was denied due process
3. Avco was given full notice and opportunity to present its claims and therefore must abide by the arbitration ruling.
4. None of the above

ANS: B

 

20. Under the International Chamber of Commerce Force Majeure clause, a party is not liable for failure to perform if he/she can prove that:

1. The failure was due to an impediment beyond control
2.  He/she could not have reasonably foreseen the impediment at the time of contract formation
3. He/she could not have reasonably avoided or overcome its effects
4. A & B only
5. All of the above

ANS: E

 

 

ESSAY QUESTIONS

1. Discuss U.S. law in regard to the enforcement of foreign judgments.  Under what circumstances will a U.S. court likely enforce/not enforce a foreign judgment?

ANS: Answers will vary.

1. What are conflict of law rules and how do courts use them to assist in making choice of law decisions?  Discuss the relevant factors that the courts consider in evaluating tort or contract claims under the Restatement (Second) of Conflicts of Laws.

ANS: Answers will vary.

 

1. What are the advantages to arbitrating an international dispute rather pursuing litigation?

ANS: Answers will vary.

1. Discuss the New York Convention and its importance.  Under what circumstances does the Convention allow for the non-enforcement or vacating of an arbitral award?

ANS: Answers will vary.

1. What issues should one keep in mind when drafting an arbitration clause for an international contract?

ANS: Answers will vary.

1. What is a force majeure clause? What criteria need to be satisfied in order for an event to qualify as a force majeure under most national laws?

ANS: Answers will vary.

 

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