Ethics are closely associated with?	culture
Sending state	state where the individual resides
Receiving state	state where the individual is conducting business
Ethical Relativism	Ethics is culture bound and thus ethics of the host country should be honored
“Righteous American”	U.S. rules and standards in foreign business operations
No Ethical Rules	Holds that it may place them at competitive disadvantage if done otherwise
Who must be involved in order for a matter to be considered bribery?	Government
What is the Foreign Corrupt Policies Act (FCPA)?	Changed the way U.S. companies did business overseas. Makes it illegal for U.S. person or company to make corrupt payments to foreign official for the purpose of obtaining business.
Who does the Foreign Corrupt Policies Act (FCPA) apply to?	Any individual company, officer, director, employee or agent(3rd party bribery) of the company any stockholder acting on behalf of the US controlled company or parent companies and they may be prosecuted for the actions of subsidiaries
What is Extra-territorial jurisdiction?	This sort of jurisdiction is called Nationality (jurisdiction over a person because they are a citizen of that nation) applied to the United States citizens.
What does Corrupt Intent mean regarding a Foreign Corrupt Policies Act (FCPA offense?	The perpetrator must have corrupt intent or must intend for the recipient to abuse their power
Five Elements of the FCPA Offense	Who Corrupt Intent Corrupt Act Recipient (Not private) Business Purpose
What does Corrupt Act mean regarding a Foreign Corrupt Policies Act (FCPA offense?	Prohibits paying, offering, promising to pay, gifts, anything of value
What does Recipient not private mean regarding a Foreign Corrupt Policies Act (FCPA offense?	Must be a foreign official, or someone who wields some sort of power in the foreign state
What does o Business Purpose mean regarding a Foreign Corrupt Policies Act (FCPA) offense?	Prohibits only payments to assists the firm in obtaining/retaining business
Exception to the Foreign Corrupt Policies Act FCPA?	Routine governmental actions... "to expedite or to secure the performance of routine governmental action by foreign official, political party, or party official.”
Defenses to the Foreign Corrupt Policies Act FCPA?	Bona fide expenditures • Travel, lodging expenses, etc.. Lawful under the written laws • Must by lawful under the political parties, party official’s or candidate’s country
Lamb v. Philip Morris, Inc.	2 subsidiaries donated to Children’s foundation who wife of president of Venezuela was president and in return price control of Venezuelan cigarette prices were controlled.  FCPA is pre- violation not post violation  No implied private cause  Justice Department and the SEC are solely responsible for the enforcement of FCPA.
United States v. Liebo	Liebo Vice President of NAPCO selling military equipment. “Third Party Bribery”  FCPA includes the use of agents to make payment to government’s officials and indirect payment to persons associated with a government official.  Classifying something as a gift or donation is not conclusive in assessing whether it constitutes bribe.  Intent may be inferred by circumstantial evidence  “Anything of value” including two airline tickets as this case explains
What is a Tort?	A wrongful act of an infringement of a right (other than under contract) leading to civil legal liability.
What is an Alien Tort Claims Act (ATCA)?	Gave the U.S. courts jurisdiction to hear three types of claims from foreigners against U.S. corporations for alleged behaviour abroad
What are the Alien Tort Claims Act has three requirements?	 Claim by an alien (foreigner)  Alleging a tort  Violation of international law
In an Alien Tort Claims Act what is a Violation of International Law?	• Non-labor related human rights claims (Torture, kidnapping, etc.) • Violation of labor rights (Forced labour, discouraging unionization) • Environmental degradation
List the strategies of entering the foreign market	 Agents  Representative offices  Branches  Joint Ventures (partnerships)  Equity joint ventures  Contractual joint ventures  Subsidiaries  Franchising
Marketing techniques to enter a foreign market?	Standards like ISO 1600 Technical Required Standards
What are the advantages and disadvantages of entering a foreign market with an Agent?	Advantages  Simplest and cheapest  No need for ‘brick and mortar’  No tax liability for contracting companies Disadvantages  Loss of control (Can be controlled through management agreements in a contract)  Local laws can restrict who and what agents can do
Explain the Representative offices (Guy with the brochure).	Are established for limited purposes. They usually cannot sell goods, used to market and gauge interest. Laws of the host state dictate the activities. Not permanent little cost involved to set up and take down. No foreign taxes.
Explain the Branches (Not separate legal entity)	Are established when parent company wants to conduct sales. Not considered separate entities of the parent company. So may have liability issues. Parent company retains full control of its operations. Establishes tax liabilities in the host state. Conflicts usually arise between host/home country standards  Eg. In the home country something may be considered an ‘extra’ (standards vs. technical regulations) in the host country it is a law ISO.
Partnerships are established when?	1. There are at least two parties 2. With an eye towards making a profit
What are the two types of Joint Ventures aka partnerships?	General and Limited partnership.
What is a limited partnership?	(The person who is richer has a limited roll and they are just the investor “passive”) One general partner with unlimited liability, usually a corporation, and the rest are limited partners with no liability. They enjoy tax flow through benefits.
What is a general partnership?	(The person who is richer has the greater risk, Disadvantage is the liability, the Advantage is the tax) Unlimited Liability for all the parties involved, but enjoy flow through tax benefits.
Equality Joint Ventures	,A joint venture is a type of partnership where a foreign business enters a foreign market with a local partner o Equity joint ventures establish new entities in the host state  Usually a corporation or a limited liability company (LLC) o The contracting parties each own equity in this new entity o The local partner helps eliminate the risk of failure by using his/her expertise, connections and knowledge to guide the new entity o The partners limit their liabilities by using the corporation or LLC to conduct business o Is a considered a separate entity from the parent companies/parties o Are taxed in the host state
Contractual Joint Ventures	o This type of joint venture does not establish a new entity o Provides flexibility in the relationship between the parties because the relationship can be controlled through a contract o Certain factors may influence the type of contract  Taxation • Where will the taxes be levied?  Liability • Who will bare liability?  Laws • Specifically some country require certain capital contributions, certain percent of local ownership rights etc.
Single project ventures	One-time contract between parties
Business alliance ventures	Long-term business relationship
The purpose clause	 Both Single Ventures and Business alliance ventures type can be placed here  Geography  Products and Services  Duration
Ancillary Agreement	o Joint venture agreement is not the only agreement o Ancillary agreements are supplementary documents that further delineate obligations of the parties o Secondment agreements o Intellectual Property Transfer o Distribution agreement
Subsidiaries (Separate legal entity)	o Subsidiaries are companies located in foreign markets, controlled directly or indirectly through a parent company o Established in the host country according to their laws and standards o Profits are taxed in the host state o Parent company does not bare responsibility for liabilities incurred by in subsidiary o Expensive to establish o Can transfer tax burdens between companies through transfer pricing
Franchising	o Quick and cheap o Controlled through franchise agreements o Franchiser agrees to impart knowledge and product to the franchisee for a royalty o There are many different royalty schemes o Common franchise agreement clauses
Piercing the Corporate Veil	Under limited circumstances a court may use the doctrine of ‘piercing the corporate veil’ to seek redress (remedy or set right) from the shareholders.
Court may pierce the corporate veil for one or more of the following:	 The company is totally dominated  The Alter-Ego Company (Batman/Bruce Wayne)
Piercing Corporate Veil: The company is totally dominated	• Financing and management are so closely connected to the parent that it lacks independence • Induced to enter into a transactions that is beneficial to the parents but detrimental to the sub and/or third parties o Undercapitalization o Personal Assumption o Fraud
Piercing Corporate Veil: The Alter- Ego Comapany	(Batman/Bruce Wayne) • Co-mingling corporate and personal assets • Using company assets for personal benefit • Failure to hold proper records or meetings
What is International Contract Law?	o International contract law is an unsuitable name o There is no international contract law o Contracts are designed/negotiated to incorporate into them the national laws of a country most favorable to the transaction (or in most cases the strongest party) o Note that there is customary international business law o Some customs are so strong that they have been codified into national laws abroad (Incoterms) o Multiple conventions have tried to unify customs
Where can Pre- Contractual Liability exist?	o In common law countries there is no pre-contractual liability -- remember that informed agreements can be binding (Except in US where no duty to negotiate in good faith because negotiations can be terminated anytime before signing contract) o In civil law countries there may be pre-contractual liability
What are some of the pre-contractual instruments? Example was Shark Tank	Instruments that can help put parties at ease with regards to contracts and may impose some liability if broken  Letter of intent  Letter of understanding  Comfort letters  Memorandums of understanding (MOUs) Remember if you don't want something to be legally binding state that it is not legally binding. 1. Investors are looking to obtain a profit 2. "Are you serious in this realtionship"
Define Non- Performance	o When it becomes impossible for the contract to be performed by one or both of the parties o Narrowly as it would be counterproductive to allow parties out of contracts easily
What is "Impossibility of Performance" in non performance?	o When it becomes objectively impossible to perform the contract o It cannot be subjectively impossibility
What is Supervening Illegality under Impossibility of Performance?	A contract becomes impossible to perform when it becomes illegal to perform said contract under the laws  Eg. If you are a U.S. company selling computer parts to Iraq before the war, after the war
What is "Frustration of Purpose" in non performance?	A contract can be terminated if an unforeseen event occurred that destroyed the purpose of the contract. Example: Couple rented room overseeing king he died. Although it was possible to actually enjoy the room, the purpose for having done such was frustrated
What is "Commercial Impracticality" in non performance?	“A thing is impossible in legal contemplation when it is not practicable; and a thing is impracticable when it be done only at an excessive and unreasonable cost”  Extreme hardship  Unforeseen events  Price fluctuations
CISG exemptions	o A party is not liable to perform if the following four situations apply  1. The event was an impediment beyond control  2. Not reasonably foreseeable  3. Was unavoidable and could not be overcome  4. Notice was given to the other party
Force majeure	o Superior Force. Has been incorporated in Article 79 of the Convention for International Sale of Goods as an “impediment”  Impediment means the event was unforeseen and impossible to plan for  Eg: A car manufacturer cannot reasonable foresee the Kraken attacking and sinking its shipping vessel, but it could reasonable foresee that rough seas could sink the ship and plan for it
Liquidated Damages clause	o A clause negotiated in the contract that stipulates in advance the damages the parties agree to pay if a breach occurs o Technically eliminates the need for dispute resolution proceedings o Not uniformly recognized and enforced





Good faith purchaser of the bill of lading	 1. For value (not in the settlement of past debt)  2. In good faith and without notice of adverse claims against the goods  3. In the ordinary course of business • Shall have greater rights in the goods than those who sold it to them • This mean that the purchaser takes the title free of any claims a third party may have against it
What are the carrier responsibility with Bill of Lading	o Misdelivery of the goods o That carrier may release the goods ONLY to the holder of the ORIGINAL bill of lading
Types of bills of lading (Boat)	• Clean bills (No damage) • On-board bills (Loaded on board or on the docs) • Received for shipment (They are ready to get bill) • Straight bills (Cannot be negotiated and goes straight to the other buyer)
Other Transport Documents	• Air waybills • Forwarder’s bill of lading • Multimodal transport documents
Explain Documentary Collections (Banks)?	Banks serve as intermediaries between buyer and seller. Instead of the buyer and seller exchanging the money and goods, banks step into their shoes and assume the risk for them (for a fee 2%) o This helps eliminate some of the transaction risk associated with international business transactions, this is where the bills of exchange come into the transaction.
What are bills o Exchange?	Dcumentary collection requires that the bill of exchange be:  Demand draft- payable on demand  A sight draft – payable upon presentation of the bill of lading (3-5 days to pay)  A time draft – payable at some future date (30,60,90 etc. days to pay)
What other documents can be used in transactions?	o Letter of Credit o Letter of Indemnity o Export Licence o Dock Receipt o Warehouse Receipt o Commercial Invoice o Packing List o Counsellor Invoice o Certificate of Origin o ISO 9000 o Insurance Document
Letter of Credit	A letter issued by a bank to another bank (typically in a different country) to serve as a guarantee for payments made to a specified person under specified conditions.
Letter of Indemnity	Document by which two parties to a misrepresentation against third parties settle their differences in advance should a third party in the future make a valid claim as a result of the misrepresentation.
Export Licence	Right to export and Government can regulate where you can send it
Dock Receipt	That it has been received at dock
Warehouse Receipt	That it has been received at warehouse
Commercial Invoice	Describes goods being shipped (Quality and Prices)  How governments determine duty and taxation
Packing List	 Directed for parties in the contract  Detailed account of what is in a box (IKEA)
Counsellor Invoice	Compare fair market vale to determine if there is dumping.
Certificate of Origin	Requested by importer that and Independent 3rd party ie. Chamber of commerce to certify where good is coming from.
ISO 9000	Quality Standard for marketing purposes only.
Insurance Document	both parties have insurance
Benefits of Alternative Dispute Resolution (ADR) ?	Both parties prefer to settle these disputes outside of formal courts, cheaper, more private, easier to access and international resolutions upheld and enforced by national courts. You can choose experts in field.
Mediation (ADR)	o In Less formal o Is not as ‘extreme’ as arbitration or litigation o Non-binding process o Is private o Parties reserve the right to pursue further legal action o In reality the mediator acts as a go-between the two parties and facilitates discussions more than ruling in favor of one side or the other
Arbitration (ADR)	Formal dispute resolution, Binding decisions that are enforceable, tied to courts to they can enforce them, Rules are set out by international arbitration bodies
What is Jurisdiction?	Jurisdiction is when a court has the power to hear and decide a case (said to be a “competent” court) o Territorial jurisdiction –Hawaii Home o In rem jurisdiction- PowerPoint Pointer, can be moved, geographical boundaries o Subject matter jurisdiction- Ashi Metal vs. California tort or contract disputes o In Personam Jurisdiction- Refers to jurisdiction over the person, someone cannot be called to a foreign court unless they have connection to that place.
Forum Selection	o Allows the parties to the contract to select the place where if a dispute arises, the proceeding will be heard Examples: Gay marriage cases, Mcdonalds- California
Venue	o Often confused with jurisdiction o Refers to the geographical location of a court of competent location where a case can be heard o Usually is the place that is most convenient to both parties (although not necessarily the case all the time) and that has the closest connection to the particular case
Forum Non- Convenies	When a court who otherwise has proper jurisdiction refuses to hear a case because another court in another location would be more convenient or justice better served there. Court with closest connection should be who hears it.
Choice of Law Clause	Contract provision that stipulates what law will be used to settle a dispute it has to have reasonable relationship between the transaction.  Forum selection affixes the jurisdiction  Choice of law affixes the law  For example if deemed necessary use US law even though jurisdiction is in japan.
Contra- Proferentem	Ambiguous terms will be construed against the party who included it in the contract
Enforcement of Foreign Judgements	Usually respect and enforce the judgements of foreign courts
What are INCOTERMS?	Eliminate the uncertainty of when risk passes, no determine ownership or title transfer , customary international law so they are enforceable.
What if INCOTERMS are not used?	Liability is usually imposed on who have title to the goods at the time of the loss
E TERMS	o E terms place the lowest amount of responsibility on the seller o All seller must do is make the good ready at its factory door o Buyer must arrange for transportation, import duties, customs etc… o Most commonly used when goods are moved between countries via ground transport
F TERMS	o Similar to E terms except that the seller is responsible to deliver the goods to the “point of departure” o At this point risk passes o Are convenient for the buyer if the buyer is going to rent out an entire ship or can acquire better shipping rates than the seller
C TERMS	o C terms indicate that the seller is responsible for certain costs after the goods have been delivered to the common carrier
D TERMS	o D term contracts are destination contracts o Places a higher burden on the seller than all the other terms o D terms are actually popular today as exporters try and find ways to secure more business than their competitors, even if it mean taking on more risk for a longer period of time
EXW (ex works)	Seller makes good ready at his place of business, seller has no responsibility past this point, buyer bears all risk for loading the goods and bears all costs as well
FCA (free carrier)	Seller hands goods over to the first carrier at a named location, seller is only responsible for paying for delivery to first carrier and only assumes risk till that point, at that point risk and cost pass to buyer
CPT (carriage paid to)	Seller pays for carriage to the named place of destination, risk passes to buyer when goods pass to the first carrie
CIP (carriage and insurance paid to)	Seller pays for carriage and insurance to the named destination point, but risk passes when goods are delivered to the first carrier
DAT (delivered at terminal)	Seller pays for and assumes all risks until goods are unloaded at the named terminal (import clearance fees are excluded)
DAP (delivered at place)	Seller pays for carriage to the point of delivery and assumes all risk up to the point when the goods are ready for unloading (import clearance fees are excluded)

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