Business Law Chapter 7

force majeure clause

A provision in a contract stipulating that certain unforeseen eventssuch as war, political upheavals, or acts of Godwill excuse a party from liability for nonperformance of contractual obligations.

act of state doctrine

A doctrine providing that the judicial branch of one country will not examine the validity of public acts committed by a recognized foreign government within its own territory.

choice-of-language clause

A clause in a contract designating the official language by which the contract will be interpreted in the event of a future disagreement over the contract's terms.

choice-of-law clause

A clause in a contract designating the law (such as the law of a particular state or nation) that will govern the contract.

civil law system

A system of law derived from that of the Roman Empire and based on a code rather than case law; the predominant system of law in the nations of continental Europe and the nations that were once their colonies.

comity

The principle by which one nation defers to and gives effect to the laws and judicial decrees of another nation. This recognition is based primarily on respect.

confiscation

A government's taking of a privately owned business or personal property without a proper public purpose or an award of just compensation.

correspondent bank

A bank in which another bank has an account (and vice versa) for the purpose of facilitating fund transfers.

distribution agreement

A contract between a seller and a distributor of the seller's products setting out the terms and conditions of the distributorship.

dumping

The selling of goods in a foreign country at a price below the price charged for the same goods in the domestic market.

exclusive distributorship

A distributorship in which the seller and the distributor of the seller's products agree that the distributor will distribute only the seller's products.

export

To sell goods and services to buyers located in other countries.

expropriation

The seizure by a government of a privately owned business or personal property for a proper public purpose and with just compensation.

foreign exchange market

A worldwide system in which foreign currencies are bought and sold.

forum-selection clause

A provision in a contract designating the court, jurisdiction, or tribunal that will decide any disputes arising under the contract.

international law

The law that governs relations among nations. International customs and treaties are important sources of international law.

international organization

Any membership group that operates across national borders. These organizations can be governmental organizations, such as the United Nations, or nongovernmental organizations (NGOs), such as the Red Cross.

letter of credit

A written instrument, usually issued by a bank on behalf of a customer or other person, in which the issuer promises to honor drafts or other demands for payment by third persons in accordance with the terms of the instrument.

national law

Laws that pertain to a particular nation (as opposed to international law).

normal trade relations (NTR) status

A status granted in an international treaty by a provision stating that the citizens of the contracting nations may enjoy the privileges accorded by either party to citizens of its NTR nations. Generally, this status is designed to establish equality of i

quota

A set limit on the amount of goods that can be imported.

sovereign immunity

A doctrine that immunizes foreign nations from the jurisdiction of U.S. courts when certain conditions are satisfied.

tariff

A tax on imported goods.

treaty

In international law, a formal written agreement negotiated between two nations or among several nations. In the United States, all treaties must be approved by the Senate.

Sources of international law

the three sources of international law are international customs, treaties and interntational agreements, and international organizations and conferences

common law and civil law systems

companies that operate in foreign nations are subject to the laws of those nations. Legal systems around the globe are either common law systems (case law supplements statutory law) or civil law systems (the statutory code governs)

the principle of comity

under this principle, nations give effect to the laws and judicial decrees of other nations for reasons pf courtesy and international harmony

the act of state doctrine

a doctrine under which US courts avoid passing judgment on the validity of public acts committed by recognized foreign governments within its own territory

the doctrin of soverign immunity

when certain conditions are satisfied, foreign nations are immune from US jurisdictions under the Foreign Sovereign Immunities Act of 1976. Exceptions are made a) when a foreign state has "waived its immunity either explicitly or implication" or b) when t

ways in which US domestic firms engage in internationa business transactions

a) exporting, which may involve foreign agents or distributors and b) manufacturing abroad, which may involve licensing arrangements or franchising operations

World Trade Organization

attempts to minimize trade barriers among nations as do regional trade agreements and associations, including European Union and the North American Free Trade Agreement

international business contracts include

choice of language, forum selection, and choice of law clauses to reduce the uncertainties associated with interpreting the language of the agreement and dealing with legal differences

most domestic and international contracts include

force majeure clauses. They commonly stipulate that certain events such as floods, fire, accidents, labor strikes, and government orders, may excuse a party from liability for nonperformance of the contract

arbitration clauses

are frequently found in international contracts

currency conversion

because nations have different monetary systems, payment on international contracts requires currency conversion at a rate specified in a foreign exchange market

correspondent banking

correspondent banks facilitate the transfer of funds from a buyer in one country to a seller in another

letters of credit

letters of credit facilitate international transactions by ensuring payment to sellers and assuring buyers that payment will not be made until the sellers have complied with the terms of the letters of credit. Typically compliance occurs when a bill of la

Sarbanes Oxley Act

certain provisions of the SOX Act of 2002 including those that protect whistle blowers from retaliation for reporting criminal violations, may apply extraterritorially

antitrust laws

antitrust laws may be applied beyond the borders oth the US. Any conspiracy that has a substantially effect on commerce within the United States may be subject to the Sherman Act, even if the violation occurs outside the United States

antidiscrimination laws

the major US laws prohbiting employment discrimination including Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, and the Americans with Disabilities Act of 1990, cover US employees working abroad for US firms-

alien tor claims act (ATCA)

this act allows plaintiffs, including foreign citizens, to bring civil lawsuits in the United States for injuries caused by violations of the law of nations or treaty of the United States. The ATCA has been used to bring actions against companies operatin