Law 1 Flashcards
Who must treaties be approved by
2/3 Senate
Intl Treaties override State Laws via…
Supremacy clause
WTO handles…
Disputes resolution
Case briefs are usually broken down into the following: (7)
Facts, history, issues, Holdings, Rule of law, Reasoning, Agreed upon opinion
IRAC format
Issue, Rule, Analysis, Conclusion (Suno)
Globalization definition
Integration of world economies beyond political borders. Made possible by transportation and technology (communication)
Domestic protectionism (barriers of free trade) (5)
Quotas, Tariffs, Embargos, Export restrictions, Subsidiaries (QTEES - Hila on other side of wall)
FTAs (Free Trade Agreements) decrease…
Domestic Protectionism and increase cooperation in trade
4 types of international business transactions
Sale of services, Import/export, Licensing, Investments (SILI- Platts’ class)
Direct exporting of g&s
Company sells overseas directly thru its own network
Indirect exporting of g&s goes thru…
intermediary (export mgmt company, export trading company, sales agents, etc)
Licensing is…
Sharing of intellectual property for a fee or royalties
Example of licensing
Microsoft office grants users a license, registry to use the suite. Cannot make copies and sell without microsofts permission
Example of franchising
McDonald’s allows Chinese operators to use its trademark and materials to open a McDonald’s in China
Foreign Direct Investments (FDIs) are…
Capital investments made by companies in other countries (ex joint venture/subsidiary, m&a, purchasing shares of established foreign entity)
Types of risk
Transactional, Legal, Currency, Cultural, Political (TlcCP)
Transactional risks examples (3)
- payment from buyer
- delivery from seller
- due to distance, payment and delivery are not simultaneous
Transactional risk preventative measure
- clear and detailed documents (5W, expectations given)
- BOL (telling LOreal lotion on board boat for shipment to consignee)
- Insurance
- Letter of credit (irrevocable payment undertaking)
Cultural risk examples (3)
- difference in language
- different culture can mean different issues
- cultural relativism
Currency risk examples (2)
- rate fluctuations
- manual currency conversions (not using Google)
Currency risk prevention a (3)
- identify payment terms
- currency hedging (purchase and sell and set price)
- trading goods for goods
Legal risk examples (3)
- Cost and complexity of litigation
- differences in law
- proper enforcement
Legal risk preventatives
- know the law
- use ARBITRATION (not in court, disinterested third party, speedy, oea)
- forum selection
- understand international treaties (cisg, wipo, etc)
Political risk (define expropriation)
Taking of stuff by foreign government
Who are treaties negotiated by
Executives
Define utilitarianism
(cost/benefit) Ends justify the means
Define rights and duties
Certain unalienable rights
Define virtue ethics
Focusing on morality and reasoning
Define cultural relativism
- Justifying persons actions based on their culture (Muslims)
- not right or wrong, unless prejudice
Disadvantages of ethical business behavior (3)
- higher costs (sourcing from fair trade rather than China)
- higher overhead (proper training and HR)
- false expectations (Chrysler reliability)
Advantages of ethical business behavior (4)
- higher revenue and quality of life for producer)
- improved brand name and rep
- better employee motivation (no suicide nets)
- new sources of financing (ethical investors)
Public relations ensure businesses act… (Celebrity pr)
Ethically
Foreign corrupt policies act (FCPA) covers what two areas (2)
- transparent accounting requirements under SEC
- bribery of foreign officials
Who is a government official?
- holding political office
- candidate for office or political party
- officers of state owned enterprise
Exception to FCPA (2)
- expedition
- facilitation
Defenses against FCPA
- okay in foreign country
- bona fide expenditure (plant visit, demonstration)
Indirect bribery definition
Illegal actions taken by third party
Organization for Economic Cooperation and Development (OECD)
- Against bribery and corruption
- identifies and pushes for good international business practices
- Recog by FCPA
Choosing an entity form (what to consider) (6)
Type, Location, Management, Liability (financial), Taxation class, Exit strategy
Liability in general partnership
Unlimited personal liability, even for misconduct of other partners (Justin steals all pockets for himself)
Limited partnership
General partners (at least one) -unlimited liability -manage day to day business Limited partner (at least one) -liability limited to contributed -NOT involved at all
Limited liability partnership
- No general or limited partner categories
- have limited liability protection (not responsible if Justin steals pockets)
- each partner participates in mgmt
Corporations
- have SHAREHOLDERS, not partners or members
- have board of directors
- limited liability for officers/directors/shareholders
LLC
Most common and most flexible
S corporation
- stock can be held by no more than 100 (SEX) persons
- shareholders can be individuals, estates, trusts
- must be generally domestic
- only one class of stock (SSSsingle)
- no foreigner shareholders (raciSt)
- taxed a SSSingle time
- transferability without unanimous consent (SSSingle person decision)
Define piercing the corporate veil
Putting aside limited liability rules to go after shareholders
-very difficult to prove
Causes to pierce veil
- no proper documentation of transactions
- under capitalization
- fraud or misconduct
Define enterprise liability
All affiliated companies are an enterprise, thus liable (Arrest Dev)
Why Delaware? (4)
- cheap
- separate court for companies without jury
- favorable legal precedent cases
- little to no taxes
Why South Dakota? (2)
- No usury laws (illegal interest rates? No need to pay back)
- favorable legal precedent cases
Define joint venture
- parties join forces for DEFINITIVE TIME PERIOD
- exercise dual control over enterprise and share rev, exp, assts
Define transfer pricing
Transactions between parent and subsidiary to shift profit to lower tax country
The Corporation is the most popular form for…
Foreigners (because sounds official)
Free Trade Zones contain…
- Regions where countries have entered into free trade agreement
- can pick jurisdiction most beneficial to the business
Types of dispute resolution (4)
Litigation, Informal, Mediation, Arbitration (Lima county)
Define jurisdiction
Courts ability to hear a case
Define venue
Location (which court) where a Case is held
Litigation
- service of process (you’ve been served)
- Court (Little Judge Judy)
- identify jurisdiction and venue
- evidence, enforcement, governing law, classic court case
Service of process
- serving papers
- other party has chance to defend
- important for enforcement purposes
- each country has its own way biren serves his papers
What does the Hague Service Convention
Multilateral treaty between ~60 nations providing a method of common Serving within member nations (central serving authority)
Alien venue statute
In federal matters, foreign alien may be sued in any federal court (except DC)
What is Subject matter jurisdiction
- ability to hear cases of a particular type (family, civil, criminal)
- state courts can hear many types of cases (unless exclusively reserved for federal court)
- can NOT waive to Subjectman
What is Personal Jurisdiction
- courts authority over particular defendant
- may waive to self in mirror
General
Systemic and continuous presence within state
Specific
Substantial connection to state
Define sovereign immunity
Foreign governments cannot be sued
Act of state doctrine
Actions of a government within its own country (N Korea)
Forum Non Conveniens
- “forum not agreeing. Aka YouTube comments”
- even if court has right to hear case, case could be dismissed if there is a more suitable court (AlienTube)
- factors: location, location of evidence, witnesses, undue hardship for defendant
Choice of Law Provision
Parties agree by contract to be governed by particular country’s law
-natural grounds: NY, London, HK
Most costly and time consuming part of litigation/court?
Collecting evidence
Hague Evidence Convention
Request from court to foreign countries for assistance in retrieving evidence
-foreign country may reject due to national law
Rule of reciprocity
Mutual exchange of privileges between states, countries, persons or businesses
General agreement on tariffs and trade (GATT) basic objective
Liberalize trade so market can work to achieve the policy goals of the GATT
-replaced by WTO
World Trade Organization (WTO) unlike GATT, establishes…
International organization and gives it legal personality and supports it with traditional treaty
4 Parts of WTO (4)
- multilateral agreements what impose binding obligations on members
- dispute settlement rules
- regular trade policy review
- other optional agreements
Ways to promote freer trade (5)
Eliminate quotas, tariffs, export restrictions, Embargos, and subsidiaries
Gradual change aka
Progressive liberalism
Generalized System of Preferences (GSP)
Formal system of exemption
Most favored nation treatment
According to WTO, if country gives another country reduced tariffs, must do so for ALL other WTO members.
-Article 1 of GATT. (Most favored is of course #1)
National treatment
Treating foreigners and locals equally as well as the products they offer
-Article 3 of GATT (National Treasure 3)
Explicit discrimination
Measure classifies a product based on its place of production
Implicit discrimination
Measure is discriminating foreign producers (more common than ex)
Tariff limits in Schedule of concessions
Article 2 of GATT
Define dumping
Selling products in host country at low prices that are below what is sold on the home market
-purpose is to increase market share in foreign market
Subsidies define
Pmt by government to private sector to encourage certain actions
-pure export subsidies are prohibited (to refrain from dumping)
Article XX
Protects morals, life, compliance of agreements, natural resources, and national treasures of artistic and historic value.
- the hippie article (XXx)
- can’t be arbitrary or unjustifiable
Countervailing duties
Amount applied equal to the amount of estimated subsidy
-can’t be used alongside anti dumping duties
Anti dumping duties
Counters the harm associated with dumping
-can’t be used alongside countervailing duties
Technical barriers
Technical regulations and standards
Dispute Settlement Understanding
Comprehensive statement of dispute settlement rules
WTOs primary objective
Have violating party withdraw violating measures (make bad guys stop)
Retaliatory actions are last resort
Last resort
Substantial transformation test
Country of origin is the last country in which a good was SUBSTANTIALLY transformed (tariff classification change, change in nature and inability to reverse change (chemicals), value added)
Value added test (EU and NAFTA)
62.5% of materials and labor in one country Mexico automobiles
Specified processes test
These Specified processes on this list say you are the country of origin
Ultimate purchaser
Final customer
Tariff limits in Schedule of concessions
Article 2 of GATT
Define dumping
Selling products in host country at low prices that are below what is sold on the home market
-purpose is to increase market share in foreign market
Subsidies define
Pmt by government to private sector to encourage certain actions
-pure export subsidies are prohibited (to refrain from dumping)
Article XX
Protects morals, life, compliance of agreements, natural resources, and national treasures of artistic and historic value.
- the hippie article (XXx)
- can’t be arbitrary or unjustifiable
Countervailing duties
Amount applied equal to the amount of estimated subsidy
-can’t be used alongside anti dumping duties
Anti dumping duties
Counters the harm associated with dumping
-can’t be used alongside countervailing duties
Technical barriers
Technical regulations and standards
Dispute Settlement Understanding
Comprehensive statement of dispute settlement rules
WTOs primary objective
Have violating party withdraw violating measures (make bad guys stop)
Retaliatory actions are last resort
Last resort
Substantial transformation test
Country of origin is the last country in which a good was SUBSTANTIALLY transformed (tariff classification change, change in nature and inability to reverse change (chemicals), value added)
Value added test (EU and NAFTA)
62.5% of materials and labor in one country Mexico automobiles
Specified processes test
These Specified processes on this list say you are the country of origin
Ultimate purchaser
Final customer
Special marking requirements
- steel knives (COO)
- gold (K value content)
- hazardous materials
- ISO standards marks
Penalties for not marking correctly
- additional duties
- restriction on import
- rejection on import
- seizure and forfeiture
Reasons for export controls (2)
- national security reasons
- foreign policy
US export control is administered by…
Bureau of Industry and Security (part of Dept of commerce)
Do you need a license to export? How about on goods that have been improved in the US?
Yes and Yes
Export Administration Act…
Makes it illegal to knowingly export a controlled commodity without license
General license
Broad grant of authority by gov to exporters (NLR)
Validated license
Granted on case-by-case basis. For more specific products
Special comprehensive license
Given to experienced exporters that are well known
If routed thru one country to get to another, what must be determined?
Ultimate purchaser
Export control commodity number (ECCN)
Code for every product. Determines export control
Commerce country chart identifies…
The countries where licenses are required
Ex-Im banks
Banks that provide loans, guaranties and insurance to encourage exports
Standard marking requirements (2)
- Ultimate purchaser
- country of origin
Ad valorem
Latin: according to value
-tax based in value of sales
Specific taxation
Fixed tax amount per unit of product
Harmonized Tariff Schedule identifies…
Identifies specific item and its tax rate
Section 9802
Item made in us, improved elsewhere, and sent back to us? Only value added portion is taxed
-must have same use
Foreign trade zones
Duty free zones on non-prohibited goods. Taxed when transferred out of foreign trade zone
Article 2 of UCC deals with
Sale of goods
Article 2Amanda deals with
Lease of goods (but not for real property)
Offer needs to contain (4)
-parties to the contract
-time for performance
-subject matter
-price
(PTSP)
Offer is Irrevocable if
- Made by merchant to buy and sell items
- made in signed writing (contract)
- terms hold timeframe open (if no time then 3 months)
Mirror image rule
Acceptance must be same as offer
Any change to material terms in offer is..
A counteroffer (Battle of Forms)
Under article 2 the mirror image rule…
Does NOT apply
Death…
Terminates a revocable offer
Unilateral offer
Mowing lawn
Bilateral offer
An ‘I accept’ is needed
Mailbox rule
Acceptance is effective when put in mailbox for pickup
Is bargaining a counter offer?
NO
Is contract TO GIFT enforceable?
No. This is nominal consideration, which is not consideration
Promissory estoppel doctrine
A non-contractual promise may be made enforceable to avoid any injustice.
Define promissory estoppel
Tho there is no enforceable contract, because one party has relied on the promise of the other, it would be unfair not to enforce the agreement
Rule by law
Country where laws are used as tools and a means to an end
Rule of law countries…
More focus on contracts and fair competition
Rule by law countries…
Less focus on contracts and more on relationships
