International Business Law and Ethics
FINAL Exam Solutions 2024
Two forms of relationships with representatives - ANS-Agency (Business arrangement
in which agent performs on behalf of principal) and Independent Contractor (perform
general tasks but retain discretion and independence in carrying them out, like
consultants). You can sue principal for acts of an agent, but not the independent
contractor
Supersession of Agreement with Representative - ANS-Other countries have laws to
protect local representatives. Law can state that it supersedes ANY agreement's
language
EU Council Directive - ANS-Parties can agree to a fixed term contract, but if they
continue relationship after contract, it becomes an *evergreen contract* and can only be
terminated by a three month written notice once the relationship has lasted 3+ years.
Also provides for *economic conditions alarm* - the principal must notify agent if it
expects agent's volume of business (commission) will be significantly lower than what
the agent normally expects
Dealer's Act - ANS-Prohibits principal from terminating agreement or from refusing to
renew without *just cause*. Just cause is often difficult to establish, even
non-performance/violation of contract isn't just cause unless principal can prove that
breach affected it in a substantial manner
Dependent-Independent Distinction - ANS-The retention of a representative often leads
to
principal liability, and triggers tax/labor law
requirements which can be burdensome, especially if agent is dependent rather than
independent
Caveat emptor - ANS-Let the buyer beware. Concept of libertarian capitalism. Buyers
should investigate seller's claims or obtain contractural representations and warranties.
"The invisible hand" of the market will eventually ferret out consistently dishonest sellers
and consistently careless buyers
, Puffing - ANS-Vagueness and exaggeration. Some countries are not tolerant at all
Advertising Restrictions on Sin Products - ANS-Countries ban ads on tobacco/alcohol
ads
Foreign Corrupt Practices Act - ANS-1977- Congress' passed first law outlawing
citizen's bribes to officials of other countries. For the first two decades, only US had a
law. Then: Convention on Combating Bribery of Foreign Public Officials In Int'l Business
Transactions became (Organization for Economic Cooperation and Development, or
OECD) effective in 1999. Ratified by 34 member countries and 6 non member
countries, and they make bribery of foreign officials a criminal act
Anti-bribery Provisions - ANS-prohibitsUS firms from corruptly paying foreign officials for
assistance in obtaining or retaining business. Also prohibits payments to a person when
payer knew that portion of payment would go to a public official. *Alternative Fines Act*
applies to all crimes that resulted in gains to a criminal, person can be fined up to twice
the amount of the benefit
Grease Payments Exception - ANS-(Routine government action exception). In many
countries petty graft is so common that to forbid U.S. companies from engaging in it
would be tantamount to forbidding them to do business there. Accordingly, Congress
excluded from the coverage of the FCPA"any facilitating or expediting payment...the
purpose of which is to expedite or secure the performance of a routine governmental
action, that must be non-discretionary
FCPA Amendment - ANS-OECD convention requires that transnational bribery law
apply to any person. FCPA was amended to provide jurisdiction for anyone "while in US
territory", which DOJ and SEC interpret this broadly
International Tribunals - ANS-Refused to enforce contracts based on bribery
International Monetary Fund - ANS-Officials will press for anticorruption reforms in
countries seeking to borrow money. World Bank said if it finds evidence of corruption in
any project, it will cancel the project.
Ground Rules to Avoid Foreign Corruption - ANS-1) Avoid making direct payments to
government officials, other than payments associated with the most ministerial aspects
of clearing customs
2) Foreign agents should be carefully selected and even more carefully paid
FINAL Exam Solutions 2024
Two forms of relationships with representatives - ANS-Agency (Business arrangement
in which agent performs on behalf of principal) and Independent Contractor (perform
general tasks but retain discretion and independence in carrying them out, like
consultants). You can sue principal for acts of an agent, but not the independent
contractor
Supersession of Agreement with Representative - ANS-Other countries have laws to
protect local representatives. Law can state that it supersedes ANY agreement's
language
EU Council Directive - ANS-Parties can agree to a fixed term contract, but if they
continue relationship after contract, it becomes an *evergreen contract* and can only be
terminated by a three month written notice once the relationship has lasted 3+ years.
Also provides for *economic conditions alarm* - the principal must notify agent if it
expects agent's volume of business (commission) will be significantly lower than what
the agent normally expects
Dealer's Act - ANS-Prohibits principal from terminating agreement or from refusing to
renew without *just cause*. Just cause is often difficult to establish, even
non-performance/violation of contract isn't just cause unless principal can prove that
breach affected it in a substantial manner
Dependent-Independent Distinction - ANS-The retention of a representative often leads
to
principal liability, and triggers tax/labor law
requirements which can be burdensome, especially if agent is dependent rather than
independent
Caveat emptor - ANS-Let the buyer beware. Concept of libertarian capitalism. Buyers
should investigate seller's claims or obtain contractural representations and warranties.
"The invisible hand" of the market will eventually ferret out consistently dishonest sellers
and consistently careless buyers
, Puffing - ANS-Vagueness and exaggeration. Some countries are not tolerant at all
Advertising Restrictions on Sin Products - ANS-Countries ban ads on tobacco/alcohol
ads
Foreign Corrupt Practices Act - ANS-1977- Congress' passed first law outlawing
citizen's bribes to officials of other countries. For the first two decades, only US had a
law. Then: Convention on Combating Bribery of Foreign Public Officials In Int'l Business
Transactions became (Organization for Economic Cooperation and Development, or
OECD) effective in 1999. Ratified by 34 member countries and 6 non member
countries, and they make bribery of foreign officials a criminal act
Anti-bribery Provisions - ANS-prohibitsUS firms from corruptly paying foreign officials for
assistance in obtaining or retaining business. Also prohibits payments to a person when
payer knew that portion of payment would go to a public official. *Alternative Fines Act*
applies to all crimes that resulted in gains to a criminal, person can be fined up to twice
the amount of the benefit
Grease Payments Exception - ANS-(Routine government action exception). In many
countries petty graft is so common that to forbid U.S. companies from engaging in it
would be tantamount to forbidding them to do business there. Accordingly, Congress
excluded from the coverage of the FCPA"any facilitating or expediting payment...the
purpose of which is to expedite or secure the performance of a routine governmental
action, that must be non-discretionary
FCPA Amendment - ANS-OECD convention requires that transnational bribery law
apply to any person. FCPA was amended to provide jurisdiction for anyone "while in US
territory", which DOJ and SEC interpret this broadly
International Tribunals - ANS-Refused to enforce contracts based on bribery
International Monetary Fund - ANS-Officials will press for anticorruption reforms in
countries seeking to borrow money. World Bank said if it finds evidence of corruption in
any project, it will cancel the project.
Ground Rules to Avoid Foreign Corruption - ANS-1) Avoid making direct payments to
government officials, other than payments associated with the most ministerial aspects
of clearing customs
2) Foreign agents should be carefully selected and even more carefully paid
