1. Whenever a contract is established between two parties in the same country, the law governing the execution of this contract is determined by that countrys legal system. 
*a. True
b. False

2. Whether or not a sales contract is international is always self-evident. 
a. True
*b. False

3. Under the Uniform Commercial Code (UCC), when a buyer agrees to an offer made by a seller, but indicates a desire for a different schedule of delivery or term of payment, such a response is considered to be a rejection of the offer. 
a. True
*b. False

4. Under the Uniform Commercial Code, an offer can be withdrawn at any time, without prejudice. 
*a. True
b. False

5. The perfect tender principle means delivered goods must exactly conform to the goods contracted and delivered within the framework specified in the contract. 
*a. True
b. False

6. An agent can negotiate prices, delivery, or other sales terms with the buyer (importer) without direction from the exporter. 
a. True
*b. False

7. Agreements between an exporter and an agent and agreements between an exporter and a distributor are called distribution contracts. 
*a. True 
b. False

8. In most Middle Eastern countries, agents and distributors are not required to be nationals of the country. 
a. True
*b. False

9. Normally, contracts between parties who speak different languages from each other can be written in both or all of their languages, and the contracts will have equal weight. 
a. True
*b. False

10. A contract is entered in good faith when neither of the parties has any other ulterior motive about the agreement. 
*a. True
b. False

11. Contracts normally contain a clause that annuls the contract in the event of an overwhelming unforeseen event like a major storm or fire. This is called an evergreen provision. 
a. True
*b. False

12. The scope of appointment clause is usually the first clause of a contract. 
*a. True

13. The European Union tends not to recognize exclusive territories that limit an agent or distributor to one country. 
*a. True
b. False

14. The scope of appointment clause of a contract usually prevents an agent or distributor to cherry pick the most profitable products for extra selling effort and to minimize effort toward less profitable products. 
*a. True
b. False

15. Agents usually feel encouraged if the exporting firm they represent retains for itself a large number of corporate accounts. 
a. True
*b. False

16. A contract with no determined duration and which can no longer be terminated for non-performance (since termination did not take place earlier, even though there was evidence of non-performance), is called an evergreen contract. 
*a. True
b. False

7. In general, the choice of law, or the choice of which countrys laws will regulate a dispute between international parties, is made by the agent or distributor rather than by the exporter. 
a. True
*b. False

18. If the country in which an arbitration takes place is one of the 130 signatory countries to the New York Convention on the Enforcement of Foreign Arbitral Awards, then the ruling can be enforced just about anywhere. 
*a. True
b. False

19. In contracts with distributors, there are no restrictions on what the exporter and distributor can agree to add on to the wholesale price of the goods. 
a. True
*b. False

20. The facilities and activities clause of a contract between an exporter and an agent/distributor spells out what kind of docking arrangements will be made when the goods arrive by ship into the agent/distributors country. 
a. True
*b. False


1. The advertising clause of a contract between an exporter and an agent/distributor spells out the obligations of both parties in the areas of 
~ The advertising clause spells out obligations regarding advertising, trade show attendance, ownership of ideas, and how the costs will be split. 
@ The advertising clause spells out obligations regarding advertising, trade show attendance, ownership of ideas, and how the costs will be split. 
a. advertising. 
b. trade show attendance. 
c. ownership of ideas. 
*d. advertising, trade show attendance, and ownership of ideas. 
e. advertising and new product ideas. 

2. The most sensitive issue in an international distribution contract between an exporter and an agent/distributor is 
~ Termination can have legal repercussions if it is not done right. In addition, a spurned former agent/distributor can wreak havoc with future marketing efforts by the exporter and/or its new agent/distributor. 
@ Termination can have legal repercussions if it is not done right. In addition, a spurned former agent/distributor can wreak havoc with future marketing efforts by the exporter and/or its new agent/distributor. 
*a. termination. 
b. advertising. 
c. territories. 
d. product line. 
e. cutomers. 

3. When an international distribution contract between an exporter and an agent/distributor is terminated for just cause, in most cases the termination is made by the
~  Usually it is the importer not doing something it is required to do, or the representative is doing something that it is contractually not allowed to do. Rarely do exporters fail to fulfill their part of the agreement. 
@  Usually it is the importer not doing something it is required to do, or the representative is doing something that it is contractually not allowed to do. Rarely do exporters fail to fulfill their part of the agreement. 
a. agent/distributor. 
b. government of the agent/distributor. 
*c. exporter. 
d. government of the exporter's country. 
e. government of the importer's country. 

4. An increasingly popular way of settling disputes between international exporter-agent/distributor partners is
~ Arbitration is a way to avoid action in courts of either parties countries, therefore it is seen as being more independent and even-handed. 
@ Arbitration is a way to avoid action in courts of either parties countries, therefore it is seen as being more independent and even-handed. 
a. joint ventures. 
*b. arbitration. 
c. lawsuits in courts in the exporters country. 
d. lawsuits in courts in the agent/distributors country. 
e. amicable settlement. 

5. An exporters termination of a relationship with an agent/distributor on the basis of convenience is 
~ A termination for convenience should be handled with the greatest care, as the potential for damages to the spurned party can be substantial. If there are issues to resolve, every effort should be made by the exporter to compensate the distributor or the agent. If it is not done, the representatives can very easily ask courts to intervene. These statutes usually mandate long notice periods and generous compensation packages. 
@ A termination for convenience should be handled with the greatest care, as the potential for damages to the spurned party can be substantial. If there are issues to resolve, every effort should be made by the exporter to compensate the distributor or the agent. If it is not done, the representatives can very easily ask courts to intervene. These statutes usually mandate long notice periods and generous compensation packages. 
a. essentially risk-free. 
b. with little obligation on the part of the exporter toward the agent/distributor. 
c. easy to accomplish. 
d. in little danger of ending up in court. 
*e. fraught with potential problems. 

6. Lex Mercatoria is 
~ The Uniform Commercial Code is business law for the United States, common law is judge-made law. Lex Mercatoria is a trade law made up of multiple sources. 
@ The Uniform Commercial Code is business law for the United States, common law is judge-made law. Lex Mercatoria is a trade law made up of multiple sources. 
a. a major calamity like a storm or other natural disaster. 
b. the Uniform Commercial Code. 
c. common law. 
*d. trade law made up of a multitude of different sources of law and jurisprudence. 
e. the laws of the country of import recognized by the country of export. 

7. Courts generally look at two criteria to determine if a contract is international. Those criteria are
~ Economic and judicial criteria consists of whether there was a transaction involving a transfer of merchandise from one country to another (with its mirror image resulting reverse transfer of funds), and if the transaction has links to the laws of the different countries to which the transaction participants are subject. 
@ Economic and judicial criteria consists of whether there was a transaction involving a transfer of merchandise from one country to another (with its mirror image resulting reverse transfer of funds), and if the transaction has links to the laws of the different countries to which the transaction participants are subject. 
*a. economic and judicial criteria. 
b. agent and distributor criteria. 
c. physical delivery and monetary exchange criteria. 
d. legal and customary criteria. 
e. common sense and regulatory criteria. 

8. If an international agreement between an exporter and an agent/distributor grants a monopoly to the agent/distributor, that agent/distributor is considered to be
~  Exclusive representative is an agent or distributor that has been granted the right of being the sole representative of the exporter. 
@  Exclusive representative is an agent or distributor that has been granted the right of being the sole representative of the exporter. 
a. operating illegally. 
b. a subsidiary of the exporting company. 
*c. an exclusive representative. 
d. operating under a force majeure clause. 
e. in breach of contract. 

9. A legal dispute in which the loser bears court costs is said to be operating under
~ European rules is a custom in which the loser bears court costs. 
@ European rules is a custom in which the loser bears court costs. 
a. common law. 
*b. European rules. 
c. contract law. 
d. arbitration. 
e. American rules. 

10. The United Nations Convention on Contracts for the International Sale of Goods (CISG) considers a contract to have been accepted 
~ The CISG does not consider that a contract has been accepted until both parties agree to all of its terms. It is customary for a seller to make an offer. Under the CISG, changes are considered to be a rejection of the offer made by the seller and understood as a counter-offer by the buyer, unless the terms suggested do not materially affect the contract. The CISG specifies that changes to price, payment, quality, and quantity of the goods, place, and time of delivery, extent of one partys liability to the othermost likely to be understood as Incotermsor the settlement of disputes are considered to alter the terms of the offer materially and therefore that no acceptance is made in those cases. The U. S. Uniform Commercial Code (UCC), not the CISG, requires that any sales agreement above U. S. $ 500 be in writing. 
@ The CISG does not consider that a contract has been accepted until both parties agree to all of its terms. It is customary for a seller to make an offer. Under the CISG, changes are considered to be a rejection of the offer made by the seller and understood as a counter-offer by the buyer, unless the terms suggested do not materially affect the contract. The CISG specifies that changes to price, payment, quality, and quantity of the goods, place, and time of delivery, extent of one partys liability to the othermost likely to be understood as Incotermsor the settlement of disputes are considered to alter the terms of the offer materially and therefore that no acceptance is made in those cases. The U. S. Uniform Commercial Code (UCC), not the CISG, requires that any sales agreement above U. S. $ 500 be in writing. 
a. when most of the items in the sellers offer are agreed to. 
b. when there has been a counter-offer. 
c. when both parties agree to the basic parts of the contract, except for details like price, payment, quality and quantity of goods, shipping instructions, and liability. 
d. if the contract is valued at above U. S. $ 500 and is in writing. 
*e. when all of the terms in the contract have been explicitly agreed to. 

11. A termination for convenience is
~ A termination for convenience is legal, but should be handled with care and sensitivity toward the party being terminated since it can cause legal complexities and bad feelings. 
@ A termination for convenience is legal, but should be handled with care and sensitivity toward the party being terminated since it can cause legal complexities and bad feelings. 
a. illegal. 
*b. a termination for any reason other than non-performance. 
c. a simple process about which the exporter should not have to worry. 
d. usually accomplished with good feelings on both sides. 
e. usually accomplished through mediation. 

12. While an exporter and distributor can agree on what the distributor can add for margin on the wholesale price of goods, in agency contracts
~ There are no restrictions placed on the amount of commission that the agent can earn. 
@ There are no restrictions placed on the amount of commission that the agent can earn. 
a. commissions are limited to U. S. $ 1. 2 million per quarter. 
b. the commission is limited to 12 percent. 
c. the commission is whatever the agent decides it should be. 
d. commissions are set by the UCC. 
*e. commissions are determined through negotiation between the principal and the agent. 

13. Under the United Nations Convention on Contracts for the International Sale of Goods (CISG), when an offer is made
~ The offer cannot be withdrawn at any time before the expiration date. Under the CISG, the offer does not have to be in writing, nor do international courts usually recognize that it can be withdrawn even after the expiration date. 
@ The offer cannot be withdrawn at any time before the expiration date. Under the CISG, the offer does not have to be in writing, nor do international courts usually recognize that it can be withdrawn even after the expiration date. 
*a. it cannot be withdrawn by the buyer or seller before its expiration date. 
b. it can be withdrawn at any time before the expiration date. 
c. it must be in writing. 
d. international courts usually recognize that it can be withdrawn even after the expiration date. 
e. it must be accepted within a month (30 days) of being made

14. Instead of using courts to settle disputes, an increasing number of contracts call for disputes to be settled by
~ An arbitration panel is often used to settle disputes. 
@ An arbitration panel is often used to settle disputes. 
a. international law. 
b. diplomacy. 
*c. an arbitration panel. 
d. the Uniform Commercial Code. 
e. the International Chamber of Commerce. 

15. In judging whether or not a contract has been breached, the Uniform Commercial Code (UCC) applies the principle of perfect tender.  This means that
~ The UCC requires that the goods conform exactly to the contract, whereas the CISG demands a substantial product or delivery discrepancy before recognizing that the contract has been breached. 
@ The UCC requires that the goods conform exactly to the contract, whereas the CISG demands a substantial product or delivery discrepancy before recognizing that the contract has been breached. 
a. there must be a cash exchange to enforce the contract. 
b. the UCC treats the matter the same as the CISG. 
c. the parties must refer to their oral agreements, not to what they have written. 
*d. the goods and their delivery must exactly conform to what was written in the contract. 
e. the parties must agree that the contract has been fulfilled. 

16. A termination of an international contract between an exporter and an agent/distributor can be initiated by 
~ Options only an exporter, only an importer, and only an agent/distributor are incomplete: either of the parties can terminate the contract. 
@ Options only an exporter, only an importer, and only an agent/distributor are incomplete: either of the parties can terminate the contract. 
*a. either of the parties. 
b. only an exporter. 
c. only an importer. 
d. only an agent/distributor. 
e. the government of either the exporter's or the importer's country

17. An agreement between an exporter and an agent/distributor may state that the laws of the exporters country apply to governing of the contract. This can be complicated by
~ The importing countrys government may protect agents/distributors under labor law. 
@ The importing countrys government may protect agents/distributors under labor law. 
a. the practice of many exporters to bribe the judges in their home countries. 
b. a shortage of lawyers in the exporters home country. 
c. it being illegal for the exporter to make such an agreement. 
*d. the government of the country where the agent/distributor is located, as it may say it has jurisdiction over the contract. 
e. the International Chamber of Commerce, as it may say that the laws of the importer's country must apply. 

18. Contracts contain a force majeure clause which dissolves the contract in the event of a major unforeseen event, like a ship sinking in a storm. Loosely translated, force majeure means
~ Force majeure is a French expression that loosely means overwhelming power. 
@ Force majeure is a French expression that loosely means overwhelming power. 
a. forced dissolution. 
*b. overwhelming power. 
c. major provisions of contract no longer in force. 
d. major forfeit. 
e. major force. 

19. Unless otherwise specified, contracts between an exporter and an agent and contracts between an exporter and a distributor are called
~ Contract law and labor law are the body of laws that may apply in this case. Common law is simply incorrect. Distribution contracts is an agreement between the parties in the absence of specifics. 
@ Contract law and labor law are the body of laws that may apply in this case. Common law is simply incorrect. Distribution contracts is an agreement between the parties in the absence of specifics. 
a. contract law. 
b. labor contracts. 
c. common law contracts. 
*d. distribution contracts. 
e. entry contracts. 

20. When a party to a contract is continually looking for loopholes to avoid living up to the obligations of that contract, it can be said that
~ The mandatory clause good faith requires neither party to have any ulterior motive about the agreement and must want to fulfill the terms of the contract. 
@ The mandatory clause good faith requires neither party to have any ulterior motive about the agreement and must want to fulfill the terms of the contract. 
a. the laws of the country of the importer should apply. 
b. the laws of the country of the agent/distributor should apply. 
*c. that party is not acting in good faith. 
d. that party is a shrewd negotiator. 
e. that party is likely to turn any contract in its favor. 


Type: F
1. An arbitration panel is usually made up of ____________________ arbitrators. 
a. Three

Type: F
2. A ____________________ notice spells out how many days the exporter must give the agent/distributor before their termination becomes effective. 
a. pre-termination
b. pretermination

Type: F
3. How trade secrets and other strategic advantages are to be handled is included in a _____________________ clause of a contract. 
a. confidentiality
b. confidential

Type: F
4. A complex multitude of international agreements and international trade laws which complement domestic laws is a form of trade law called ____________________. 
a. Lex Mercatoria
b. lex mercatoria

Type: F
5. The contract clause that spells out if a representative will be an agent or distributor is usually the first clause of the contract and is called the _____________________ of appointment clause. 
a. scope

Type: F
6. Accounts that the exporter will keep to itself and will not allow the agent/distributor or any other local representative to sell to are called ____________________accounts. 
a. corporate
b. house

Type: F
7. The main reason some countries use specific statutes to regulate international distribution agreements is that they feel they need to ____________________ agents and distributors. 
a. protect

Type: F
8. When a territory clause in an international distribution contract makes an agent/distributor an exclusive representative, it essentially grants a ____________________ to the representative. 
a. monopoly

Type: F 
9. Normally, an exporter pays the agents commission when the ___________________ pays the exporter. 
a. customer
b. importer

Type: F
10. A facilities and ____________________ clause in a contract spells out what the exporter and the agent/distributor have agreed upon with respect to the type of establishment the agent/distributor will maintain. 
a. activities