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Methods of Conducting International Business

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Information/Liaison Office Distributorships, Sales Representatives and sales agents Import/Export Licensing Direct Investment (four types)

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Information/Liaison Office

answer

...

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Distributorships, Sales Representatives and sales agents

answer

complex export transaction - sell goods in the host country. o Distributorships: sale of goods to an individual or sales org that, in turn, resells the product in the foreign country ex. IBE and distributors is governed by a contract typically known as a distributorship agreement. o Sales Representatives: person who takes orders for the product and then transmits these orders to the manufacturer/does not take title to the goods, cannot bind the manufacturer/ is not an employee of the manufacturer./commission based on the value of the goods shipped. o Sales Agents: employee of the IBE in the foreign country/sales agent can bind the IBE contractually and be sued in the foreign country on behalf of the IBE/doesn't constitute a presence in the foreign country/foreign country can exercise jurisdiction over the IBE through the sales agent.

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Import/Export

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Simplest form of business. Import regulation & quotas/goods and prod cross national boundaries; does not constitute a presence as a basis of jurisdiction in the foreign country.

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Licensing

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contract to use another's intellectual property. The contract gives permission to use the IBE's patents, trademarks, and/or copyrights in that foreign country. Contracts allow the foreign firm to manufacture and sell the IBE's good in that country for a royalty payment. Royalties are payments made in exchange for permission to use someone's intellectual properties. A licensing arrangement allows the IBE to enter a foreign market without substantial investments and without creating a presence and a basis for jurisdiction. Patents, copyrights, or trademarks, as in the US and some countries even restrict the amount that can be paid to the IBE as royalties.

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Direct Investment (four types)

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o Portfolio investment - investment of money in the securities of a foreign country. Regulations may include restricting the ability to repatriate profits or transfer currency into and out of that country. o Branch - entity in the host country whose identity is not separate from the IBE. A branch is merely an arm of the IBE, completely owned IBE. May perform the same services, manufacture similar products, or sell the same goods as the company in the home country. o Subsidiary - entity whose identity is separate from the IBE. A subsidiary takes the form of doing business specified by the laws of the foreign country. Corporation incorporated under the laws of FC. IBE own 51% of subsidiary if the IBE has effective control over the subsidiary. Effective control - controlling the day2day operation of the subsidiary or providing the materials needed in manufacturing the product. Constitute the presence of the IBE in the foreign jurisdiction. o Joint Venture - partnership btwn 2 corporation. Setup for a specific purpose of function and for a limited period of time. Separate and apart from either of the participants, it may not constitute a presence, IBE be bound by a contract entered into by the joint venture.

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International Contracts

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• International Business transactions often involve a variety of contracts: Leasing of office space, employment contracts, purchase of raw materials, and sale of finished products. Joint Ventures and contracts for the purchase or sale of goods btwn a branch, a subsidiary, and the parent company.

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Contract clauses:

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o Contract clauses: choice of language, terms of payments, force majeure, government approval, arbitration clause, choice of forum, and choice of law.

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Choice of Language:

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official language that will be used for the contract doc.

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Terms of payments:

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currency to be used in payment as well as the location of payment

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Force majeure:

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part of international business contracts. Clause excuses nonperformance under specified circumstances. A force majeure clause may designate natural disasters.

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Law

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particular country's laws will apply to any dispute arising out of the contract.

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Forum

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where a lawsuit will be brought in the case of a contract dispute.

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Arbitration:

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familiar in domestic contracts, (international contracts). Resolve a contractual dispute before the filing of any lawsuit.

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Government Approval:

answer

responsible for getting the necessary licenses, permits govrnt permission for the transaction.

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Multinational Enterprise -

answer

International Uniform Commercial Code WTO seeks to reduce or eliminate trade barriers• Codes of conducts for IBEs have an impact on behavior through the process of negotiating these codes, rather than through direct enforcement. • Convention applies to sales transactions btwn 2 parties in diff countries if both have ratified./does not apply to consumers • GATT ) Gen Agreement on Tariffs and Trade: reduce/eliminate trade barriers liberalizing INT trade policies o Principles of reciprocity and nondiscrimination • Tripartite Dec of Principles Concerning Multi-National Enterprises and Social Policies - labor relations working conditions, training and employment, social policy

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Tripartite Dec of Principles Concerning Multi-National Enterprises and Social Policies

answer

o Restrictive Business Practices Code - protect competition as well as social welfare and consumer interests, price fixing, refusals to deal, mergers and trademark o Technology code coming soon o Org Eco Cooperation and Dev. Guidelines for Int Investment and Multinational Enterprises - taxation, financing, employment, trade unions o United National Commission - Human rights disclosing info, human rights, corrupt prac, consumer, environmental and transfer of technology - BROADEST & MOST COMPREHENSIVE CODE.

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Host Country Regulations

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• Restricting movements of capital, tax legislation, disclosure and merger. • Nationalization can be expropriation, which is a legal taking or a confiscation, when compensation not received.

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Nationalization can be expropriation, which is a legal taking or a confiscation, when compensation not received.

answer

o Regulations vary from country to country. o Host country sets the conditions o Capital movement - currency brought in and out o Tax leg - tax conditions o Disclosure leg - information of the company (hirers, future plans, secret processes) etc. o Nationalization - taking prop/control of a priv. enterprise by the gvt Expropriation - legal nationalization Confiscate - illegal nationalization Compensation - US prompt, effective and adequate compensation; other refer as Calvo doctrine stated not differ bet foreign firm than nationals o Complaint with the State Dept. due to nationalization (political process) Appeal/firms behalf via Foreign Claims SC (EVIDENCE) Creeping Expropriation seeking approval at every turn (purchases, sells) slowly take over

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Import Controls

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• Dumping prac. - selling goods in the US at unfairly low prices • Goods sold at below production cost or below home market price and injury to industry • Countervailing duties/antidumping - after finding of unfair gvt subsidies. (Dept. of Commerce)

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Foreign Corrupt Practices Act

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• Prohibits giving anything of value to a foreign gvt official to influence a discretionary decision. • Requirements to any issuer of securities, even if its not engaged in INT business o 1977 amendment of SEA 1934: o Anything of value - money, gifts, particular culture o Foreign gvt official - ind acting in official capacity decisions with in function o Discretionary decisions - obtaining and retaining bus o Grease payment exceptions - make payment to expedite a function that does not require a disc decision • Regulate conduct that takes place outside the boundaries of the US

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Expropriation

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Nationalization or taking of property by the government that is recognized as legal

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Nationalization

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The taking of property or control of a private enterprise by the government

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Confiscation

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Nationalization or taking of property by the government that is not recognized as legal under international law

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International law

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The body of rules, regulations, treaties, and conventions that govern the relationship between nations

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International Business Entity (IBE)

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Any business entity with relationships that transcend national boundaries; may be organized as a sole proprietorship, partnership or corporation.

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IBE

answer

Standard designation for an international business entity

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Home country regulations

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Laws of the country where an IBE is incorporate or has its principal place of business.

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Regional regulations

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Laws created by groups of nations that have banded together for a particular purpose. Example: European Union regulations

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Host country regulations

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Host country regulations

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International regulations

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Includes both public international law and private international law, such as the Convention on International Sale of Goods

question

Name the 4 types of direct investment by an IBE.

answer

() portfolio investment, (2) branch offices, (3) subsidiaries, (4) joint ventures

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Branch office

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An entity that is not separate from the IBE; creates a presence of the IBE in the foreign country

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Portfolio investment

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When an IBE invests in the securities ( stocks and bonds) of a foreign country.

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Subsidiary

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An entity that is separate from the IBE; often a corporation incorporated in the foreign country with the IBE owning a majority of the stock; may constitute the IBE's presence in the foreign country.

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Joint Venture

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A partnership between the IBE and a corporation of a foreign country or between the IBE and the government of a foreign country; set up for a specific purpose and for a limited time.

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Name 7 provisions in a well-drafted international contract.

answer

1)Choice of language clause, (2) choice of forum clause, (3) choice of law clause, (4) terms of payment clause, (5) force majeure clause, (6) government approval clause, (7) arbitration clause clause

question

Multinational corporation (enterprise)

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Use of the term is limited by the United Nations to corporations whose parent corporation has more than one national identity.

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Force majeure clause

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Used in international contracts to excuse non-performance under specific circumstances, usually acts of God, outbreak of war, and strikes.

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Conventional on International Sale of Goods

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Private International law; applies to sales contracts between businesses located in different countries if (1) each country ratified the Convention and (2) the parties do not agree not to be bound by the Convention.

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Transnational corporation

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Use of the terms is limited by the United Nations to corporations with international production facilities.

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GATT

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General Agreement on Tariffs and Trade: multinational treaty whose purpose is to reduce trade barriers, such as tariffs and quantity restrictions, between member nations

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Just compensation

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Required for a legal taking of business property by a government; the U.S. defines just compensation as "prompt, effective and adequate compensation."

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Calvo doctrine

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Used by many non-United States countries to define a legal taking of business property by a government: the taking is legal if the foreign business is treated in the same way as businesses of the host country

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Creeping expropriation

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A gradual form of nationalization in which the host country enacts so many laws and restrictions that it, in practice, takes control of the business.

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Extraterritoriality

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Application of U.S. laws to the activities of an American IBE that take place outside the U.S.

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Dumping

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Foreign goods sold in the U.S. at below fair value with the purpose of capturing a large share of the market

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Countervailing duties

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Also known as anti-dumping duties; duties imposed by the U.S. on foreign goods that are being sold below their fair value to reestablish a competitive market.

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General license

answer

A license to export goods requiring no special procedures

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Validated license

answer

A license to export goods restricted by the product being sold and the ultimate destination of the product; Sellers must provide an end-user's certification

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End-user's certification

answer

Required for a validated license; the exporter must certify the country of destination and who the ultimate user of the product will be; designed to thwart the sale of products or technology to non-approved countries

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Grease payment exception

answer

The Foreign Corrupt Practices Act allows U.S. based IBE's to pay an official of a foreign government to expedite a matter that does not involve a discretionary decision. Examples: expediting the stamping or processing of papers.

question

Foreign Corrupt Practices Act of 1977

answer

The Act (1) imposes record keeping requirements on U.S. IBE's and (2) forbids businesses from giving anything of value to a foreign official to influence a discretionary decision.

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Information/Liaison Office

answer

The simplest way to do international business; an office is set up in the host country that does not sell goods or services, but merely distributes information and answers questions; does not constitute a presence in the foreign country.

question

Distributorship agreement

answer

An IBE sells goods to a business in a foreign country, which then resells the goods in the country; ownership of the goods passes to the foreign distributor and the IBE has no presence in the country.

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Immunity

answer

Freedom from the legal duties and penalties imposed on others (multiple ppl one crime).

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Conspiracy

answer

An agreement by two or more persons to commit a crime

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Embezzlement

answer

The fraudulent appropriation by one person, acting in a fiduciary capacity, of the money or property of another

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Exclusionary rule

answer

Rule created by the Supreme Court that makes any evidence gathered in violation of the accused's 4th,5th or 6th Amendment rights inadmissible at trial (prevents its use at trial improper use of search warrant)

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True bill

answer

Returned by a grand jury when it indicts an accused, having found probable cause to believe that the accused committed the offense

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Information

answer

docu used to inform of charges

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Public torts

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Also known as petty offenses; usually prosecuted before a city magistrate and punishable by fines or jail . Examples: violations of traffic ordinances and building codes

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Beyond a reasonable doubt

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The standard of proof the prosecution must meet in a criminal trial

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Administrative crimes

answer

Violations of a rule or regulation of a federal or state agency

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White collar crimes

answer

Also known as business crimes; crimes are committed through deceit and concealment, rather than force and violence, usually with the intent of getting money or of getting goods or services without paying for them.

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Strict liability crimes

answer

Criminal liability is imposed without fault or criminal intent, usually for reasons of social policy. Example: selling alcohol to a minor

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Vicarious liability crimes

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One party who is without fault is held liable for the criminal conduct of another, usually because of a special relationship between the two parties. Example: corporations have vicarious liability for the criminal activity of directors and officers.

question

Entrapment

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A defense to criminal liability; accused admits to performing the criminal action, but claims that the intent to commit the crime originated with the police.

question

The Durham Rule

answer

A test for insanity used by some states in criminal cases; the accused is not criminally liable if the criminal act was the product of a mental disease or defect

question

The _____Amendment protects against illegal searches and seizures.

answer

4th

question

The _____Amendment protects against compulsory self incrimination.

answer

5th

question

The _____Amendment protects a person from being tried for the same crime more than once.

answer

5th

question

The _____Amendment contains a due process clause requiring that all procedures in a criminal case be fundamentally fair

answer

5th

question

The ______Amendment protects against excessive bail.

answer

8th

question

The ______Amendment protects against cruel and unusual punishment

answer

8th

question

The _____Amendment gives criminal defendants the right to be represented by counsel.

answer

6th

question

The _____Amendment entitles a criminal defendant to a speedy and public trial

answer

6th

question

Name the 5 elements of negligence

answer

(1) Duty (2) Breach of duty (3) Breach of duty was the actual cause of damage (4) Breach of duty was the proximate cause of damage (5) Damage (or injury)

question

Name the 3 classifications of negligence

answer

(1) Slight negligence (2) ordinary negligence (3) gross negligence

question

Due care

answer

Reasonable conduct under the circumstances

question

Ordinary negligence

answer

Failure to exercise ordinary care

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Slight negligence

answer

Failure to exercise great care

question

Gross negligence

answer

Failure to exercise even slight care; sometimes called willful and wanton misconduct, or conscious disregard for the safety of others

question

Design defect

answer

May be a basis for liability in product liability cases; the risk of harm could have been reduced or avoided by using a reasonable alternative plan for a product

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The duty of a landowner to a business visitor

answer

Duty to protect from both known dangers and dangers that an exercise of reasonable care would reveal; landowners owe the highest duty of care to business visitors

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The duty of a landowner to a trespasser

answer

Not to entrap or willfully harm the trespasser

question

The duty of a landowner to a guest

answer

To warn of known dangers

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The reasonable person test

answer

The test used to determine the duty of care in the particular set of circumstances; the reasonable person takes appropriate precautions to ward off the foreseeable risks in any situation; experts, because they are more knowledgeable, are held to higher standards than non-experts

question

Palsgraf v. Long Island Railroad Company (1928)

answer

The case that established that the reasonable person has a duty of care only for risks that are foreseeable

question

Malpractice

answer

Negligence committed by professionals, such as doctors, lawyers, accountants, etc., in the practice of their professions; expert testimony is required to determine the standard of care within the profession.

question

Name the 3 elements the plaintiff must prove to establish negligence per se.

answer

(1) Plaintiff is within the class of persons protected by the statute (2) Plaintiff suffered the type of injury that the statute intended to protect against (3) Defendant's violation of the statute caused the plaintiff's injury.

question

Assumption of the Risk

answer

Plaintiff voluntarily assumes a known risk of harm

question

Res ipsa loquitur

answer

The thing speaks for itself, rebuttable presumption that a defendant was negligent

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Proximate Cause

answer

The negligent action that is close to the resulting injury or damage

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Right

answer

The phrase legal right is a correlative of the phrase legal duty. A person has a legal right if, upon the breach of the corresponding legal duty, that person can secure a remedy in a judicial proceeding

question

Negligence per se

answer

Negligence is shown through the violation of a statute or ordinance

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Duty

answer

A legal obligation imposed by general law or voluntarily imposed by the creation of a binding promise

question

Superseding cause

answer

Also known as an intervening cause; an event, unrelated to the defendant's conduct, that breaks the direct sequence between the defendant's negligent act and the plaintiff's injury.

question

Foreseeability

answer

A requirement for proximate cause; proximate cause requires that the injury be a natural, probable, and thus foreseeable, consequence of the negligent act or omission.

question

Contributory negligence

answer

A defense to negligence. A plaintiff who contributes in any way to his or her own injury can collect nothing from the defendant, even if the defendant's negligence was the major cause of the injury.

question

Modified comparative fault negligence

answer

A defense to negligence that is also known as the 50% Rule. A plaintiff who contributes to his or her own injuries can still collect damages from the negligent defendant so long as the plaintiff's contribution to the injuries is not greater than the defendant's contribution.

question

Pure comparative fault negligence

answer

A defense to negligence. A negligent plaintiff can collect damages from a negligent defendant even if the plaintiff's negligence caused more harm than the defendant's. Example: a plaintiff who is responsible for 75% of the injury can recover 25% in damages from the defendant.

question

Name the 2 requirements for establishing assumption of the risk.

answer

(1) The plaintiff knew of the risks associated with a particular activity (2) The plaintiff voluntarily assumed those risks

question

The earliest applications of strict liability were to hold owners liable for damages caused by _______and ___________. dangerous animals and abnormally dangerous activities

answer

dangerous animals and abnormally dangerous activities

question

Strict liability

answer

Also known as liability without fault; the legal theory that holds a person liable in tort for damages to another even if there was no wrongful intent or negligence.

question

Name the 4 things a plaintiff must prove under 402A Restatement (Second) of Torts in a product liability case based on strict liability.

answer

(1) The product was defective (2) the defect caused the product to be unreasonably dangerous (3) the product has not been modified by the plaintiff, and (4) the plaintiff suffered damages using the product

question

State-of-the-art defense

answer

"The product was manufactured using the best and latest technology available." A defense for product liability cases based on negligence, but not allowed in cases based on strict liability.

question

Special damages

answer

Plaintiffs in slander cases must show the actual, specific damages they suffered because of the false statement

question

Strict liability

answer

The doctrine under which a party may be required to respond in tort damages, without regard to that party's fault

question

Slander

answer

An oral utterance of a false statement that injures the reputation of another.

question

Chattel

answer

A very broad term, derived from the word cattle and includes every kind of property that is not real property

question

Punitive damages

answer

Damages by way of punishment that are allowed by the court as the result of an injury caused by a wrong that is willful and malicious

question

Negligence

answer

Failure to do that which an ordinary, reasonable, prudent person would do, or the doing of some act that an ordinary, prudent person would not do

question

Libel

answer

The publication of a falsehood about a person by printing, writing, signs, or pictures for the purpose of injuring the reputation and good name of such person

question

Compensatory damages

answer

A sum of money the court imposes on a defendant as compensation for the plaintiff because the defendant has injured the plaintiff by breach of a legal duty

question

Tort

answer

A wrongful act committed by one person against another person or his or her property ? the breach of a legal duty imposed by law other than by contract

question

Nuisance

answer

Generally, any continuous or continued conduct that causes annoyance, inconvenience, or damage to person or property, nuisance usually applies to unreasonable, wrongful use of property, causing material discomfort, hurt, and damage to the person or property of another

question

Joint and several

answer

Two or more persons have an obligation that binds them individually as well as jointly. The obligation can be enforced either by joint action against all of them or by separate actions against one or more

question

Malice

answer

A requirement that public figures and celebrity plaintiffs must prove in libel cases because of the constitutional protection given the press in the First Amendment; malice means that the defendant knew the statements were false, or acted with reckless disregard for whether they were true or false..

question

A citizen who reports a suspected crime to the police cannot be sued for defamation because the statement has a ___________privilege.

answer

qualified

question

Publication

answer

The requirement in defamation cases that the false statement was made to at least one third party

question

Witnesses who testify during trials cannot be sued for defamation because their testimony has a ____________privilege.

answer

absolute

question

Name the 4 elements plaintiff must prove in a defamation case.

answer

(1) the defendant made a false statement of fact (2) the statement was communicated to a third party (3) plaintiff's reputation was harmed by the false statement (4) plaintiff suffered damages because of the harm to his or her reputation

question

Name the 4 categories of invasion of privacy

answer

(1) appropriating the name or picture of a person (2) intruding on a person's physical solitude (3) making public a private fact (4) placing a person in a false light

question

Conversion

answer

Interference with a person's chattel to the extent that the wrongdoer ought to pay for the chattel. Examples: purchasing stolen goods; destroying the chattel; delivering the chattel to someone other than the owner

question

Name the 4 categories of slander that do not require the plaintiff to prove actual damages.

answer

(1) statements that the plaintiff committed a crime of moral turpitude (2) statements that the plaintiff has a loathsome disease (3) statements that the plaintiff is unfit to practice his or her profession or trade (4) statements that a female is unchaste

question

Respondeat superior

answer

The legal theory that holds employers (masters) liable for the torts committed by employees (servants) while the employees are doing their jobs.

question

Family purpose doctrine

answer

The legal theory that holds parent-owners liable for damages caused by their children or other family members while operating the family vehicle.

question

Disparagement

answer

A business tort in which damaging false statements are made about the quality of a product or the character of a business person; specific loss of customers or sales must be shown

question

Exemplary damages

answer

Another term for punitive damages

question

Trade secrets

answer

Proprietary information about customers, manufacturing processes and business plans that is protected by tort law

question

Mental distress

answer

Wrongful interference with a person's peace of mind by insults, indignities, or outrageous conduct; conduct must be so extreme that it goes beyond the bounds of decency

question

False Imprisonment

answer

Wrongful restraint of a person's freedom of movement; businesses must be careful when detaining suspected shoplifters not to commit false imprisonment

question

Wrongful appropriation

answer

Infringing goodwill, patents, trademarks, copyrights and other business interests

question

Interference with contractual relations

answer

Inducing a party to a contract to breach it or interfering with the performance of a contract

question

Interference with a prospective advantage

answer

Wrongfully interfering with a prospective business benefit, such as making a sale or entering into an employment contract.

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