Deck 16: International Marketing and Consumer Law

Question 1

The FCPA is a multilateral agreement among member nations of the WTO to combat the practice of global bribery.

Answer 1

False

Question 2

Althoug h briber y o f governmen t official s i s considere d a corrup t practic e i n th e U.S. , man y countrie s traditionally considere d i t t o b e a standar d operatin g procedur e. Official s i n thos e countrie s expecte d t o b e pai d fo r granting certai n favor s an d therefor e can be exempte d fro m th e Foreig n Corrup t Practice s Act.

Answer 2

False

Question 3

Many countries require pre-clearance of children's television advertising.

Answer 3

True

Question 4

One of the main objectives of the FCPA is to prohibit foreign company representatives in the United States from bribing U.S. government, state, and county officials to obtain procurement contracts.

Question 5

Under the provisions of EC Council Directive 86/653, an agent accrues sales commissions on deals that occur within his territory only when she or he has substantially participated in the events leading up to the customer's purchase.

Question 6

As a result of the global financial collapse there has been a great deal of international cooperation and success in harmonizing the local foreign investment laws of most nations.

Question 7

The Electra-Amambay case involved a local Paraguayan firm that was terminated for "just cause" from representing a Brazilian company.

Question 8

The distinction between independent and dependent agents is important because tax and labor law considerations are determined by the designated relationships.

Question 9

The antibribery provisions of the FCPA specifically and clearly define the conditions that must be violated in order to prosecute an individual or corporation for bribery of foreign officials.

Question 10

The FCPA requires that individuals and corporations meet disclosure requirements for all monies sent abroad as payment for fees owed to their sales agent.

Question 11

Most American lawyers can give competent advice on foreign marketing regulations and  advertising laws.

Question 12

A dependent agent relationship allows for greater quality control but reduces the level of profit that accrues to the principal.

Question 13

Illegal payments routed through a independent foreign sales agent to foreign officials may result in criminal prosecution of the corporation employing the agent.

Question 14

A company that forms an agency relationship with its sales representatives can be sued for damages incurred through the acts of the agent against a third party.

Question 15

Truth-in-advertising is now a generally accepted business practice and laws prohibiting false advertising exist in many nations.

Question 16

Payment s mad e t o foreig n official s b y a n individua l fo r th e purpos e o f expeditin g o r securin g th e performanc e o f a routin e o r clerica l governmenta l actio n ar e subjec t t o fine s u p t o $100,00 0 and/o r an imprisonment ter m o f u p t o fiv e years.

Question 17

In order to be liable for illegal payments made to foreign officials, the payment must be made directly to the official from the firm receiving the favors granted.

Question 18

A principal who hires an independent agent within a host country is viewed as having opened an office and is then subject to the host country's tax laws.

Question 19

The former communist countries of Eastern Europe have no advertising restrictions on tobacco and alcohol targeting teenagers.

Question 20

The United States is the only nation of the world that regulates advertising to children, such as tobacco advertisements

Question 21

Nepotism can be a violation of the Foreign Corrupt Practices Act.

Question 22

Sales representatives that perform specific acts at the specific direction of the company they represent are considered:

A) agents of the company.
B) principals of the company.
C) independent contractors of the company.
D) none of the above.

Question 23

Advertising abroad must comply with the legal guidelines established in the home country.

Question 24

Some cultures are less tolerant of vagueness and exaggeration in advertising than others.

Question 25

Only payments in excess of $5,000 paid directly to foreign government officials are subject to criminal prosecution under the FCPA.

Question 26

Under EC Directive 86/653, an evergreen contract occurs when the agency relationship has:

A) lasted for three or more years.
B) been continued beyond the original fixed term with no formal renewal.
C) been terminated by giving a three-month written notice.
D) all of the above.

Question 27

The FCPA prohibits U.S. firms from paying bribes to:

A) foreign competitors.
B) purchasing agents of foreign firms with whom U.S. firms do business.
C) foreign government officials.
D) the clerk in a telephone office in Paris who is trying to place an overseas call for you.
E) two of the above.

Question 28

Under the FCPA, a payment can be illegal if it is made:

A) corruptly, knowingly, and to expedite the performance of a routine governmental action.
B) corruptly, negligently, and to expedite the performance of a routine governmental action.
C) criminally, intentionally, and in order to obtain or retain business.
D) corruptly, knowingly, and for assistance in obtaining business.
E) any payment that is illegal under local law is illegal under the FCPA.

Question 29

Documentation submitted to the Department of Justice for review under the FCPA is considered confidential and sensitive to national security.

Question 30

In a prosecution for violating the FCPA, the defendant's conduct will be excused if he or she can prove that the payment was paid as a result of extortion by the foreign official.

Question 31

In order to avoid a charge of violating the FCPA, commissions and other payments to a foreign sales agent should conform to customary rates normally paid to agents of that kind in the foreign nation.

Question 32

Corporate penalties for violating the FCPA include:

A) fines of no more than $100,000.
B) fines up to $2,000,000.
C) revocation of the firm's license to do business in a foreign country.
D) punitive damages.
E) two of the above.

Question 33

Advertising of sexually explicit messages would be most severely regulated in which of the following countries?

A) Denmark
B) Sweden
C) The United States
D) Saudi Arabia

Question 34

Which of the following statements explain the characteristics of an independent agent?

A) Principal is involved in working out details of the agent's work organization.
B) The agent is always subject to a change in instructions.
C) The agent works for many clients.
D) The agent is paid on an hourly or salaried basis.
E) All of the above.

Question 35

The government agency responsible for prosecuting violators of the FCPA is:

A) Department of International Judicial Review.
B) SEC.
C) Department of Justice.
D) B and C.

Question 36

The FCPA was passed in the United States in the 1970s largely because:

A) the law was based on a draft law written by the United Nations.
B) U.S. public opinion and world disdain over disclosures of hundreds of unethical payments to foreign officials by U.S. firms.
C) an attempt by the U.S. Congress to provide a more predictable and easily understood law for U.S. firms operating abroad.
D) the law was requested by many U.S. corporations in order to allow them to compete more effectively in foreign markets.

Question 37

Which of the following is prohibited in more countries?

A) False advertising
B) Advertising to children
C) Sexually explicit advertising
D) Advertising in a foreign language

Question 38

Pursuant to EC Council Directive 86/653, an economic conditions alarm is sounded by the principal for the benefit of his or her agent:

A) to give six-months prior notice of an increase in the agent's sales quota.
B) when the inflation rate of the host country threatens to precipitate a price increase.
C) when currency exchange rates rise to a level that makes business unprofitable.
D) when sales forecasts indicate that the agent's volume of business will be significantly lower than normally expected.

Question 39

In Germany, the attitudes toward exaggeration in advertising are:

A) not highly regulated.
B) highly regulated.
C) the law is uncertain and in a state of change.
D) best illustrated by the Carbolic Smoke Ball case.

Question 40

Individual penalties for violating the FCPA include:

A) imprisonment of up to five years and a fine of up to $100,000.
B) imprisonment of up to fifteen years and a fine of up to $10,000.
C) fines, imprisonment, and discharge from the corporation.
D) fines, imprisonment, and revocation of the right to travel in the foreign country.
E) none of the above.

Question 41

In what ways are advertising regulations pertaining to "sin" products in the U.S. more or less liberal than those in Europe (and/ or other regions)?

Question 42

Evaluate the socioeconomic impact of corruption in developing countries. For instance, does corruption merely cause an African dictator to buy tractor parts from Country A instead of Country B, or does it cause him to buy helicopter gun ships or AK-47s instead of syringes and pharmaceuticals for infant health care at his country's modest hospitals?

Question 43

Under the EU's directive on agency relationships, whenever a principal makes a sale in a territory or a market sector reserved for the agent, the principal must pay the agent a commission, whether or not the agent actually participated in the sale, no matter what the agency agreement provides. This is know as a(n):

A) economic condition alarm.
B) economic commission.
C) commission override.
D) permanent commission.

Question 44

In advertising, a vague or exaggerated claim such as "20% less fat" is called:

A) caveat emptor.
B) false witness.
C) puffing.
D) none of the above.

Question 45

Describ e th e way s tha t advertisin g regulatio n o r consume r protectio n law s theoreticall y migh t diffe r i n market economie s a s compare d wit h non-marke t economies . Give practical example s o f thi s theor y .

Question 46

In advertising, products such as tobacco and alcohol that are deemed to be corrosive to society are called:

A) "temptation" products.
B) illegal products.
C) "sin" products.
D) none of the above.

Question 47

Provide examples of the ways in which a U.S. advertiser is subject to more and less regulation when advertising abroad.

Question 48

Some countries have enacted "language laws" in advertising in order to:

A) preserve the purity of the country's primary language.
B) require advertisers to be clear and honest about their products.
C) protect children from inappropriate language.
D) all of the above.

Question 49

Draft a contract with a foreign representative. Include a provision regarding termination and payment for services under such circumstances.

Question 50

One of the founding concepts of libertarian capitalism is caveat emptor , which means:

A) truth in advertising.
B) let the buyer beware.
C) always maximize profits.
D) sales potential.

Question 51

Compare and contrast U.S. and European regulations aimed at advertising to children.

Question 52

I f a n agen t sell s a lin e o f American-mad e children' s toy s t o a Europea n to y stor e chai n. Late r, it is discovere d that th e toy s ar e dangerou s for children but th e agen t i s no t hel d accountabl e . Thi s i s a n exampl e of:

A) product liability.
B) just cause.
C) a commission.
D) none of the above.

Question 53

Evaluate the foreign political ramifications of bribery (witness the scandals and resignations in countries such as Japan, the Netherlands, and Italy in the 1970s, not to speak of the tremendous political impact in the developing countries). Does corruption interfere with the foreign policy of the United States, exerting influence that may be counter to U.S. policy?

Question 54

Outline the main legal issues attendant to a major American toy manufacturer's worldwide advertising campaign.

Question 55

Assum e tha t yo u ar e th e chie f operatin g office r o f a company in Unite d State s tha t considers in retainin g a representativ e i n Germany . Wha t ar e th e relativ e merit s o f decidin g whethe r t o retai n a dependen t agent o r an independent one?

Question 56

Imagine how a developing economy would wish to address truth in/deceptive advertising. Draft a position paper.

Question 57

Which of the following statements about dependent agents is true?

A) The office in which the dependent agent is unimportant and is not subject to the host country's tax laws.
B) A dependent agent is considered an employee for purposes of the host country's labor laws.
C) A principal is not liable to third parties for a dependent agent's misdeeds.
D) All of the above.

Question 58

An American manufacturer is setting up a manufacturing plant in China. A Chinese telecommunications worker has asked the American firm's agent to pay him a fee of $500 for setting up Internet service in the new plant. Under the FCPA, if the American agent pays the fee, it will be considered:

A) perfectly legal; the Chinese telecommunications firm deserves to be paid for its services.
B) questionable; the American agent should confirm that this is the appropriate amount and person to pay for the service.
C) totally illegal; it is obviously a bribe.
D) none of the above.

Question 59

Under the FCPA, the "routine governmental action exception" is also known as the:

A) "accepted payments" exception.
B) "grease payments" exception.
C) "necessary payments" exception.
D) none of the above.

Question 60

Under the FPCA, U.S. courts have jurisdiction over a person who commits an FCPA violation:

A) only if the person is a U.S. citizen.
B) if the person commits the act while in the territory of the United States, whether or not he or she is a U.S. citizen.
C) regardless of where the act is committed or the citizenship of the person.
D) none of the above.

Question 61

Are the actions undertaken by the companies or individuals in the following scenarios legal or illegal pursuant to U.S. law? Please explain each of your answers.
Scenario A cash payment of $100 made by an agent of Chicago Chemicals Company, a U.S. corporation, to a processing clerk in the Chilean Office of Business Licensing in order to expedite consideration of CCC's application for authority to conduct business operations in Chile.

Question 62

Are the actions undertaken by the companies or individuals in the following scenarios legal or illegal pursuant to U.S. law? Please explain each of your answers. Scenario A cash paymen t o f $250,00 0 was made by Durd y Coal , Inc. , a U.S . corporation , to DCI' s agent with the instruction "put this to good use on DCI' s behalf. " In turn cash is paid to the State Importation Officer of the People' s Republic of China in order to secure a Chinese import license.

Question 63

Are the actions undertaken by the companies or individuals in the following scenarios legal or illegal pursuant to U.S. law? Please explain each of your answers.
Scenario A wire transfer of $200,000 to the Minister of Contracting of Gambia made by Bordeaux Builders, Inc., a French corporation, and originating from its corporate headquarters in New York in order to secure a construction contract.

Question 64

Are the actions undertaken by the companies or individuals in the following scenarios legal or illegal pursuant to U.S. law? Please explain each of your answers.
Scenario A birthday card and bottle of California wine sent annually by Woody Pulp, the chief executive officer of Pacific Paper Products, Inc., a U.S. corporation, to his long-standing friend who is the Director of Government Procurement for the Japanese government.

Question 65

Draft an internal memo or company rule regarding permissible and forbidden actions/payments in dealing with foreign contracts.

Question 66

Are the actions undertaken by the companies or individuals in the following scenarios legal or illegal pursuant to U.S. law? Please explain each of your answers. Scenario A $100,000 wire transfer made by Automobile Repair Parts, Inc., a California corporation, to the director of contracting of Yoshiba International, a Japanese corporation, for the purpose of obtaining a supply contract from Yoshiba.