Identify the significance of the following concepts:
1) Force Majeure: It refers to any event that may allow a party to break a contract. This phrase is French for ‘superior force’ or “greater force.” It consists of a group of legal concepts that excuse performance of contractual duties when that performance has become impractical or impossible. It is a common clause in contracts which essentially frees one or both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as war, strike, riot, crime, natural disaster (e.g., flood, earthquake, volcano), prevents one or both parties from fulfilling their obligations under the contract.
2) Embargo: This is any restriction put on commerce by law. An example is the U.S. trade embargo of Cuba, which has been in place since 1962. The embargo forbids trade with Cuba in a bid to sanction Fidel Castro’s dictatorial regime.
3) Tariff: A tariff (or duty) is a tax levied on imports and, less often, on exports as they cross the border into other countries. For example, the United States and 22 other countries signed the General Agreement on Tariffs and Trade (GATT) in 1947. GATT was designed to promote trade and settle trade disputes among the industrial and agricultural nations of the world and remove protectionism.
4) Lex Mercatoria: Lex Mercatoria governed the transactions of traveling merchants in the Middle Ages. In the late eleventh and twelfth centuries, the basic concepts and institutions of modern Western mercantile law – lex mercatoria (‘the law merchant’) – were formed. It was then that mercantile law in the West first came to be viewed as an integrated, developing system, a body of law. Today, lex mercatoria is a set of rules of conduct for border-crossing transactions developed by the international business community themselves and applied by arbitrators in case of trade disputes.
5) C.I.S.G. : This refers to the United Nations Convention on Contracts for the International Sale of Goods. It applies to international commercial sales of goods. Today, CISG has been adopted by 35 countries and does not generally apply to services contracts, consumer sales, auction sales, sales of negotiable instruments or securities, or the sale of ships, vessels, or aircraft. CISG provides important benefits to traders negotiating international sales contracts by helping parties of different countries to avoid difficulties in negotiating which country’s law will govern. It provides for internationally accepted rules that the contracting parties, courts, and arbitrators may rely in their business dealings.
6) Letter of Credit: A letter of credit is an instrument issued by a bank, usually addressed to a correspondent bank, stating that it will accept drafts charged against it in the name of a person or company. Importers and exporters often use commercial letters of credit to finance the purchase of goods. A circular letter of credit, often used by travelers, is one not addressed to any particular bank. The traveler’s check is a form of letter of credit.
7) Exporter: An exporter sends or transports goods or products to another country, especially for trade or sale. This is a sales contract covering goods moved internationally by sea or air.
8) Bill of Lading: A bill of lading is a contract between a shipper of goods and a carrier that acknowledges the receipt of certain goods from a shipper and agrees to transport and deliver them to the designated destination at a specified time. A copy of the bill of lading is sent to the buyer, thereby establishing ownership. The bill of lading also explains the liability assumed by the carrier when it contracts to carry the goods. The carrier is responsible for any loss or damage occurring through negligence, or for delaying the shipment for an unreasonable length of time. The carrier, however, is not liable for loss or delay caused by an act of God, that is, an unavoidable natural accident, or by civil disturbances or strikes.
9) Freight Forwarder: A freighter is a cargo vessel that is engaged primarily in carrying general merchandise. Many facilitators and expeditors of this process are called freight forwarders. Domestic freight forwarders normally have trucks, which pick up shipments from their customers and consolidate them with the shipments of other customers into full loads (either truck or rail). A foreign freight forwarder arranges for ocean shipping and for inland transportation at the foreign destination and may also arrange for insurance, and may handle customs formalities. Sometimes a shippers’ co-operative will perform the work of freight forwarders.
10) Blood Diamond: ‘Blood Diamonds’ or ‘Conflict diamonds’ refer to the fatal role that diamonds are believed to have played in several African conflicts In 2002 countries involved in the diamond trade agreed to a UN-backed certification system designed to block what have come to be called “blood diamonds” from reaching the world market. The rules, known as the Kimberley Process, came into effect at the beginning of 2003.
Define what the following acronyms mean:
1) TRIPS: TRIPS or Trips Agreement refers to the Agreement on Trade-Related Aspects of Intellectual Property Rights.
2) FCN: FCN refers to the Friendship, Commerce and Navigation Treaties. These are bilateral treaties entered into to promote this cross-border prosperity.
3) FCPA: The Foreign Corrupt Practices Act (FCPA) of 1977 forbids American businesses from bribing foreign officials.
4) IMF: International Monetary Fund.
5) ICJ: The International Court of Justice (or the World Court) is the principal judicial organ of the United Nations (UN)
6) L/C or LOC: Letter of Credit
7) NAFTA: North American Free Trade Agreement
8) UNCITRAL: United Nations Commission on International Trade Law
9) WIPO: World Intellectual Property Organization
10) WTO: World Trade Organization
PART III (Fill-In)
Directions: Print the term that best describes the following:
1) Lex Mercatoria: customs and practice of merchants used in the sale and barter of goods developing into commercial law.
2) Seller (Exporter): goods shipped from Boston to Seoul F.O.B. with risk of loss and title being on this party.
3) Freight Forwarder: person taking care of shipment of goods and preparation of all shipping and customs documents ensuring goods get to proper carrier.
4) Seller (Exporter): goods shipped CIF, Kobe from Boston with title and risk of loss being on this party.
5) Bill of Lading: document issued by the carrier to a shipper to be forwarded to a buyer and is referred to as a document of title.
6) Letter of Credit: a commercial instrument issued by a buyer’s bank to a seller’s bank as payment upon the performance of the specified contract.
7) Warsaw Convention: treaty which places limits on liability for international passengers and shipment of goods damaged or lost or injured while in flight.
8) Carriage of Goods by Sea Act (COGSA) of 1936: protection at sea for sea damaged goods via contract policy for ocean coverage losses.
9) Barter: agreement between buyer and seller to accept exchange of goods or commodities in lieu of cash or currency payment.
1O) Embargo: more restrictive than a quota, this legal weapon is a complete ban on trade with foreign nations as a punishment for offensive conduct in world affairs.
PART IV (True or false)
Directions: Answer the following statements as true or false in the left hand column and transpose your exact answer onto the computer scantron sheet using a #2 pencil.
F 1) The United States has embargoes on Cuba, Iran, North Korea and recently lifted embargoes on Libya and Iraq.
T 2) In Japan Line, Ltd., v. County of Los Angeles, the court held that only federal law can tax international commerce and not a country or state government.
T 3) In Kumar Corp. v. Nopal (stolen TV set case), the court held where a seller under a CIF contracted failed to obtain the marine insurance paid for by the buyer, risk of loss did not pass to the buyer.
T 4) In the Export video, it stated that the majority of shipment of goods in the world moves to vessels. (containerization)
F 5) In Banco Espanol de Credito v. State Street Bank & Trust Co., the court held that it is the seller’s duty to inspect the goods to ensure they conform with the letter of credit instructions.
F 6) The carrier of goods is not liable for an innocent misdelivery of goods.
T 7) The term Force Majeure in a contract excuses a party from failing to perform due to war, blockades, fires, Acts of God, failure of transportation, quarantine restrictions and strikes.
T 8) In the Marc Rich case (video), the president issued a pardon before his arrest and conviction making it impossible to charge him with a crime while he stayed in Europe.
T 9) In the Dole v. Carter case, the court held that an executive order by the President can transfer the Hungarian crown back with the Congress’s approval.
T 10) In the Pesquera Mares Australes Ltd a. U.S. (Chilean Salmon) selling salmon in the U.S. below FMV violated the anti-dumping laws.
T 11) The Argentina Safeguard Measures on Imports of Footwear failed to carry the burden of proof to win their case on unforeseen developments.
T 12) In Heavyweight Motorcycles & Engines & Power-Train, Harley-Davidson Co. couldn’t get a fair market share in Japan and had duties imposed on its competitor Honda motorcycles.
F 13) In Biddell Brother v. E. Clemens Horst Co, the court held that under eIF contract, the buyer has the right to inspect the goods before making payment.
T 14) In Shaver Transportation Co. v. Travelers Indemnity Co (tallow) the court held that unless there is a specific clause of insurance coverage, there is no recovery for the loss by the plaintiff.
T 15) In Banque De Depots v. Ferroligas, the court held that a court ordered seizure of goods in transit cannot be enforced when title to the goods by way of a Bill of Lading was not shown by the court order.
T 16) There has been an International Criminal Court of Justice established which the United States government has refused to sign the agreement.
T 17) In the EC Measures Concerning Meat & Meat Products (Hormones), the WTO Appellate Body allowed the ban on beef grown with hormones.
T 18) Concerning the use of retaliatory measures under Sec. 301 for Anti-Dumping Regulations, the WTO permitted it as long as WTO Regulations were complied with at the time.
T 19) Under import relief, anti-dumping laws cannot be used as a safeguard to protect domestic industries from unfair competition.
T 20) In MacNamara v. Korean Air Lines, the court held the use of the Friendship, Commerce & Navigation Treaty to hire one’s nationals to be valid and legal and not discriminatory.
PART V (Essays)
1) Briefly compare Hernando DeSoto’s theory to end the cycle of poverty with Muhammed Yunu’s viewpoint to end the cycle of poverty.
Hernando DeSoto raises two major points:
1. Need for private ownership and
2. Need to remove government bureaucracy that stifles the economy
His main theme is that people in developing countries lack the formal property systems that will enable them to own land and goods. He states that the total value of all the real estate held, but not legally owned, by the poor is more than 20 times all direct foreign investment in the Third World and more than 90 times all the foreign aid to all Third World countries over the past three decades. To worsen matters government bureaucracy greatly hinders the ability for people to hold private property.
He concludes that property rights should not be privileges for the rich only. The poor need them most of all, especially if they want to stop being poor.
Mohammed Yunus is in agreement with Hernando DeSoto’s theory. He has introduced the concept of microcredit, the extension of small loans to entrepreneurs too poor to qualify for traditional bank loans. He discovered that very small loans could make a disproportionate difference to a poor person. He has also displayed the fact that this concept works by applying it in various instances.
2) In the Matsushita Electrical Industrial Co. v. U.S. case (packet case), what was the Court requiring the company to divulge and for what reasons? Explain your viewpoint.
The Court required Matsushita Electrical Industrial Co. to divulge confidential business proprietary information to the in-house counsel (Hershel Winn) of its competitor, Tandy Corporation. This was because it was claimed that Hershel Winn was not involved in competitive decision making at Tandy Corporation.
My opinion (as stated by Matsushita also) is that he is not isolated enough from Tandy’s competitive decision making that he will not present a risk to Matsushita.
3) What is Prof Bell’s viewpoint concerning the next major economic power in 2013? Explain your viewpoint.
Daniel Bell argued that the nation-state is becoming too small for the big problems of life, and too big for the small problems of life. A common dilemma is that nations are becoming too large to manage specific problems such as unemployment, inflation, etc. This results in a mismatch of scale.
It is too small for the big problems like capital flows, commodity imbalances, the loss of jobs, welfare reform because the devolved systems are not effective enough to deal with such issues.
Other issues he raised are below:
The pacific basin will be the center of the economic power. Third world countries can provide raw materials and primary products for the core countries. The mass-production of products is being relocated to lesser developed countries. Service and high-tech sectors are the predominant sectors. By 1990, it is believed that 75% of the US. Labor force will be in services and the labor forces will consist of more women than before. Today, international economy is almost tied together in “real time”. One day even transportation changes could bring the physical aspects into “real time”. The primary demographic issue will not be population but the increasing discrepancy between the age groups in different parts of the world.
4) In the video presentation on Jamaica, how has free trade or globalization with multinational corporations been received by the people? Why, also, were South Korean farmers protesting the free trade agreements signed with the United States?
The case study shows how contemporary free trade policies and global financial institutions such as the International Monetary Fund, World Bank and World Trade Organization have affected the economies of developing nations like Jamaica. These economic policies seem to have a negative impact on the day-to-day lives of the people they are said to benefit.
Jamaica now owes over $4.5 billion to the IMF, the World Bank and the Inter-American Development Bank (IADB) and others. These amounts owed have had a negative impact on the lives of most Jamaicans, as it is unlikely they can be paid back.
Furthermore, there are many restrictions on foods and goods imported into the U.S. while there usually are no such restrictions on food and goods exported to foreign developing countries like Jamaica. This is unfair and agreements such as NAFTA and the Caribbean Basin Initiative support this inequity under the excuse of “free trade.”
Even though these policies are supposed to benefit Third World economies by integrating them into the global market, the fact is that Third World people suffer, while commercial banks in the North collect a great deal of interest. This can be seen in the case of Jamaica where only 5 percent of total money borrowed since 1977 has been able to stay inside the country.
South Korean farmers protested the free trade agreements because the farmers feared that opening up the market by the abolition of rice tariffs could be harm them.
5) What is meant by the Harmonization Doctrine concerning trade barriers?
Harmonization is to serve the objective of removing trade barriers. It is generally agreed that trade barriers are detrimental and decrease overall economic efficiency.
It is believed that free trade involves the removal of all such barriers, except where such barriers exist to protect health or national security.