Chap 007

Chapter 07 - The International Legal Environment: Playing by the Rules
Chapter 07 The International Legal Environment: Playing by the Rules
True / False Questions 1. (p. 186) If a company plans to market products abroad, securing expert legal advice is a wise decision because of the complicated nature of international law. TRUE
Difficulty: Easy Type: Comprehension
2. (p. 186) The form of law found in the United States and England is classified as civil or code law. FALSE
Difficulty: Moderate Type: Knowledge
3. (p. 186) The form of law found in Germany, France, and Japan is called civil or code law. TRUE
4. (p. 187) Common law is based on an all-inclusive system of written rules of law. FALSE
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5. (p. 187) Under code law, the legal system is generally divided into three separate codes: commercial, civil, and criminal. TRUE
Difficulty: Easy Type: Knowledge
6. (p. 188) The basis for Islamic Law is interpretation of the Koran. TRUE
7. (p. 189) Under Marxist-socialist tenets (law) it would be illegal to pay interest on a loan. FALSE
Difficulty: Hard Type: Knowledge
8. (p. 190) The World Court can settle disputes between governments. TRUE
9. (p. 190) When dealing with foreign countries, a domestic marketer should refer to "international commercial law" for guidance. FALSE
Difficulty: Moderate Type: Comprehension
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10. (p. 191) Most disputes that arise in commercial transactions are settled informally. TRUE
11. (p. 191) Another term for conciliation is mediation. TRUE
12. (p. 191) If conciliation is not used to settle a difference in an international business dispute or an agreement cannot be reached, the next step is litigation. FALSE
Difficulty: Hard Type: Comprehension
13. (p. 193) Mick Masters had an arbitration clause added to a contract between his Australian company and the German government because he knows that enforcing an arbitration agreement is relatively easy and almost always binding in international law disputes. FALSE
Difficulty: Moderate Type: Application
14. (p. 194) One of the deterrents to litigation with respect to disputes in the international business arena is the fear of creating a poor image and damaging public relations. TRUE
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15. (p. 194-195) The piracy industry has grown so sophisticated that many counterfeit goods are almost impossible to distinguish from the original. TRUE
16. (p. 194) To prevent piracy companies are developing new technologies that make it impossible for counterfeiters to overcome. FALSE
17. (p. 195) China, Russia, Japan, and Vietnam have made major progress in reducing software piracy. TRUE
18. (p. 197) In the United States, a common-law country, ownership of intellectual property rights is established by registration versus prior use (whoever registers first is considered to be the rightful owner). FALSE
Difficulty: Hard Type: Application
19. (p. 197) In many code-law countries, ownership of intellectual property rights is established by registration rather than by prior use--the first to register a trademark or other property right is considered to be the rightful owner. TRUE
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20. (p. 201) All countries have laws regulating marketing activities in promotion, product development, labeling, pricing, and channels of distribution. TRUE
21. (p. 200) A creative non-traditional way for companies with intellectually property to make money in China is to employ the oldest strategy of all, i.e., charging what the market will bear. TRUE
22. (p. 203) In Germany, any implied or stated superiority in comparison advertisements is not subject to legal challenges. FALSE
23. (p. 204) The United States passed the most stringent green marketing laws that regulate the management and recycling of packaging waste. FALSE
24. (p. 205) Many countries have modeled their antitrust laws after U.S. laws. TRUE
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25. (p. 205) Leaving the political boundaries of a home country with a business venture has been interpreted to mean that a company is then exempt from home-country laws because business is not being conducted in that home-country. FALSE
26. (p. 206) The U.S. Foreign Corrupt Practices Act (FCPA) makes it illegal for companies to pay bribes to foreign officials, candidates, or political parties. TRUE
27. (p. 207) U.S. firms, their subsidiaries, or foreign firms that are licensees of U.S. technology cannot sell a product to a country in which the sale is considered by the U.S. government to affect national security. TRUE
28. (p. 209) One of the purposes of U.S. antitrust legislation is to protect American export and investment opportunities against any privately imposed restrictions. TRUE
29. (p. 209) In general, U.S. firms are allowed to participate in foreign-based boycotts as long as the U.S. firm can demonstrate that they would loose business in the foreign country if they did not participate in the boycott. FALSE
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Multiple Choice Questions 30. (p. 186) The _________ of a legal system profoundly affects how the law is written, interpreted, and adjudicated. A. foundation B. legality C. cost D. religious ties E. politics
31. (p. 186) Which of the following forms of law was derived from English law? A. code law B. common law C. religious law D. civil law E. universal law
32. (p. 186) Which of the following types of law is primarily found in the United States, England, Canada, and other countries once under English influence? A. code law B. common law C. religious law D. civil law E. universal law
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33. (p. 186) Another term for code law is: A. business law B. common law C. religious law D. civil law E. universal law
34. (p. 186) Civil or code law was derived from which of the following? A. English law B. economic law C. Greek law D. Persian law E. Roman law
35. (p. 197) Which of the following countries has ownership of IP rights established by prior use whoever can establish first use is typically considered the rightful owner? A. Japan B. Brazil C. Saudi Arabia D. France E. United States
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36. (p. 187) The basis for which of the following is tradition, past practices, and legal precedents set by the courts through interpretations of statutes, legal legislation, and past rulings? A. common law B. code law C. Islamic law D. Marxist-socialist tenets E. legal tradition
37. (p. 187) If law is founded on tradition, past practices, legal precedents set by the courts through interpretations of statutes, legal legislation, and past rulings, it is called: A. common law B. code law C. Islamic law D. Marxist-socialist tenets E. legal tradition
38. (p. 187) Which of the following is based on an all-inclusive system of written rules of law that is generally divided into commercial, civil, and criminal sections? A. common law B. code law C. Islamic law D. Marxist-socialist tenets E. legal tradition
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39. (p. 187) ___________ is considered complete as a result of catchall provisions found in most of this type of law's system. A. Common law B. Code law C. Islamic law D. Marxist-socialist tenets E. legal tradition
40. (p. 188) The overriding objective of ___________ is social justice. A. common law B. code law C. Islamic law D. Marxist-socialist tenets E. legal tradition
41. (p. 188) The basis of ___________ is the Koran. A. common law B. code law C. Islamic law D. Marxist-socialist tenets E. legal tradition
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42. (p. 188) Among the unique aspects of Islamic law is the prohibition against the payment of: A. taxes. B. profits. C. interest. D. equity. E. accounting fees.
43. (p. 189) Under _____________, the legal system is subordinate to prevailing economic conditions. A. common law B. code law C. Islamic law D. Marxist-socialist tenets E. legal tradition
44. (p. 189) Because of political changes in the late twentieth century, which of the following countries has had to build from scratch an entire commercial legal system? A. France B. Germany C. Taiwan D. Russia E. Saudi Arabia
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45. (p. 190) Which of the following supranational system of laws governs world commerce today? A. U.S. law B. English law C. traditional Roman law D. code law as explained by French courts E. there is no supranational system of laws that governs behavior
46. (p. 190) The World Court can adjudicate disputes between which of the following? A. disputes between governments B. disputes between a company and a government C. disputes between two companies D. disputes between a private citizen and a government E. the World Court does not adjudicate in any of the above matters
47. (p. 190) In international commercial disputes, jurisdiction is generally determined in any of the following ways EXCEPT: A. on the basis of the money involved in a contract (who gains the most). B. on the basis of jurisdiction clauses included in contracts. C. on the basis of where a contract was entered into. D. on the basis of where the provisions of the contract were performed. E. on the basis of legal documents that define the business transaction.
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48. (p. 191) In settling international commercial transaction disputes, which of the following methods accounts for the majority of settlements? A. conciliation B. informal settlement C. arbitration D. litigation E. coercion
49. (p. 191) Another name for conciliation as a means for settling a dispute in international commerce is: A. mediation. B. informal settlement. C. arbitration. D. litigation. E. coercion.
50. (p. 191) A nonbonding agreement between parties to resolve disputes by asking a third party to mediate differences is called: A. conciliation. B. informal settlement. C. arbitration. D. litigation. E. coercion.
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51. (p. 191) Ralph Richards has been attempting to solve a problem that his company has with a contract default by the Dutch government. He has tried conciliation but the two parties could never find any common ground on which to begin a fruitful negotiation for settlement. Which of the following will most likely be the course of action that both of the two parties will try next? A. mediation B. informal settlement C. arbitration D. litigation E. coercion
52. (p. 191) In the usual ______________ procedure, parties select a disinterested and informed party or parties to sever as a referee to determine the merits of the case and make a judgment that both parties agree to honor. A. conciliation B. informal settlement C. arbitration D. litigation E. coercion
53. (p. 193) The first step that most arbitrators try to resolve a dispute between two parties is to attempt: A. conciliation. B. informal settlement. C. fault finding or wrong doing. D. litigation. E. coercion.
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54. (p. 193) Most arbitration is successful, but success depends on the: A. amount of the judgment. B. personalities of the complainants. C. nationalities of the complainants. D. willingness of both parties to accept the arbitrator's rulings. E. amount of money involved in the dispute.
55. (p. 193) Which of the following is usually placed in the arbitration clause that is becoming standard in many international contracts? A. the names of arbitrators to be involved. B. the place of the arbitration (city and/or country). C. the titles of the arbitrators to be involved. D. the age of the arbitrators to be involved. E. the nationalities of the arbitrators.
56. (p. 193) Arbitration clauses require agreement on two counts. Which of the following is one of those accounts? A. The complainants agree on who is right and who is wrong. B. The complainants agree on litigation issues. C. The complainants agree to abide by the awards resulting from the arbitration. D. The complainants agree to not hire legal counsel. E. The complainants agree to hear the case before the World Court if the arbitration fails.
Difficulty: Easy Type: Application
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57. (p. 193) When all else fails in an international commercial dispute, the final step is: A. conciliation. B. to encourage one's government to force the other party to comply. C. to find fault or wrong doing as a public relations device. D. litigation. E. coercion.
58. (p. 194) All of the following are considered to be deterrents to litigation EXCEPT: A. fear of creating a poor image and damaging public relations. B. fear of unfair treatment in a foreign court. C. difficulty in collecting a judgment that may otherwise have been collected in a mutually agreed settlement through arbitration. D. the relatively low cost and time required when bringing legal action. E. loss of confidentiality.
59. (p. 194) One authority suggests that settlement of every dispute should follow four steps. Which of the following is considered to be the first step in this process? A. conciliate B. arbitrate C. coerce D. try to placate the injured party E. litigate
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60. (p. 196) One counterfeiting problem for international marketers is: A. the ease with which consumers can tell the difference between real and counterfeit products. B. the theft of products by pirates during shipping. C. government regulations legitimizing counterfeiting. D. collusion between contract manufacturers and illegitimate sellers. E. the worldwide availability of duplication software.
61. (p. 194) In the constant vigilance and battle against counterfeiting and piracy, companies are increasingly developing new __________. A. regulations B. products C. technologies D. strategies E. licenses
62. (p. 195) According to the text Vietnam, Russia, Japan and __________ made major progress in reducing software piracy from 2003 to 2006. A. Tunisia B. India C. Iran D. China E. Myanmar
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63. (p. 194) Companies spend millions of dollars establishing brand names and trademarks primarily to symbolize: A. U.S. marketing power. B. environmentally-friendly production processes. C. local content. D. consistency with generic products. E. quality.
64. (p. 195-196) Which of the following commonly counterfeited products has the potential for doing the greatest harm to the consuming public? A. toys B. CDs C. pharmaceuticals D. software E. clothing
65. (p. 196) A famous case occurred in Japan where a Japanese business registered McDonald's world famous trademark before McDonald's did and was given permission to use the trademark. McDonald's eventually got the trademark back after a lengthy court battle and a monetary award to the Japanese company. McDonald's learned that trademarks registered in the United States: A. must be ratified by the United Nations trademark protection agency. B. are worthless. C. are protected in the European Union under the Geneva Convention but not in Japan. D. need to be registered with the World Court. E. are not protected in other countries.
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66. (p. 197) In a common-law country, ownership of intellectual property rights is established by: A. prior use. B. registration. C. design proof. D. the "common sense mandate." E. the "golden rule of property."
67. (p. 197) In a common-law country, ownership of intellectual property rights is established by "prior use versus registration." What does the phrase "prior use versus registration" mean? A. One must register a trademark to gain rightful ownership of it. B. One must pay for the right to own a trademark. C. Whoever can establish first use of a trademark is typically considered the rightful owner. D. Ownership of a trademark can only be established in a court of law. E. Ownership of a trademark is global and is established by the United Nations.
68. (p. 197) Which of the following international conventions was established to recognize intellectual property rights? A. the Paris Convention B. the Munich Agreement C. the Tokyo Convention D. the Eurasian Convention E. the Kyoto Protocol
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69. (p. 197) Which of the following conventions is responsible for the promotion of the protection of intellectual property rights? A. the Paris Convention B. the Madrid Arrangement C. the Tokyo Agreement D. the Eurasian Convention E. The United Nation's WIPO
70. (p. 201) ALL countries have laws regulating all of the following marketing activities EXCEPT: A. promotion B. product development C. labeling D. channels of distribution E. production volume
71. (p. 204) Which of the following acts developed by the European Union erases legal and trade differences that have existed for decades between the member nations? A. European Sanctity Act B. European Antitrust Act C. European Unification Act D. Single European Market Act E. No European Union Act exists
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72. (p. 200) Which of the following is NOT one of the traditional remedies by American companies to protect intellectual property: A. threats to withdraw products from country B. complaints to U.S. government and WTO C. negotiation and dispute resolution D. preventative steps such as local representation E. complaints to country's government
73. (p. 200) A creative way for intellectually property rich companies to make money in China is __________. A. enlist the Chinese government to sell their products B. to charge what the market will bear C. to sell older instead of the latest versions of their products D. to sell only in select populated areas, i.e., major cities E. to provide an extreme discount on next purchase
74. (p. 204) Which of the following countries has enacted the most stringent green marketing laws that regulate the management and recycling of packaging waste? A. Britain B. France C. Germany D. United States E. Japan
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75. (p. 205) Which of the following is NOT one of the areas of antitrust enforcement in the European Union and elsewhere? A. full-line forcing B. price discrimination C. supply restrictions D. competitiveness councils E. antimonopoly
76. (p. 206) The question of jurisdiction of U.S. law over acts committed outside the territorial limits of the country has been settled by the courts through application of a long-established principle of international law called the: A. the right of imminent domain. B. the legal transfer of power. C. the rights of foreign powers and citizens. D. the objective theory of jurisdiction. E. the McNeil Principle of International Law.
77. (p. 206) The ________________ of the United States makes it illegal for companies to pay bribes to foreign officials, candidates, or political parties. A. Constitution B. Bill of Rights C. Foreign Corrupt Practices Act D. Best Practices Act E. International Codes of Law
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78. (p. 207) U.S. firms, their foreign subsidiaries, or foreign firms that are licensees of U.S. technology cannot sell a product to a country in which the sale is considered by the U.S. government to affect: A. the competitive balance of world trade. B. the competitive balance of free competition inside the U.S. C. relationship with the world community. D. the overall balance of payments of the United States. E. the national security of the United States.
Difficulty: Easy Type: Application
79. (p. 209) Antitrust enforcement has two purposes in international commerce. Which of the following accurately describes one of those purposes? A. Protection of American consumers by ensuring that they benefit from products and ideas produced by foreign competitors as well as by domestic competitors. B. Protection of the trade balance of the United States. C. Protection of the U.S. dollar abroad. D. Protection of the right to compete abroad. E. Protection of American consumers from contaminated foreign food products.
80. (p. 209) Which of the following U.S. government agencies oversees antitrust enforcement in international commerce? A. Department of State B. Department of Justice C. Department of Commerce D. Department of Defense E. Department of Home Land Security
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81. (p. 209) Under the Antiboycott Law, U.S. companies are forbidden to participate in any unauthorized foreign boycott. Which of the following situations brought about the Antiboycott Law in the U.S.? A. The boycott of Cuba by the U.S. B. The boycott of South Africa by the world community. C. The boycott of Israel by the Arab League. D. The boycott of Iraq by the United States. E. The boycott of the U.S. by the U.S.S.R. (the wheat embargo).
82. (p. 210) Even though each nation is considered to be sovereign, many nations consider the extraterritoriality of U.S. laws to be a threat. Which of the following best describes the most realistic of these threats as interpreted by foreign governments? A. the threat to annex a foreign country. B. the threat to boycott a foreign country. C. the threat to go to war with a foreign country. D. the threat of influencing a foreign government through American government policy on their economies through U.S. multinationals E. the threat of germ warfare
83. (p. 211) According to the text, _____________ buy and register descriptive nouns, geographic names, ethnic groups, pharmaceutical substances and other similar descriptors and hold them until they can be sold at an inflated price. A. cyberterrorists B. cybersquatters C. cyberpirates D. cybermarkers E. cyberghosts
Fill in the Blank Questions
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84. (p. 186) Civil or code law was derived from _________ law. Roman
85. (p. 187) The basis for __________ law is tradition, past practices, and legal precedents set by the courts through interpretations of statutes, legal legislation, and past rulings. common
86. (p. 186) Another term for civil law is __________ law. code
87. (p. 188) The basis for Islamic law is interpretation of the _________. Koran
88. (p. 189) Countries moving away from Marxist-socialist tenets (laws) need to establish business-related laws regarding private ownership, ____________, and ___________. contracts; due process
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89. (p. 191) Another term for conciliation is __________. mediation

90. (p. 191) If two parties cannot reach agreement through conciliation, the next step to resolve the dispute is _________. arbitration
91. (p. 193) The final step to solving a dispute (if all other steps have failed) is __________. litigation
92. (p. 194) Companies spend considerable sums creating brand names and trademarks symbolizing_________________. quality
93. (p. 194) To prevent piracy companies are developing new __________ but counterfeiters are relentless in overcoming the most sophisticated security measures. technologies
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94. (p. 197) In common law countries ownership of intellectual property rights is established by ___________________. prior use versus registration
95. (p. 204) Legislation that addresses environmental issues is called __________ legislation. green (green marketing)
96. (p. 206) In the United States, the ______________ Act makes it illegal for companies to pay bribes to foreign officials, candidates, or political parties. Foreign Corrupt Practices Act
97. (p. 209) The U.S. enforcement agency that oversees antitrust laws as they apply to international commerce is the Department of ___________. Justice
98. (p. 210) When U.S. multinational corporations (MNCs) subsidiaries are prohibited from making a sale in violation of the U.S. _________ Act, host governments react with hostility toward the extraterritorial application of U.S. foreign policy. Trading with the Enemy
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99. (p. 211) Jake Lloyd's company specializes in buying and registering descriptive nouns, geographic names, ethnic groups, pharmaceutical substances and other similar descriptors and holding them until they can be sold at an inflated price. Though Jake may not like the description of his company, his company is called a cyber ______ by others in business. (cyber)squatter
Essay Questions 100. (p. 186-190) The text identifies three heritages (four forms) that form the bases for the majority of legal systems in the world. What are the four forms of law and what are the heritages linked to these forms of law?
The first form is common law that is derived from English law. The second form is code or civil law that was derived from Roman law. The third form is Islamic law that was derived from the interpretation of the Koran. The fourth form is Marxist-socialist tenets derived from this view of economics.
101. (p. 197) Compare the differences between "prior use" and "regiatration" ownership of intellectual property rights.
According to the text, the United States, a common-law country, ownership of IP rights is established by prior use. Whoever can establish first use is typically considered the rightful owner. Whereas in many code law countries, ownership is established by registration rather than prior use. Whoever registers the property right is considered the rightful owner. The differences between the United States and Japan with respect to interpretation of patent law.
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102. (p. 187) What is the difference between common and code law? Common law is based on tradition, past practices, and legal precedents set by the courts through interpretations of statutes, legal legislation, and past rulings. Code or civil law is based on an all-inclusive system of written rules of law.
103. (p. 188-190) What is the difference between Islamic law and Marxist-socialist tenets?
The basis for Islamic law is the Koran. It encompasses religious duties and obligations as well as the secular aspect of law regulating human acts. In the Marxist-socialist approach, the premise of law is based on prevailing economic conditions.
104. (p. 190) Legal disputes arise between and among what three groups? Disputes between which groups does the World Court adjudicate?
Legal disputes can arise between governments, between a company and a government, and between two companies. The World Court can adjudicate disputes between governments only.
105. (p. 191) With respect to the resolution of international disputes, what is conciliation?
Conciliation (or mediation) is a nonbonding agreement between parties to resolve disputes by asking a third party to mediate differences. For additional information see page 191.
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106. (p. 191-192) Describe what might happen in an arbitration process between two international groups that have a dispute with one another. The usual arbitration procedure is for the parties involved to select a disinterested and informed party or parties as referee to determine the merits of the case and make a judgment that both parties agree to honor. For more information see page 191-192.
107. (p. 194) What are the deterrents to litigation as a means for settling an international commerce dispute cited by the text?
(a) Fear of creating a poor image and damaging public relations; (b) fear of unfair treatment in a foreign court; (c) difficulty in collecting a judgment; (d) the high cost and time required when bringing legal action; and (e) loss of confidentiality. For additional information see page 194.
108. (p. 206-207) What is the purpose of the Foreign Corrupt Practices Act?
The Act makes it illegal for companies to pay bribes to foreign officials, candidates, or political parties. Stiff penalties can be assessed against company officials, directors, employees, or agents found guilty of paying a bribe or of knowingly participating in or authorizing the payment of a bribe.
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109. (p. 187) Sam Fitch is trying to decide whether to pursue a business venture in France. He has heard that the French system of business law is different from that of the United States. Research has told him that France (and other European countries) follows what is called code law. Describe code law for Mr. Fitch. What are the advantages and disadvantages of such a legal system? After reviewing the material in the text, students should see that code law is based on an allinclusive system of written rules (codes) of law. This is different from common law practiced in the United States. Code law is considered to be complete by those that practice it because there are many catchall provisions in a code-law country. Students can build their own case for or against code law (see information in the text), however, all students should see the value of hiring a French lawyer to interpret French law. See pages 187 for additional information.
110. (p. 191) Your company has just entered into an agreement with a Chinese company to do a joint venture in China. However, problems occurred almost immediately. Which of the forms of international dispute resolution would probably be best to pursue to solve your problems with the Chinese so that business may continue? Explain your choice.
Conciliation is considered to be especially effective when resolving disputes with Chinese business partners because they feel less threatened by conciliation than arbitration. The Chinese believe that when a dispute occurs, informal, friendly negotiation should be used first to solve the problem; if that fails, conciliation should be tried. For additional information see page 191.
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Chapter 07 - The International Legal Environment: Playing by the Rules

Chapter 07 The International Legal Environment: Playing by the Rules

Difficulty: Easy Type: Comprehension

Difficulty: Moderate Type: Knowledge

Difficulty: Moderate Type: Knowledge

Difficulty: Moderate Type: Knowledge

Chapter 07 - The International Legal Environment: Playing by the Rules

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Difficulty: Moderate Type: Comprehension

Chapter 07 - The International Legal Environment: Playing by the Rules

11. (p. 191) Another term for conciliation is mediation. TRUE

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Chapter 07 - The International Legal Environment: Playing by the Rules

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Chapter 07 - The International Legal Environment: Playing by the Rules

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Chapter 07 - The International Legal Environment: Playing by the Rules

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Chapter 07 - The International Legal Environment: Playing by the Rules

Difficulty: Easy Type: Comprehension

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Chapter 07 - The International Legal Environment: Playing by the Rules

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Chapter 07 - The International Legal Environment: Playing by the Rules

Difficulty: Moderate Type: Knowledge

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Chapter 07 - The International Legal Environment: Playing by the Rules

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Chapter 07 - The International Legal Environment: Playing by the Rules

Difficulty: Moderate Type: Knowledge

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Chapter 07 - The International Legal Environment: Playing by the Rules

Difficulty: Moderate Type: Comprehension

Difficulty: Hard Type: Comprehension

Chapter 07 - The International Legal Environment: Playing by the Rules

Difficulty: Moderate Type: Knowledge

Difficulty: Moderate Type: Knowledge

Chapter 07 - The International Legal Environment: Playing by the Rules

Difficulty: Moderate Type: Knowledge

Difficulty: Moderate Type: Comprehension

Chapter 07 - The International Legal Environment: Playing by the Rules

Difficulty: Moderate Type: Comprehension

Difficulty: Easy Type: Application

Chapter 07 - The International Legal Environment: Playing by the Rules

Difficulty: Moderate Type: Comprehension

Difficulty: Easy Type: Comprehension