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International busn law final Flashcards

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1
Q

what is economic interdependence? what factors resulted this?

A

realities of a modern world make all business international

factors: tech, transportation, trade agreements, languages

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2
Q

forms of international busn

A
  1. trade
  2. international licensing of tech and intellectual property
  3. foreign direct investment
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3
Q

What is foreign direct investment? What are the types?

A

ownership and active control of ongoing business concerns

  1. subsidies
  2. joint ventures A+B
  3. mergers A+B=C and acquistions A to B
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4
Q

Under the UCC what is the writing requirement?

A

sale of goods over $500 must be in writing

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5
Q

What is parole evidence rule?

A

written agreement may not be contridicted by any prior or contemporaneous oral agreement.

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6
Q

CISG applies if

A
  1. commericial sale of goods
  2. place of busn are in diff countries
  3. place of busn ratified the convention
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7
Q

What are the elements of a valid contract?

A
  1. Agreement- free will- consent
  2. Object- is it legal?
  3. Considerations- parties must have legal capacity
  4. form
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8
Q

Voidable contract

A

enforceable at the option of the weak party.
valid but one of the parties was not of sound mind or a minor

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9
Q

What consititutes as an offer?

A
  1. Describes the goods
  2. Specifies the quantity
  3. Specifies the price
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10
Q

when is there an agreement?

A

offer + acceptance= contract

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11
Q

When can silence be interpreted as acceptance?

A

when it was agreed so
past dealings

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12
Q

Time of acceptance under common law and CISG

A

under common law, a contract formed when the acceptance leaves the hands of the offeree
under CISG, a contract is formed when it reaches the offeror

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13
Q

what is the mirror image rule

A

acceptance must match the term of the offer exactly

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14
Q

what is a counteroffer under common law and CISG

A

Under common law, mirror image rule
under CISG, modifying terms constitutes as a counteroffer. However adding terms becomes an agreement when the offeror accepts.

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15
Q

what are the remedies for a breach of contract?

A
  1. right to remedy
  2. specific perfomance
  3. additional time to perform
  4. avoidance of contract
  5. price reduction
  6. money damages
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16
Q

what is the bill of exchange?

A

a specialized type of negotiable instrument used to expedite foreign money payments in many tupes of international transactions. aka draft

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17
Q

bill of exchange purposes

A
  1. acting as a substitute for money
  2. acting as a credit device
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18
Q

flow of bill of lading and bill of exchange

A

carrier: seller & bill of lading
carrier: bank- buyer -> bill of exchange

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19
Q

letter of credit

A

it is an undertaking by the bank- obligation-. buyer gives bank instruments to issue a letter of credit that bank takes to pay to the seller at specified time when bill of lading is recieved.

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20
Q

what three relationships are involved in a typical letter of credit

A
  1. sale of goods contract between buyer and seller
  2. agreement between the bank and buyer
  3. bank’s engagement to pay the seller
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21
Q

principle of independency

A

the letter of credit is a separate contract between the account party and issuing bank, independent from the contract between the buyer and seller

only exception is fraud

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22
Q

what is the upc

A

it is a set of standardized rules for issuing and handling the LOC

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23
Q

what is the strict compliance rule?

A

the terms of the documents presented to the issuing bank must strictly conform to the requirements of the letter of credit

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24
Q

what is the moderate approach to the strict compliance rule?

A

a common sense case by case approach would permit minor deviations of a typographical nature

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25
Q

procedures for waiving and dishonoring

A
  1. The bank should call the buyer if they want to waive the discrepencies.
  2. if the bank and buyer refuses the documents, the bank must give a notice of refusal within 7 days and it must describe the discrepencies and have a clear refusal.
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26
Q

what is the confirming bank?

A

in a country where it is reliable, covers cost if issuing bank is insufficient, chosen by the seller,

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27
Q

describe the roles, duties and liabilities of the issuing, advising and confirming bank

A

issuing bank
role- issues the letter of credit
duties- check for discrepencies and see if they pay or not pay
liabilities- total liability on line of credit

advising bank
role- to provide a service to the seller
duties- collect and check documents
liability- no liability on the line of credit but it is liable to its client, the seller

confirming bank
role- to confirm the credit
duties- identical to the issuing bank
liability- identical to the issuing bank

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28
Q

types of countertrade

A
  1. counterpurchase agreement- it involves the sale of goods to a buyer, who requires as a condition of the sale that the seller buy other goods produced in that country.
  2. barter- it is the direct exchange of goods for goods
  3. buy-back agreement- with the sale of machinery or industrial equipment, the provider of the equipment will recieve as a payment a portion of the goods manufactured.
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29
Q

what is GATT

A

the general agreement of tariffs and trade.

the GATT has been the most important multilateral agreement for liberalizing trade by reducing tariffs, opening market, and setting rules for promoting freer and fairer trade.

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30
Q

what is the WTO

A

world trade organization

it provides an umbrella organization that sets the rules by which nations regulate trade in manufactured goods, services, intellectual property.

the role is to facilitate international cooperation to open markets, provide a forum for future negotiations between members and provide a forum for the settlemennt of trade disputes.

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31
Q

what is the decision making by the WTO

A

it has to be consensus
if the countries do not agree by consensus, voting is by majority

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32
Q

WTO gasoline case study

A

gasoline case between venezuela and brazil vs US
feb 1994, US had passed a reguation imposing certain conditions of gas sold in the US. Under the clean air act, reduce pollution from gas emissions. there is a violation of international treatment. venezulan gas was being submitted to standards that are more rigorous than those of the US. The US argued that this discrimination aspect was justified article 20 of the gatt. said that under certain conditions, a country could do things to protect health, life. venezuela argued that imported and exported gas should be held at the same high requirement from the US. The panel ruled that imported gas was indeed discriminated. The US appealed the panels decisions a month later. The appellate body was in favor of brazil and venezuela. The two sides agreed on the timing. `

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33
Q

GATT 1994 has 5 basic principles of intl trade law

A
  1. mutilateral trade negotitations- nations will meet periodically to reduce tariff and nontariff barriers to trade
  2. predictability of trade opportunities- nations commit themselves to specific negogiated tariff rates
  3. nondiscrimination and unconditional most-favored-nation-trade- member will not give any import advantage or favor to products coming from one member over the goods of another member
  4. national treatment- member will not discriminate in favor of domestically produced goods and against imported goods.
  5. elimination of quotas and other nontariff barrier- nations first convert their nontariff barrier into tarigg and then engage in negotiations to reduce the tariff rates.
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34
Q

what is tariffication

A

it is the process by which quotas, licensing schemes, and other non tariff barriers to trade are conveted into tariffs.

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35
Q

what happens ina tariff concession

A

one country promises not to levy a tatiff on a given product at a level higher than agreed upon. each country makes a concession to the products of the other country and recieves reciprocal treatment.

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36
Q

what is the principle of nondiscrimination

A

it has long been a guiding concept of international economic relations and of trade liberalization

nondiscrimination means that in every aspect of economic life, all nations should be treated equally. the products of all nations should be treated equally and without discrimination by importing and exporting nations.

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37
Q

where is nondiscrimination most evident?

A
  1. the concept of most favored nation trade, that favorable tariff treatment on goods and services imported from one country shall be extended to similar goods and serices from all other countries.
  2. the concept of national treatment, that an importing country shall treat imported goods and services that same as its own domestic goods.
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38
Q

what is the MFN

A

most favored nation trade
it require that any trade advantage granted by one GATT member to the goods or services of another member should be granted to all

unconditional MFN trade requires that whena nation extends some privilege or right to one of its trading partners, such as a reduced tariff, that privilege auto becomes applicable to all other trading partners.

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39
Q

NTR and human rights

A

the use of NTR (normal trade relation) tariff treatment is subject to several exceptions- the US law authorizes the president to deny NTR status to any nation on the basis of national security, foreign policy.

the president may grant temp NTR status only if the country improves its human rights record.

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40
Q

what is the national treatment?

A

the national treatment provisions of GATT are intended to ensure that imported goods will not be subjected to discriminatory treatment under the laws of importing nation

41
Q

GATT and the elimination of quotas

A

Art. XI of the GATT permits the use of tariffs as the acceptable method of regulating imports, but not quotas of other quantitiative restrictions.
The use of quotas is subject to the principle of nondiscrimination.

42
Q

types of unfair trade

A

dumping and antidumping duties
subsidies

43
Q

what is dumping?

A

it is the unfair trade practice of selling products in a foreign country for less than the price charged for the same or comparable goods in the producer’s home market.

44
Q

when can antidumping duties be imposed?

A

may be imposed only when the dumping threatens or causes material injury to a domestic industry producing like products.

45
Q

what two federal agencies are involved in investigations of dumping and antidumping?

A

International trade administration- look for whether the produt has been sold at a price less than its normal value
international trade commission- look for whether it has caused or threaten to cause a material injury to US producers of like products.

46
Q

remedies to safeguards

A
  1. tariff
  2. quotas
  3. negotiated agreement with foreign countries that limit their exports to the US
  4. trade adjustment assistance for the domestic industry
47
Q

how to find surrogate normal value

A

look for a market economy country that is at a level of economic developement comparable to that of the NME and is a significant producer of comparable merchandise.

48
Q

what is a subsidy?

A

any financial contribution by a government to a domestic firm or industry to achieve some economic or social objective

49
Q

three types of subsidies

A
  1. prohibited subsidies- distort trade patterns, prohibited even without injury to domestic industry.
  2. domestic subsidies- government programs designed to achieve some greater social or national economic objective. permissible if they do not cause or threaten to cause material injury
  3. nonactionable subsidies- non actionable and not countervailable if they meet the requirements of the GATT. always legal. subsidies granted to poor regions or universities.
50
Q

historical developement of legal framework

A

export controls after major world events:
during american revolution 1775- first US export regulation which restricted trade with IK.
After wwi and wwii- world split into E and W

51
Q

what is the dilemma of export controls

A

someone else could supply desired goods to the “enemies” and the US wouldve lost a sale.

52
Q

What is the trading with the enemy act 1917?

A

to restrict trade with hostile countries during times of war, but used also in peacetime for economic crisis, but must have a reason why.

53
Q

What is the National Emergency act of 1976?

A

the prsident can still declare state of emergency, although the authority to act under it lasts for only one year at the end of which the president must ask Congress to renew authority over that situation

54
Q

What is the international emergency powers act of 1977?

A

It provides the cureent grant of authority to the president to regulate economic and financial transactions and to place restriction on importing and exporting during a peacetime national emergency

55
Q

What is the USA patriot act 2001?

A

banks are responsible for monitoring lists of persons and ultilizing a compliance program to catch money launderers and suppliers to foreign terrorist networks

56
Q

What are the 3 reasons to regulate exports?

A
  1. supply control
  2. foreign policy
  3. national security
57
Q

what is a boycott?

A

it is an organized regusal of one or more nations, often backed by economic sanctions to trade with one or more other nations

58
Q

What are anti-boycott laws

A

they are legal responses by the government that make it unlawful for their citizens to participate in a boycott

59
Q

Export adminstration act EAA?

A

illegal to comply with or support any boycott forstered or imposed by a foreign country against a country which is friendly to the US

60
Q

What did the Sept 11 event prompt?

A

It prompted a reassessment of how to improve the efficacy of controls- 2 equal pushes: decontrol items for allies and increase controls for suspect users and end users.

61
Q

What is the exporting licensing review process?

A
  1. Try to comply with the law in a way that allows companies to do business in a timely manner and meet the demands of their clients
  2. The bureau of industry and security must review and rule licenses within 90 days.
  3. Once the application for a type of validated license is recieved, the office of export licensing reviews the application
  4. if the department cannot reach consensus the application goes through several layers of interagency committees, culiminating in a final decision by the president.
    Role of BIS os to review request
    Office of export decides
62
Q

Foreign availabilty

A

if a product is available from another source besides the US, export controls make little sense
The office of foreign availability allows US companies for petition for a review of the foreign availability of products and tech
(loopholes) block on exports from US but cant impede other countries to do the same.

63
Q

What is diversion

A

it refers to the illegal placememnt of goods or commodities in the hands of an individual for whom an export license would not be granted either beause of country group, end use of the product, or the product itself. EX- shipping of US origin helicopters to North Korea through a west german firm.
(loophole) EX: USA sells guns to france but the guns make its way to North Korea because France sold it to them

64
Q

What is the function of Customs?

A

It is to collect revenues and protect. And also to prevent terrorists and terrorist weapons from entering the US and enforce customs laws. They have the authority to bar the entry of goods.

65
Q

payment of duties

A

Calculation of duties is done by the importer

66
Q

The penalty depends on whether it resulted in negligent violation or gross neglience or fradulent violation.

A

Negligent violation is when the importer fails to use reasonable care, skill and competence to ensure that all customs documents and statements are materially correct and all laws are complied with

Gross negligence is when there is a clear and convincing evidence that the act or omission was done with actual knowledge or reckless disregard for the relevant facts or aware that something is dangerous but didnt intend to harm. pay taxes but no prison.

fradulent violation is when the importer clearly knowingly made a materially fasle statement. Up to 2 years in prison.

67
Q

what is the statue of limitations on import violations.

A

after 5 years from the date of violation involving negligence or gross negligence.
after 5 years from the date of discovery of the violation involving fraud.

68
Q

What is the dutiable status of goods?

A

determined by
- the classification of merchandise
- the value of the merchandise
-country of origin of merchandise

69
Q

What is the harmonized tariff schedule?

A

a mechanism for defining commodities, materials, and articles but does not set the tariff rate. 22 sections broken in 99 chapters.

General rule- all goods entering the US are dutiable unless specifically exempted.

70
Q

What is the tent case study?

A

Importer of tents entered the tariff schedule as sports equipment instead of textiles. Textiles is the highest tax. The tents were 9 person tents so they were huge. When in trial. the question of “is camping a sport” arose. And said that yes camping is a sport but those tents were too heavy and big for backpacking. The court ruled in favor of customs.

71
Q

What are the general rules of interpretation?

A

GR1: an article be classified according to the four digit heading under which it is specifically and completely described.
GR3a rule of relative specificity: when an article vcan be classified under more than one heading, it must be classified under the one that most specifically describes the item
GR3b rule of essential character: when an article is made of two or more different components, the article should be under the heading that describes those materials that gives the article its essential character.

72
Q

what is the shower curtain set case?

A

An importer of shower curtain sets classified its set by the inner plastic liner. Customs argued that it be classifed by the outer curtain so under textile. Company said the plastic liner is the essence/purpose which prevented water from escaping. The decision was in favor of the company.

73
Q

What is tariff engineering?

A

It is a way to modify the product to apply a lower rate. It is illegal when its intent is to pay lower.

74
Q

What is the general rule for the country of origin?

A

the country of oridin is that country where an article was grown, mined or wholly and completely produced originating in that country.

75
Q

What is the substantial transformation test and name, character use test?

A

The general rule is that the country of origin is that country where a product last underwent a substantial transformation.

The name, character, use test for NTR countries. A substantial transformation occurs when the original article loses its identity as such and is transformed into a new article having a new name, character or use.

76
Q

what is the principle objective of corportations?

A

It is to maximize profits for their stockholders.

77
Q

What is the necessity of working regulations?

A

laws the protect workers from abusive or discriminatory practice.

78
Q

what is the US and European view of employee participation in strategic designs?

A

The US: great flexibility to owners- traditionally US managment completely by iteself and in secret makes strategic decisions such as whether to close a plant or reduce manpower levels.

EU: right of consultation about or notice before the implementation of decisions resulting in workforce reduction

79
Q

mandatory employee representation on board of directors

A

many countries require substantial employee representation on the coporate board of directors.

80
Q

US and EU employee dismissal

A

US: no person is legally entitled to a job, once an individual ceases to be productive, their future employement is in jeopardy. legally require severance pay is high. easiest dismissal in the US because it is employement at will- no cause to fire you.

EU: employees acquire a property interest in their jobs over time- legally require severance pay is high. consultation with the works council or dismissal under a cause.

81
Q

What is the assumption of employee arrangement?

A

In EU, when there is an acquisition, they have to keep everything and employees at same salary and level.

The US can dismiss.

82
Q

what are the 3 defenses to US challenges of employement decision abroad

A
  1. control by a foreign person or lack of control from american employer.
  2. foreign compulsion defense- local law prevails.
  3. bona fide occupational qualification- the performance of the job require a trait such as a specific religion or gender.
83
Q

what is a collective agreement?

A

it is signed by representatives of employees and employers that has a a list of conditions of employemnt such as min wages and time off. It applies like local law.

84
Q

what is antitrust law?

A

an enterprise with great market power must be concerned with the limits that antitrust or competition laws placeon extensions of that power.

85
Q

Historical development of intl competition law

A

-end of 19th century: sherman antitrust and clayton act: in order to permit free market forces to operate.
-After wwii in eu: comptition law: developed rapidly and europeans are more willing to rely on direct government action and less willing to count on litigation

86
Q

despite differences in form and enforcement the substance of competition law is similar and focus on two types of activites

A
  1. prohibition of agreements between competitors that restrict competititon
  2. prohibition of the abuse of a dominant market position
87
Q

prohibitions against agreements to restrict competition

A

art. 81 of the treaty of rome and section 1 of the sherman act prohibit concerned anticompetitive conduct.
-this principle is implemented differently under different systems

88
Q

abuse of dominant market position

A

art. 82 of treaty of rome and sec. 2 of the sherman act: problem of monopoly and abuse of monopoly power
- a company must first have a dominant market position
-second, the dominant party must be found to have abused this position

89
Q

EC merger regulation

A

parties to all mergers, acquisitions, joint ventures, having a community dimension must provide pre-transaction notification to the commission
-5 weeks, phase 1: deals notified to the commission automatically befin the phase 1 inquire. the task force studies the competitive effects of the proposed transaction
-if no doubts result, the merger is cleared
-if doubts arise, phase 2: a 4.5 month review, look into each doc and make deep investigations

any merger task force rejection of a proposed merger will nbe held to stringent standard of proof thus any company undergoing a merger review should expect a more intense review

90
Q

Non US competition law

A

foreign competition law is similar to US law in substance, but it is enforced differently- the most obvious distinction is in the sanctions for violating the law.
-US law is enforced by private attorney generals and private cause of action for violation of antitrust rules and possibility of criminal liability.
-in EU, EU competition laws may be enforced only in national courts. A private party may not go to the pan-european forums. no criminal liability

91
Q

what is the per se violation?

A

those that no amount of explanation can make legal- automatic sanctions
actions subject to the rule of reason can be legal if they are not found to be anticompetitive

92
Q

article 81(3)

A

the commission may under art. 81(3) exempt agreements that violate the terms of art. 81(1) by a comfort letter, an individual exemption or a negative clearance.
-comfort letter tell companies in advance that their anticipated transactions if implemented as represented are not likely to infringe competition law.
-individual exemption allows performance of an agreement that would otherwise violate art. 81(1) beause it has favorable economic effects overall
-negative clearance is a confirmation that an agreement does not

92
Q

article 81(3)

A

the commission may under art. 81(3) exempt agreements that violate the terms of art. 81(1) by a comfort letter, an individual exemption or a negative clearance.
-comfort letter tell companies in advance that their anticipated transactions if implemented as represented are not likely to infringe competition law.
-individual exemption allows performance of an agreement that would otherwise violate art. 81(1) beause it has favorable economic effects overall
-negative clearance is a confirmation that an agreement does not fall within art. 81(1).

93
Q

preapproval procedures vs. litigation

A

europeans: resolution of competitive law issues prior to the transaction taking place through admin action.

-de minimis exception: art. 81(1) is not violated if (1) the parties to the agreement in question have combined gross annual reveneues of less than 200 million euros (2) the products covered by the agreement do not account for more than 5% of the volume in the relevant market. with De Minimis exception the majority of agreements within EU are not considered to be anticompetitive.
-conform letter: tell companies that their anticipated transactions, if implemented as represented is not likely to infringe competition rules.

benefits of the preapproval approach by the EU- the parties can consummate the transaction without risk of subsequent nullifications and fines.
disadvantages: the commision has been overwhelmed. virtual prohibition of almost everything. costs.

US does not have an analogous pre approval system

in sept 2000, the commision proposed an end to its preapproval system- parties would as in US decide for themselves whether an arrangement violates competition law, based on the commission precedent.

94
Q

US and EU differ in the extent to which statutes are given extraterritorial application

A

american have tended to apply their antitrust law to every corner of the globe.

95
Q

American banana case

A

the plantiff, a US corporation, alleged that a rival US corporation had caused the Costa Rican governemnt to serize the plantiffs banana plantation and prevent the completion of the plantiff’s railway. The Sherman act shall be interpreted to be cofnined in its operation and effect to the territorial limits over which the lawmaker has general and legitimate powers.

decision: the judgment for defendent was affirmed on appeal because defendent’s actions, although illegal in the US, were permitted by the local law in the foreign jurisdiction at issue.

96
Q

ALCOA case

A

developing of the effects doctrine- US courts interpreted the sherman act to require an ever decreasing effect on the US before it was applicable- any state may impose liabilityes within its borders whcih the state reprehends.

A group of europeans formed a swiss corp called alliance. Effect was to create a cartel that controlled aluminum supplies.

Decision: US court of appeals reversed the district courts decision and remanded the case to it for further proceedings consistent with its opinion.

97
Q

what is the foreign trade antitrust improvements act

A

in 1982, the US congress clarified its intent in the sherman act adopting a strict version of the “effects test” in the foreign trade antitrust improvements act- the act provides that US antitrust law does not apply to conduct unless such conduct has a direct, substantial, and reasonably foreseeable effect on US commerce or on the business of a person engaged in exporting goods from the US to foreign nations

international busn law (1 decks)

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