Test Bank For The Legal Environment of Business 8th Edition Frank B Cross Download

Test Bank for The Legal Environment of Business, 8th Edition: Frank B.
Cross
Test Bank for The Legal Environment of Business,

8th Edition: Frank B. Cross
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Chapter 8
International Law in a
Global Economy
N.B.: TYPE indicates that a question is new, modified, or unchanged, as

follows.
N A question new to this edition of the Test Bank.

+ A question modified from the previous edition of the Test Bank.
= A question included in the previous edition of the Test Bank.
TRUE/FALSE QUESTIONS
A1. International law is a body of law that governs relations among nations.
ANSWER: T PAGE: 163 TYPE: =

NAT: AACSB Analytic AICPA Legal
A2. An international custom is a general practice accepted in the international

arena as law.

A3. A treaty is a contract or other agreement between two or more nations that
must be ratified by the United Nations to take effect.
ANSWER: F PAGE: 164 TYPE: =

87
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in
whole or in part.
88 TEST BANK A—UNIT TWO: THE PUBLIC & INTERNATIONAL ENVIRONMENT
whole or in part.
CHAPTER 8: INTERNATIONAL LAW IN A GLOBAL ECONOMY 89
A4. Legal systems around the globe are generally divided into common law and
civil law systems.

A5. Under the principle of comity, a foreign business that deals with a U.S.
business may be subject to U.S. law.

A6. Confiscation occurs when a government seizes private property for an il-
legal purpose and without just compensation.
ANSWER: T PAGE: 166 TYPE: +

A7. Firms overseas have almost total legal protection against government acts
in the countries in which they operate, under the act of state doctrine.

A8. The doctrine of sovereign immunity can immunize a foreign nation from the
jurisdiction of U.S. courts.

A9. A foreign state is immune from the jurisdiction of U.S. courts as long as the
state is involved in commercial activity in the United States.

A10. The simplest way for a U.S. firm to do business in a foreign market is to ex-
port its products directly to that market.
whole or in part.

NAT: AACSB Reflective AICPA Critical Thinking
A11. A party to a licensing agreement generally agrees to pay royalties on some

basis.

A12. Confiscating property without compensation does not normally violate

principles of international law.
ANSWER: F PAGE: 168 TYPE: N

A13. Few nations have restrictions on imports.
ANSWER: F PAGE: 169 TYPE: +

NAT: AACSB Reflective AICPA Legal
A14. Congress cannot impose any restrictions on exports except taxes.

A15. Restrictions on imports may include tariffs.
ANSWER: T PAGE: 170 TYPE: +

A16. Restrictions on imports may include quotas.

A17. Dumping is the sale of imported goods at “greater than fair value.”

whole or in part.
A18. The chief aim of the European Union and other trade organizations is to
minimize trade barriers among their members.

A19. A foreign citizen can bring a civil suit in a U.S. court for a violation of a
treaty of the United States.

A20. U.S. antidiscrimination laws, as they affect employment relationships,

generally do not apply extraterritorially.
ANSWER: F PAGE: 175 TYPE: N

MULTIPLE CHOICE QUESTIONS
A1. The government of the United States and the governments of other nations
have the power to enforce their respective national laws within their
borders. The power to enforce international law within the borders of all
nations rests with
a. no court or international organization.

b. the European Union.
c. the International Court of Justice.
d. the United Nations General Assembly.
ANSWER: A PAGE: 163 TYPE: =

A2. In the global environment of business, the law of a particular nation, such as
Brazil, China, or India, is classified as
a. environmental law.
whole or in part.
b. global law.
c. international law.
d. national law.
ANSWER: D PAGE: 163 TYPE: N

whole or in part.
A3. The Association of Southeast Asian Nations is a regional trade association

that was created through
a. a bilateral agreement.
b. a lateral agreement.
c. a multilateral agreement.
d. a unilateral agreement.
ANSWER: C PAGE: 164 TYPE: =

A4. China and India form an agreement to govern their commercial exchanges
with one another. This is
a. a bilateral agreement.
b. a lateral agreement.
c. a multilateral agreement.
d. a unilateral agreement.

A5. Yokima, Ltd., and Zenota, S.A., transact an international sale of goods. For
these parties, and other international buyers and sellers, the United
Nations Convention on Contracts for the International Sale of Goods spells
out the duties that apply
a. if Article 2 of the Uniform Commercial Code does not apply.

b. if a dispute is submitted to the International Court of Justice.
c. if the parties have not agreed otherwise in their contracts.
d. under all circumstances.

A6. Chile has a civil law system. In theory, in this system, the courts
a. are obligated to follow the doctrine of stare decisis.

b. may not develop their own laws.
whole or in part.
c. must create new rules of law.

d. must develop legal concepts by case law.
ANSWER: B PAGE: 164 TYPE: =

whole or in part.
A7. Business Abroad, Inc., a U.S. firm, obtains a judgment in a U.S. court
against Quang Tri, Ltd., a Vietnamese business. Whether the court’s
judgment will be enforced by a court in Vietnam depends on the
Vietnamese court’s application of
a. the act of state doctrine.

b. the doctrine of sovereign immunity.
c. the principle of comity.
d. the World Trade Organization .

A8. Sudan seizes the assets of Triage Medico, Inc., a U.S. firm. Triage’s re-
covery from Sudan in a U.S. court may be prevented by
a. the act of state doctrine.

b. the doctrine of sovereign immunity.
c. the Foreign Corrupt Practices Act.
d. the principle of comity.

A9. Michael, a citizen of Ireland, and Nina, a citizen of the United States, enter
into a contract. When Nina breaches the contract, Michael obtains an
award of damages in an Irish court. He asks a U.S. court to enforce the
award. The U.S. court defers to and enforces the Irish court’s decree. This is
a. a travesty of justice.
b. the act of state doctrine.
c. the doctrine of sovereign immunity.
d. the principle of comity.
ANSWER: D PAGE: 165 TYPE: =

whole or in part.
A10. Noggin Development Corporation, a U.S. firm, wishes to participate, but limit
its involvement, in Middle Eastern markets. Noggin empowers Ousai, Ltd., a
Dubai firm, to enter into contracts in certain countries on Noggin’s behalf. This
is
a. a distribution agreement.
b. an agency relationship.
c. indirect exporting.
d. licensing.
ANSWER: B PAGE: 166 TYPE: N

A11. Significant business develops in Mexico for Natural Beauty Cosmetics, Inc., a
U.S. firm. Natural Beauty appoints Ojos, Ltd., a Mexican firm, to act as Natural
Beauty’s marketing representative in Mexico. This is
a. a joint venture.
b. franchising.
c. indirect exporting.
d. licensing.
ANSWER: C PAGE: 166 TYPE: N

A12. Diners Corporation, a U.S. firm, signs a contract with Essen, A,G., a
German firm, to give Essen the right to use Diners’ trademark in restau-
rants in Germany. This is
a. a distribution agreement.
b. a joint venture.
c. direct exporting.
d. licensing.

whole or in part.
A13. Simpatico Business, Inc., a U.S. firm, expands into international markets
through a joint venture. In the venture, Simpatico shares
a. both the profits and liabilities.

b. none of the profits or liabilities.
c. the profits but not the liabilities.
d. the liabilities but not the profits.
ANSWER: D PAGE: 167 TYPE: +

A14. Continents Two Corporation, a U.S. firm, establishes a wholly owned subsidiary
firm in Argentina. In this situation, Continents Two retains complete control
and authority over
a. all of the operation.

b. only the part of the operation in the United States.
c. none of the operation.
d. about half of the operation.
ANSWER: A PAGE: 167 TYPE: N

A15. Agro Co-op, Inc., and Bio Feed Corporation are exporting firms that join
together to export a line of products. Agro Co-op and Bio Feed apply to
Charter Bank for a loan to fund their effort. Under federal law, Charter and
other U.S. banks are
a. encouraged by credit guaranties to lend such funds.

b. discouraged by administrative rules to make such loans.
c. asked by enforcement agencies to report such requests.
d. banned by statute from opening such credit lines.
ANSWER: A PAGE: 169 TYPE: N

whole or in part.
A16. Senator Smith and other politicians want to restrict the flow of techno-
logically advanced products and data from the United States to other
countries. To restrict or encourage exports, Congress can
a. do nothing.
b. assess antidumping duties.
c. impose export taxes.
d. set export quotas.

A17. The United States taxes each barrel of imported oil at a flat rate. This is
a. an antidumping duty.
b. a dumping duty.
c. a quota.
d. a tariff.

A18. Wang Ltd., a Chinese firm, imports its goods into the United States and
offers those goods for sale at “less than fair value.” This is
a. confiscation.
b. defalcation.
c. dumping.
d. expropriation.

A19. Nick, or Nora, or any U.S. citizen, can bring a civil suit in a U.S. court
against a foreign entity
a. for a tort allegedly committed in the United States only.

b. for a tort allegedly committed in the United States or overseas.
c. for a tort allegedly committed overseas only.
whole or in part.
d. under no circumstances.
ANSWER: B PAGE: 173 TYPE: +

whole or in part.
A20. Qang and other foreign citizens allege human rights violations committed
overseas by the government of Burma on behalf of Railway Construction
Company, a U.S. firm. To seek redress for their injuries in a U.S. court,
these citizens can
a. subject the private company to the provisions of the Sherman Act.

b. bring civil suits under the Alien Tort Claims Act.
c. file criminal complaints under Title VII of the Civil Rights Act.
d. do nothing.
ANSWER: B PAGE: 173 TYPE: +

ESSAY QUESTIONS
A1. When a nation moves from a state-controlled economy toward free enter-
prise, it must develop a new set of business laws. If you could start from
scratch, what kind of business law system would you adopt—a civil law
system or a common law system? What factors should be considered in
deciding the business regulations to impose?
ANSWER: Each system has its advantages and its disadvantages. In a

common law system, the courts independently develop the rules governing
certain areas of law, such as torts and contracts. This judge-made law
exists in addition to the laws passed by a legislature. Judges must follow
precedential decisions in their jurisdictions, but courts may modify or even
overturn precedents when deemed necessary. Also, if there is no case law
to guide a court, the court may create a new rule of law. In a civil law
system, the only official source of law is a statutory code. Courts are
required to interpret the code and apply the rules to individual cases, but
courts may not depart from the code and develop their own laws. In theory,
the law code will set forth all the principles needed for the legal system.
Common law and civil law systems are not wholly distinct. For example,
the United States has a common law system, but crimes are defined by
statute as in civil law systems. Civil law systems may allow considerable
room for judges to develop law: law codes cannot be so precise as to address
every contested issue, so the judiciary must interpret the codes. There are
also significant differences among common law countries. The judges of
whole or in part.
different common law nations have produced differing common law prin-
ciples. The roles of judges and lawyers under the different systems should
be taken into account.
Among other factors that should be considered in establishing a
business law system and in deciding what regulations to impose are the
goals that the system and its regulations are intended to achieve and the
expectations of those to whom both will apply, including foreign and do-
mestic investors.
PAGE: 164 TYPE: N

NAT: AACSB Reflective AICPA Decision Modeling
A2. International Diversified Corporation (IDC) owns assets in Tagistan, a new

country in Asia. The government of Tagistan wants to nationalize all assets
owned by foreign firms and investors. What can IDC do? Can it at least
obtain payment for the assets?
ANSWER: If a government decides to seize property within its borders,

and not to pay for it, there are few remedies available. This is of course a
confiscation, which results when a government takes private property for
an illegal purpose without paying just compensation. (An expropriation, by
contrast, occurs when a government seizes private assets or a private
business for a legal purpose and pays for the seizure.) Under most
circumstances, it is unlikely that a confiscating nation’s courts would order
its government to pay just compensation, even if the court had the
authority to do so. In a case alleging that a foreign government has
wrongfully taken a business firm’s property, the defendant government has
the burden to prove that the taking was an expropriation, not a
confiscation. But the act of state doctrine can prevent a firm’s recovery in a
court in the firm’s home country. Under that doctrine, a court in one
country will not review the validity of a public act of a recognized foreign
government within it own territory. (Some nations guarantee compensation
to foreign investors in their constitutions, statutes, or treaties. Others (such
as the United States) provide some insurance for their citizens’ investments
abroad. Claims are often resolved by lump-sum settlements after
negotiations, as between the United States and the confiscating nation.)
PAGE: 166 TYPE: =

NAT: AACSB Reflective AICPA Decision Modeling
whole or in part.
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Test Bank for The Legal Environment of Business, 8th Edition: Frank B.

Test Bank for The Legal Environment of Business,

To download the complete and accurate content document, go to:

Visit TestBankBell.com to get complete for all chapters

N.B.: TYPE indicates that a question is new, modified, or unchanged, as

N A question new to this edition of the Test Bank.

ANSWER: T PAGE: 163 TYPE: =

A2. An international custom is a general practice accepted in the international

ANSWER: T PAGE: 163 TYPE: =

ANSWER: F PAGE: 164 TYPE: =

NAT: AACSB Analytic AICPA Legal

ANSWER: T PAGE: 164 TYPE: =

ANSWER: T PAGE: 165 TYPE: =

ANSWER: T PAGE: 166 TYPE: +

ANSWER: F PAGE: 166 TYPE: =

ANSWER: T PAGE: 166 TYPE: =

ANSWER: F PAGE: 166 TYPE: =

ANSWER: T PAGE: 166 TYPE: =

A11. A party to a licensing agreement generally agrees to pay royalties on some

ANSWER: T PAGE: 167 TYPE: =

A12. Confiscating property without compensation does not normally violate

ANSWER: F PAGE: 168 TYPE: N

A13. Few nations have restrictions on imports.

ANSWER: F PAGE: 169 TYPE: +

A14. Congress cannot impose any restrictions on exports except taxes.

ANSWER: F PAGE: 169 TYPE: =

A15. Restrictions on imports may include tariffs.

ANSWER: T PAGE: 170 TYPE: +

A16. Restrictions on imports may include quotas.

ANSWER: T PAGE: 170 TYPE: =

ANSWER: F PAGE: 172 TYPE: =

ANSWER: T PAGE: 172 TYPE: =

ANSWER: T PAGE: 173 TYPE: =

A20. U.S. antidiscrimination laws, as they affect employment relationships,

ANSWER: F PAGE: 175 TYPE: N

MULTIPLE CHOICE QUESTIONS

a. no court or international organization.

ANSWER: A PAGE: 163 TYPE: =

ANSWER: D PAGE: 163 TYPE: N

A3. The Association of Southeast Asian Nations is a regional trade association

ANSWER: C PAGE: 164 TYPE: =

ANSWER: A PAGE: 164 TYPE: =

a. if Article 2 of the Uniform Commercial Code does not apply.

ANSWER: C PAGE: 164 TYPE: =

a. are obligated to follow the doctrine of stare decisis.

c. must create new rules of law.

ANSWER: B PAGE: 164 TYPE: =

a. the act of state doctrine.

ANSWER: C PAGE: 165 TYPE: =

a. the act of state doctrine.

ANSWER: A PAGE: 165 TYPE: =

ANSWER: D PAGE: 165 TYPE: =

ANSWER: B PAGE: 166 TYPE: N

ANSWER: C PAGE: 166 TYPE: N

ANSWER: D PAGE: 167 TYPE: =

a. both the profits and liabilities.

ANSWER: D PAGE: 167 TYPE: +

a. all of the operation.

ANSWER: A PAGE: 167 TYPE: N

a. encouraged by credit guaranties to lend such funds.

ANSWER: A PAGE: 169 TYPE: N

ANSWER: D PAGE: 169 TYPE: =