Business Law In canada 11th Edition By Yates -Test Bank A+ A+

Description

1. An administrative agency is a governmental body charged with administering and implementing legislation.

ANS: T MSC: AACSB Analytic

1. Administrative agencies may make the rules, police the community to see the rules are obeyed, and sit in judgment to determine violations of their rules.

ANS: T MSC: AACSB Analytic

1. Because administrative agencies have broad powers, they are subject to strict procedural rules as well as disclosure requirements.

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1. The modern administrative agency typically possesses legislative, executive, and judicial powers.

ANS: T MSC: AACSB Analytic

1. The Sunshine Act requires most meetings of major administrative agencies to be open to the public.

ANS: T MSC: AACSB Analytic

1. Administrative agencies must be rigidly controlled and cannot be granted discretionary authority.

ANS: F MSC: AACSB Analytic

1. Until proven valid, a rule adopted by an administrative agency is invalid.

ANS: F MSC: AACSB Analytic

1. In an emergency, an administrative agency can act beyond the scope of the statute that created it.

ANS: F MSC: AACSB Analytic

1. The Freedom of Information Act provides access to any information upon request.

ANS: F MSC: AACSB Analytic

1. The public has access to the activity of administrative agencies in three ways: (1) open records, (2) open meetings, and (3) public announcement of agency guidelines.

ANS: T MSC: AACSB Analytic

1. The Administrative Procedure Act is a federal law that establishes the operating rules for administrative agencies.

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1. Modern administrators cannot make laws, but they can argue persuasively before Congress for the passage of needed legislation.

ANS: F MSC: AACSB Analytic

1. Administrative agencies never allow members of the industry that is to be regulated to participate in rule-making deliberations.

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1. A federal agency planning to adopt a new regulation must give public notice of such intent and then hold a hearing at which members of the public may express their views and make suggestions.

ANS: T MSC: AACSB Analytic

1. Regulations properly adopted by agencies are important, but they do not have the full force of law as do statutes.

ANS: F MSC: AACSB Analytic

1. The Federal Register lists all administrative regulations, presidential proclamations, and executive orders on a semiannual basis.

ANS: F MSC: AACSB Analytic

1. An administrative agency has the power to investigate, to require persons to appear as witnesses, to require witnesses to produce relevant papers and records, and to bring proceedings against those who violate the law.

ANS: T MSC: AACSB Analytic

1. Agency investigations of possible violations of agency rules are handled through independent enforcement agencies.

ANS: F MSC: AACSB Analytic

1. Administrative agencies are not subject to the constitutional protections afforded individuals and businesses.

ANS: F MSC: AACSB Analytic

1. An administrative agency is barred from examining the records of a business enterprise by the constitutional guarantee against unreasonable searches and seizures.

ANS: F MSC: AACSB Analytic

1. Within the area in which the administrative agency is authorized to make decisions, the agency can be regarded as a specialized court or court of limited jurisdiction.

ANS: T MSC: AACSB Analytic

1. An administrative agency cannot hold a hearing without a jury.

ANS: F MSC: AACSB Analytic

1. In an administrative hearing, an administrative law judge hears the complaint and has the authority to swear witnesses, take testimony, make evidentiary rulings, and make a decision to recommend to the administrative agency heads for action.

ANS: T MSC: AACSB Analytic

1. Administrative agencies generally are not subject to the rules of evidence.

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1. A consent decree is an informal settlement of an enforcement action brought by an administrative agency.

ANS: T MSC: AACSB Analytic

1. Before an appeal can be taken to a court concerning a determination of an agency, all administrative remedies must be exhausted.

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1. A court will not reverse an agency’s decision merely because the court would have made a different decision based on the same facts.

ANS: T MSC: AACSB Analytic

1. Decisions made by agencies are more likely to be reversed than to be accepted by the court on appeal.

ANS: F MSC: AACSB Analytic

1. As Courts now tend to accept an agency’s reasonable interpretation of a statute involving a technical matter, even though it was not the only interpretation that could have been made.

ANS: T MSC: AACSB Analytic

1. An administrative agency whose erroneous decision causes a regulated person or enterprise substantial loss is liable for such loss regardless of whether the agency acted in good faith.

ANS: F MSC: AACSB Analytic

MULTIPLE CHOICE

1. The most recent addition to the American governmental structure is the:

a.	executive branch.
b.	administrative agency.
c.	judicial branch.
d.	legislative branch.

ANS: B MSC: AACSB Analytic

1. An administrative agency can be created to perform:

a.	only one of the three functions of government (executive, legislative, or judicial).
b.	any two of the three functions of government.
c.	all three of the functions of government.
d.	none of the three functions of government.

ANS: C MSC: AACSB Analytic

1. Members of administrative agencies are ordinarily

a.	pre-selected.
b.	elected.
c.	assigned.
d.	appointed.

ANS: D MSC: AACSB Analytic

1. Generally, which power(s) does (do) an administrative agency possess?

a.	all powers necessary to effectively perform the duties entrusted to it
b.	legislative only
c.	judicial only
d.	executive only

ANS: A MSC: AACSB Analytic

1. The Freedom of Information Act:

a.	is to be strictly construed to prevent unauthorized disclosures.
b.	has too many exemptions to be of any use.
c.	is intended to subject agency action to public scrutiny.
d.	puts the burden of proof upon the person requesting the information.

ANS: C MSC: AACSB Analytic

1. Meetings are to be open to the public under the guidelines of the Sunshine Act of 1976. Meetings include:

a.	those of federal administrative agencies.
b.	those of state administrative agencies.
c.	those actions that are deemed “meetings” by the agency.
d.	both a and b.

ANS: D MSC: AACSB Analytic

1. In reviewing agency action, courts generally apply the:

a.	“beyond a reasonable doubt” standard.
b.	“preponderance of the evidence” standard.
c.	“arbitrary and capricious” standard.
d.	“rational relationship” standard.

ANS: C MSC: AACSB Analytic

1. An administrative regulation:

a.	is a guideline that may be voluntarily followed.
b.	has the force of law.
c.	is a suggestion of what will protect the environment.
d.	is a standard used to guide an industry at the industry’s discretion.

ANS: B MSC: AACSB Analytic

1. The term “exhaustion of administrative remedies” means that:

a.	parties to an agency action must be diligent in pursuing their case.
b.	parties to an administrative action must take their appeal to a court of law.
c.	parties to an administrative action can appeal only after the agency has made a final decision.
d.	administrative agencies tend to work very hard.

ANS: C MSC: AACSB Analytic

1. The “public comment” period for proposed administrative agency rules must be at least __________ days.

a.	30
b.	60
c.	90
d.	120

ANS: A MSC: AACSB Analytic

1. A regulation adopted by a federal administrative agency is binding only if:

a.	it has been printed in the Federal Register.
b.	the persons affected have received copies of it.
c.	the persons affected have notified the agency of their approval of the regulation.
d.	publicity has been given to it by the news media.

ANS: A MSC: AACSB Analytic

1. Which of the following is part of an administrative agency’s power to investigate?

a.	an investigation to determine whether additional administrative rules need to be adopted
b.	an investigation to ascertain facts with respect to a particular suspected or alleged violation
c.	an investigation to determine whether the defendant in a proceeding before the agency is complying with its final order
d.	all of the above

ANS: D MSC: AACSB Analytic

1. Concerning administrative investigations:

a.	agencies are severely limited by the constitutional protection against unreasonable searches and seizures.
b.	a search warrant is always required to search premises.
c.	papers and records generally may be subpoenaed by an agency.
d.	a person does not have constitutional protection against unreasonable searches and seizures.

ANS: C MSC: AACSB Analytic

1. The United States constitution places the most significant limitations on administrative investigation in the area of:

a.	search and seizure of the person.
b.	aerial inspection.
c.	search and seizure of papers and records.
d.	guarantee against self-incrimination.

ANS: A MSC: AACSB Analytic

1. A subpoena to testify or to produce records:

a.	is prohibited by the constitutional guarantee against unreasonable searches and seizures.
b.	is an illegal attempt to gain information by compulsion.
c.	cannot be opposed on the grounds that such a request constitutes an unreasonable search and seizure.
d.	must be approved by corporate officers to be effective.

ANS: C MSC: AACSB Analytic

1. An administrative agency:

a.	is not empowered to act as a court with regard to its own regulations.
b.	acts as a specialized court of limited jurisdiction.
c.	can hear complaints only in the presence of a jury.
d.	cannot impose penalties for violation of its regulations.

ANS: B MSC: AACSB Analytic

1. Which statement is true concerning administrative hearings?

a.	An existing business has the right to challenge the granting of a license to a potential competitor.
b.	Denial of a jury trial is a denial of due process.
c.	It is generally necessary to give notice of an administrative hearing and to allow affected persons to be present.
d.	Traditional courtroom rules of evidence must be applied.

ANS: C MSC: AACSB Analytic

1. Which of the following is beyond the enforcement power of an agency?

a.	requiring proof of compliance with agency regulations
b.	issuing a cease-and-desist order
c.	convicting of criminal violations
d.	imposing civil penalties

ANS: C MSC: AACSB Analytic

1. Due process requires that a hearing generally be held before an agency may make a judicial decision:

a.	in all actions.
b.	when the action affects the community generally.
c.	when the action concerns a class of persons.
d.	when the action concerns only the persons directly affected.

ANS: D MSC: AACSB Analytic

1. A significant difference between an administrative agency hearing and a court hearing is that:

a.	a binding decision can only be made by an agency.
b.	there is no right of trial by jury before an agency.
c.	a court hearing allows no public intervention.
d.	a court can enforce its decision.

ANS: B MSC: AACSB Analytic

1. A(n) __________ is a negotiated disposition of a matter before an administrative agency, generally without public sanctions.

a.	formal settlement
b.	informal settlement
c.	judicial verdict
d.	quasi-judicial verdict

ANS: B MSC: AACSB Analytic

1. Which of the following is true about judicial review of agency action?

a.	Judges tend to substitute their own judgment for that of the agency.
b.	Agency interpretation and application of the law are subject to “de novo” review.
c.	An agency decision will not be reversed in the absence of an error of law or a clear abuse of, or the arbitrary or capricious exercise of, discretion.
d.	All of the above

ANS: C MSC: AACSB Analytic

1. Under modern law, when the issue that an agency decides is a question of law based on a technical statute:

a.	the court on appeal will reverse the agency’s decision if the court disagrees with the decision.
b.	the court will not accept the agency’s decision unless the agency’s interpretation is the only one that could have been made.
c.	the court will tend to accept the agency’s interpretation of the law as long as it is reasonable.
d.	the court will not reverse the agency’s decision.

ANS: C MSC: AACSB Analytic

1. Ordinarily, a court will __________ an agency’s decision to do nothing about a particular complaint.

a.	not reverse
b.	reverse
c.	remand
d.	none of the above

ANS: A MSC: AACSB Analytic

1. If an agency causes a substantial loss to a business by enforcement of its laws, that business:

a.	always may hold the agency liable for damages.
b.	never can hold the agency liable for damages.
c.	may seek damages if the agency acted in bad faith.
d.	may seek damages if the agency complied with its own guidelines.

ANS: C MSC: AACSB Analytic

CASE

1. The Federal Trade Commission suspects Billy Williams of unlawful trade activities and has obtained evidence, claimed to be proof of unlawful activity, by way of aerial photography. The FTC is also currently seeking the submission of various documents, within Williams’ place of business, for additional evidence. Williams refuses to submit to the demands to produce the documents and claims that this demand and the aerial photos are direct violations of his constitutional rights. Williams also demands a jury trial to clear him of charges levied. Comment on Williams’ claims.

ANS:

An agency has the power to execute the law and to bring proceedings against violators. This may be accomplished with no significant constitutional limitations on how the agency is to conduct its investigation of infractions. A search warrant is never required for subject matter observed from a public place; therefore, aerial photography of Williams’ place of business can be used by the FTC as proof of wrongdoing. The FTC may also demand the production of relevant papers and documents by Williams, since the constitutional guarantee against unreasonable searches and seizures does not afford much protection with regard to papers and records being investigated by an agency. Lastly, Williams has no right to a jury trial in an administrative hearing.

MSC: AACSB Reflective Thinking | AACSB Analytic

1. Arthur sustained an injury to his back. Arthur claimed the injury was suffered at work and filed a claim for workers’ compensation benefits. The employer opposed this claim, saying the injury, if real, was the result of a congenital condition. In accordance with the statute, a hearing was held before the Workers’ Compensation Board, which ruled against Arthur. Arthur became disgusted with the hearing officer and the proceedings because Arthur felt that the hearing officer did not like him. Arthur has consulted an attorney seeking to sue for workers’ compensation benefits. An appeal is available within the agency, but Arthur wants to go directly to court because he feels that the agency appeal would be useless. Discuss the merits of this strategy.

ANS:

Arthur cannot bring a lawsuit to overturn the findings of the Worker’s Compensation Board, since Arthur has failed to exhaust his available administrative remedies. The lawsuit would be unsuccessful and would not be heard by the courts.

MSC: AACSB Reflective Thinking | AACSB Analytic

1. Wilma was an employee of the Electric Storage Battery Company. She was fired. She claimed that she was fired because she was a member of a labor union. The employer asserted that she was fired because she was a poor worker. Wilma filed an unfair labor practice complaint with the National Labor Relations Board. Its examiner held a hearing at which evidence was presented showing that Wilma was a poor worker. Other evidence presented showed that the employer was opposed to labor unions. The Board decided to believe Wilma’s witnesses and concluded that she had been fired because she belonged to the union. Can the employer appeal this decision?

ANS:

Yes. The employer has the right to appeal the decision. This right is conferred by statute. On the facts as stated, however, the employer will lose the appeal because the decision turns upon the decision of which witnesses to believe. If the witnesses on behalf of the employee are believed, there was an unfair labor practice. When the administrative agency selects one set of witnesses to believe, a court hearing an appeal will not reverse the conclusion of the agency. The court will only examine the case to see if there was a substantial basis for the agency’s findings of fact. There was evidence on both sides which, if believed, would be sufficient to justify a conclusion in favor of each side. The court will not go further to see if it would have agreed with what the agency believed. That is, the court will not substitute its own opinion when a case turns upon the credibility of witnesses who testified before the agency.

MSC: AACSB Reflective Thinking | AACSB Analytic

Chapter 7—THE LEGAL ENVIRONMENT OF INTERNATIONAL TRADE

TRUE/FALSE

1. When an international sale is made, the parties often set forth in their contract which country’s law will govern a dispute.

ANS: T MSC: AACSB Analytic

1. Parties to international ventures often agree to arbitrate their disputes in neutral countries.

ANS: T MSC: AACSB Analytic

1. Law is the result of the desire of the lawmaker to achieve certain goals.

ANS: T MSC: AACSB Analytic

1. A letter of credit agrees to provide the seller with needed currency exchanges when transactions with foreign buyers occur.

ANS: F MSC: AACSB Analytic

1. The U.S. dollar is considered the international currency.

ANS: F MSC: AACSB Analytic

1. Since 1947 and the end of the World War II era, the goal of the GATT has been to restrict world trade.

ANS: F MSC: AACSB Analytic

1. Under GATT, the principle of trade without discrimination is embodied in the most favored nation clause.

ANS: T MSC: AACSB Analytic

1. As a result of pressure from the United Nations Conference on Trade and Development (UNCTAD), the General Agreement on Tariffs and Trade (GATT) allowed the grant of special preferences to developing countries as an exception to the GATT’s basic rule of trade without discrimination.

ANS: T MSC: AACSB Analytic

1. The WTO provides a Dispute Settlement Body (DSB) to enable member countries to resolve trade disputes rather than engage in unilateral trade sanctions or a trade war.

ANS: T MSC: AACSB Analytic

1. Contracts for the International Sale of Goods (CISG) sets forth uniform rules to govern international sales contracts.

ANS: T MSC: AACSB Analytic

1. The interests of the less-developed nations of the world are represented by the UNCTAD.

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1. The goal of the North American Free Trade Agreement (NAFTA) is to eliminate all tariffs between Mexico, Canada, and the United States.

ANS: T MSC: AACSB Analytic

1. A country can borrow money from other IMF members or from the IMF by means of specific distribution rights (SDRs) sufficient to permit that country to maintain the stability of its currency’s relationship to other world currencies.

ANS: F MSC: AACSB Analytic

1. The International Monetary Fund (IMF) was formed to shorten the duration and lessen the disequilibrium in the international balance of payments of its members.

ANS: T MSC: AACSB Analytic

1. The International Bank for Reconstruction and Development, also known as the World Bank, facilitates the lending of money by capital surplus countries to countries needing economic help and wanting foreign investments.

ANS: T MSC: AACSB Analytic

1. A direct sale to customers abroad by an American firm, with terms of payment commonly based on an irrevocable letter of credit, is an import sale.

ANS: F MSC: AACSB Analytic

1. The use of agency arrangements allows a U.S. firm to avoid taxation on sales made in its agent’s country.

ANS: F MSC: AACSB Analytic

1. Franchising is a form of licensing that now is very common in international business.

ANS: T MSC: AACSB Analytic

1. Licensing involves the transfer of title of goods to a distributor who bears the financial and commercial risks for the subsequent sale of the goods.

ANS: F MSC: AACSB Analytic

1. A societé anonyme is the European counterpart of a U.S. corporation.

ANS: T MSC: AACSB Analytic

1. United States antitrust laws can protect United States exports.

ANS: T MSC: AACSB Analytic

1. The jurisdictional rule of reason addresses the problems that arise when a foreign country has a significant interest in regulating conduct taking place within the United States.

ANS: F MSC: AACSB Analytic

1. Under the act of state doctrine, the courts of one country will not sit in judgment of the acts of the government of another country conducted within its own territory.

ANS: T MSC: AACSB Analytic

1. Blocking laws prohibit the disclosure, copying, inspection, or removal of documents located in the territory of the enacting country in compliance with orders from foreign authorities.

ANS: T MSC: AACSB Analytic

1. The Securities and Exchange Commission (SEC) is not limited to litigation when a securities law enforcement investigation runs into secrecy or blocking laws.

ANS: T MSC: AACSB Analytic

1. A common barrier to the free movement of goods across borders is the tariff barrier.

ANS: T MSC: AACSB Analytic

1. The use of import quotas represents the most common form of tariff barrier.

ANS: F MSC: AACSB Analytic

1. The term dumping refers to the sale of damaged goods in a foreign market to cut the losses that would otherwise be caused by their damage.

ANS: F MSC: AACSB Analytic

1. The Overseas Private Investment Corporation (OPIC) offers asset protection insurance against risk of loss to plant and equipment, as well as loss of deposits in overseas bank accounts, to companies that qualify on the basis of the involvement of a “substantial U.S. interest.”

ANS: T MSC: AACSB Analytic

1. The Foreign Corrupt Practices Act prohibits improper payments to influence foreign officials.

ANS: T MSC: AACSB Analytic

MULTIPLE CHOICE

1. Which is a correct statement about arbitration of contractual disputes regarding international trade?

a.	It is done in court.
b.	There is extensive judicial review of the decision.
c.	Parties frequently arbitrate in neutral countries.
d.	It is not available in disputes of more than $1 million.

ANS: C MSC: AACSB Analytic

1. NAFTA seeks to eliminate tariffs among which countries?

a.	all members of the United Nations
b.	United States, Canada, and Mexico
c.	United States and Japan
d.	members of the common market

ANS: B MSC: AACSB Analytic

1. The GATT:

a.	is a multilateral treaty
b.	is subscribed to by the United States
c.	has as its goal the liberalization of world trade
d.	all of the above

ANS: D MSC: AACSB Analytic

1. Which of the following statements is true regarding the World Trade Organization (WTO)?

a.	The WTO has been in place since 1947.
b.	The WTO coordinates its activities with GATT.
c.	It provides a dispute settlement body to promote the resolution of trade disputes.
d.	It has the ability to impose criminal penalties.

ANS: C MSC: AACSB Analytic

1. Which of the following does not describe the European Union (EU)?

a.	It was formerly known as the European Economic Community.
b.	It had three members sign on as recently as 1995.
c.	It eliminated internal barriers to the free movement of goods, persons, services, and capital between member countries.
d.	It is administered solely by the heads of state of the member countries.

ANS: D MSC: AACSB Analytic

1. The provisions of the United Nations Convention on Contracts for the International Sale of Goods have been strongly influenced by:

a.	the GATT’s most-favored nation clause.
b.	the European Economic Community’s Treaty of Rome.
c.	the Uniform Commercial Code.
d.	the success of the Organization of Petroleum Exporting Companies.

ANS: C MSC: AACSB Analytic

1. The main purpose of the International Monetary Fund is to:

a.	provide easy access to money for multinational corporations.
b.	facilitate the expansion and balanced growth of international trade.
c.	create a model simplified lending system.
d.	facilitate currency exchanges.

ANS: B MSC: AACSB Analytic

1. Which country is NOT a part of The North American Free Trade Agreement (NAFTA)?

a.	Mexico.
b.	United States
c.	Canada.
d.	Greenland

ANS: D MSC: AACSB Analytic

1. Which of the following is true regarding export regulations?

a.	Valid reasons for controlling the export of goods include national security, foreign policy, or short supply.
b.	The U.S. has recently implemented a system of granting export licenses that is designed to differ from that used by the EU.
c.	Only civil, not criminal, sanctions apply to those who violate export control regulations.
d.	Only governments, not individuals, are held liable when goods are exported that might be used for improper defense purposes.

ANS: A MSC: AACSB Analytic

1. A direct sale to customers in a foreign country is a(n):

a.	foreign distributorship.
b.	agency arrangement.
c.	licensed sale.
d.	export sale.

ANS: D MSC: AACSB Analytic

1. The transfer of technology rights in a product to allow another firm in a foreign country to produce a product in return for royalties or other specified payments is called:

a.	exporting.
b.	licensing.
c.	agency representation.
d.	subsidiary sales.

ANS: B MSC: AACSB Analytic

1. Which of the following allows a domestic firm to maintain the greatest control over its foreign operations?

a.	wholly-owned subsidiaries
b.	licensing
c.	foreign distributorships
d.	agency arrangements

ANS: A MSC: AACSB Analytic

1. When a U.S. trademark holder licenses a foreign business use of its trademark overseas and a third party imports these goods into the United States to compete against the U.S. manufacturer’s goods, the foreign-made goods are called __________ goods.

a.	“gray market”
b.	counterfeit.
c.	specially-licensed.
d.	dumped goods.

ANS: A MSC: AACSB Analytic

1. U.S. courts will assume jurisdiction and apply antitrust laws to conduct business outside the United States if the activities of the business firms outside the United States have a direct, substantial, and foreseeable impact on U.S. commerce. This is based on what principal?

a.	the “jurisdictional rule of reason”
b.	the “act–of–state doctrine
c.	the “effects” doctrine
d.	comity

ANS: C MSC: AACSB Analytic

1. Three defenses are commonly raised to the extraterritorial application of U.S. antitrust laws. They are:

a.	act–of-state, sovereign compliance, and sovereign immunity doctrines.
b.	jurisdictional rule of reason, effects doctrine, and comity.
c.	foreign legislation, sovereign compliance, and comity.
d.	foreign antitrust laws, sovereign immunity doctrine, and International Monetary Fund applications.

ANS: A MSC: AACSB Analytic

1. The Alexo Corporation has been charged in a United States court with violation of American antitrust laws in its foreign dealings. The firm has raised the defense that its actions were compelled by the government of its host country. Alexo based its defense on the__________ doctrine.

a.	act-of-state
b.	sovereign compliance
c.	sovereign immunity
d.	Timberlane

ANS: B MSC: AACSB Analytic

1. Under which of the following doctrines is it held that a foreign sovereign cannot be sued unless it engages in illegal commercial conduct?

a.	act-of-state
b.	sovereign compliance
c.	Timberlane
d.	sovereign immunity

ANS: D MSC: AACSB Analytic

1. Which of the following is not a nontariff barrier?

a.	government subsidies
b.	import quotas
c.	complex custom procedures
d.	an import or export duty or tax placed on goods as they move in or out of a country

ANS: D MSC: AACSB Analytic

1. In antidumping cases:

a.	The International Trade Administration determines whether foreign goods are being sold in the United States at less than fair value (LTFV).
b.	The International Trade Commission determines if there is an injury to a U.S. industry as a result of such sales.
c.	Remedial action will be taken only if findings of both LTFV sales and injury are present.
d.	All of the above

ANS: D MSC: AACSB Analytic

1. Companies with concerns over the possibility of expropriation could lessen the harm or the likelihood of this occurring by:

a.	fully investigating a host government’s stability.
b.	establishing treaty commitments.
c.	obtaining insurance.
d.	all of the above.

ANS: D MSC: AACSB Analytic

1. When a foreign government takes over an American business that is being conducted in the foreign country, this is called:

a.	expropriation.
b.	dollar credits.
c.	suspension agreement.
d.	antidumping.

ANS: A MSC: AACSB Analytic

1. Legal restrictions of U.S. firms doing business abroad in regard to payments made to foreign officials for obtaining business are set forth in the:

a.	International Corruption Prohibition Act.
b.	Global Anti-bribery Control Act.
c.	Foreign Corrupt Practices Act.
d.	International Graft Prohibition Act.

ANS: C MSC: AACSB Analytic

1. Which of the following actions is not prohibited by The Foreign Corrupt Practices Act?

a.	offers of payments to government officials to influence a decision on behalf of the firm making the payment
b.	payments to government officials to influence a decision on behalf of the firm making the payment
c.	payments to low-level officials for expediting the performance of routine government services
d.	all of the above actions are prohibited by The Foreign Corrupt Practices Act

ANS: C MSC: AACSB Analytic

1. What is the maximum fine that can be imposed against a company for violation of The Foreign Corrupt Practices Act?

a.	$100,000
b.	$500,000
c.	$1,000,000
d.	Only individuals, not companies, can be fined for violating The Foreign Corrupt Practices Act.

ANS: C MSC: AACSB Analytic

CASE

1. You plan to enter the export market with a new product that you have just developed. You feel that the product has great promise, but you are confused over whether you are required to obtain an export license. Further, your brother-in-law says that he knows someone in the Japanese government who could greatly assist you in your endeavors for a very modest fee. Discuss this situation.

ANS:

International trade is well-regulated in the United States. The majority of the appropriate regulations come from the Export Administration Regulations. Current Export Administration Regulations simplify the export process, seeking thereby to enhance export trade by U.S. citizens. For example, no license is required unless the regulations affirmatively require a license. However, when no license is required, the exporter must fill out a Shipper’s Export Declaration and attach it to the bill of lading from shipment with the goods being exported.

Your brother-in-law may be leading you directly into a violation of the Foreign Corrupt Practices Act, as the prospective payment to the Japanese official would be primarily designed to influence a business transaction decision, rather than to expedite routine governmental services.

MSC: AACSB Reflective Thinking | AACSB Analytic

1. Oswaldo Enterprises began to do business in a small East African nation. The representatives of Oswaldo bid on government contracts. Although Oswaldo was by far the lowest bidder and offered a superior product, the company was not awarded a contract. Oswaldo officials learned after inquiring that the company would have to give substantial sums of money to high-level government officials in order to receive a contract. Oswaldo officials are considering this as a necessary cost of doing business, but they are concerned about violating U.S. law. Discuss the implications of this under the Foreign Corrupt Practices Act.

ANS:

Unfortunately, these payments would appear to violate the Foreign Corrupt Practices Act, which prohibits payments to officials to influence business decisions.

MSC: AACSB Reflective Thinking | AACSB Analytic

1. The SEC has accused the Acme Company of fraud in connection with the sale of its securities to American citizens. Although the firm is American-owned, it is located in Switzerland. All of the accounts and business records of the firm are in several Swiss banks. The SEC has been actively pursuing the case, although it has not been able to provide a great deal of hope for those victimized by the fraud. What factors are probably hindering the SEC, and how might this be handled?

ANS:

Secrecy laws (which prohibit the disclosure of business records or the identity of bank customers) and blocking laws (which prohibit the disclosure, copying, inspection, or removal of documents located in the territory of the enacting country in compliance with orders from foreign authorities) probably are to blame. The SEC may take action under the 1977 Treaty of Mutual Assistance in Criminal Matters if the conduct involved constitutes a criminal offense under the laws of both the United States and Switzerland.

MSC: AACSB Reflective Thinking | AACSB Analytic