International Legal Issues Midterm 1 Sample Questions

GSU - Fall 2026

Which entry method gives a company the MOST control over its foreign operations but also carries the HIGHEST level of risk? A. Exporting / B. Licensing / C. Foreign Direct Investment / D. Franchising

C. Foreign Direct Investment

If a U.S. company sells goods to a French buyer in Euros and the Euro drops in value before payment is made, what specific risk did the U.S. seller face? A. Cultural / B. Financial/Foreign Exchange / C. Political / D. Commercial

B. Financial/Foreign Exchange

What is the simplest and safest way for an exporter to eliminate foreign exchange rate risk entirely? A. Buy currency options / B. Require payment in their home currency / C. Wait for the currency to fluctuate back / D. Only choose countries with stable economies

B. Require payment in their home currency

In Gaskin v. Stumm Handel, why did the court enforce a German-written contract against an American manager who couldn't read German? A. German law always overrides U.S. law / B. The manager was fluent in Dutch which is close to German / C. The manager lied about his credentials / D. The manager was negligent for signing without getting a proper translation

D. The manager was negligent for signing without getting a proper translation

In Coker v. Burlington, why was the buyer denied a refund on his non-refundable deposit when Peru blocked the import of textile looms? A. The contract did not allocate the risk to anyone other than the buyer / B. The looms were destroyed in transit / C. The contract was in German and the buyer failed to translate it to English / D. The contract contained a frustration of purpose clause

A. The contract did not allocate the risk to anyone other than the buyer

If a foreign government bans foreign investors from sending their profits back home, this is an example of what? A. Tariff-rate quota / B. Currency control / C. Forum selection / D. Imposition of sanctions

B. Currency control

A company decides NOT to expand into a country because the political situation is too unstable. Which risk management strategy did they use? A. Risk Transference / B. Risk Avoidance / C. Risk Acceptance / D. Risk Reduction

B. Risk Avoidance (the file bolds A; likely a slide error)

Buying commercial insurance or using a bank letter of credit to shift risk to a third party is an example of what? A. Risk Transference / B. Risk Avoidance / C. Risk Acceptance / D. Risk Reduction

A. Risk Transference

Which exporting method involves hiring an independent foreign firm to buy your products and resell them in their local market? A. Direct Exporting / B. Foreign Distributor / C. Foreign Branch / D. Importing

B. Foreign Distributor

In Tarbert Trading v. Cometals, why did the court refuse to enforce the contract for Kenya red beans? A. The beans were spoiled / B. The manifest contained false weight details / C. The contract required a false certificate of origin / D. The shipment arrived late

C. The contract required a false certificate of origin

What clause in a contract excuses a company from performing if an extraordinary, unpredictable event like a hurricane or war occurs? A. Forum Selection clause / B. Force Majeure clause / C. Choice of Law clause / D. Statute of Limitations clause

B. Force Majeure clause

Which type of tariff is charged as a fixed percentage of the imported product's total value? A. Specific tariff / B. Tariff-rate quota / C. Special tariff / D. Ad valorem tariff

D. Ad valorem tariff

A complete or near-total government ban on trading goods with a specific country is called what? A. Quota / B. Tariff / C. Embargo / D. Sanction

C. Embargo

What is the major risk a licensor faces when giving a foreign licensee access to their brand and trade secrets? A. The "invisible tax risk" meaning the high cost of foreign trademark protection / B. The "apprentice risk" referring to the licensee learning the secrets and becoming a competitor / C. The "high tax risk" suggesting that local corporate taxes are higher for franchises

B. The "apprentice risk" referring to the licensee learning the secrets and becoming a competitor

In Dayan v. McDonald's, why was McDonald's allowed to terminate the French franchisee's agreement? A. The contract term ended / B. McDonald's was banned from France for poor operational issues / C. The franchisee failed to maintain QSC standards / D. McDonald's failed to provide employment opportunities to enough French citizens

C. The franchisee failed to maintain QSC standards

Which business structure is a separate legal entity created under the host country's laws, providing a limited liability shield for the parent company? A. Foreign branch / B. Joint venture / C. Foreign subsidiary / D. Franchise

C. Foreign subsidiary

An agreement between two independent companies to form a new, jointly-owned legal entity to share risks and local expertise is called what? A. Foreign branch / B. Joint venture / C. Wholly-owned subsidiary / D. Convention

B. Joint venture

What type of agreement ensures that sensitive business information, client lists, or trade secrets shared with another party are kept confidential? A. Force Majeure Agreement / B. Gag Order / C. Supply Chain Agreement / D. Non-Disclosure Agreement

D. Non-Disclosure Agreement

Which method of dispute resolution involves a neutral third party making a final, legally binding decision that courts will enforce? A. Negotiation / B. Mediation / C. Arbitration / D. Litigation

C. Arbitration

What treaty makes international arbitration awards enforceable in over 170 countries? A. Vienna Convention / B. New York Convention / C. UN Convention on Legal Protections / D. Berne Convention

B. New York Convention

What contract clause specifies which court or country has the authority to hear a legal dispute if one arises? A. Forum selection clause / B. Choice of law clause / C. Force majeure clause / D. Non-disclosure clause

A. Forum selection clause

What contract clause specifies which court or country's laws will be used to interpret the contract? A. Forum selection clause / B. Choice of law clause / C. Force majeure clause / D. Non-disclosure clause

B. Choice of law clause

The legal doctrine that allows a court to dismiss a case because another court in a different country would be better suited to hear from witnesses and see evidence is called what? A. Sovereign immunity / B. Forum non conveniens / C. Strict liability / D. Tortious interference

B. Forum non conveniens

What do you call it when a business unlawfully convinces a third party to break a valid contract with a competitor? A. Fraud / B. Loss of consortium / C. Breach of contract / D. Tortious interference

D. Tortious interference

If an entire line of motorcycles contains a flawed throttle design, what type of product defect is present? A. Manufacturing defect / B. Design defect / C. Warning defect / D. Marketing defect

B. Design defect

If a single motorcycle comes off the assembly line with a bad brake line that was properly attached, what type of product defect is present? A. Manufacturing defect / B. Design defect / C. Warning defect / D. Marketing defect

A. Manufacturing defect

In the Collett case, why was the Japanese manufacturer subject to personal jurisdiction in Georgia courts? A. It had a factory in Georgia / B. The CEO lived in Georgia and paid taxes there / C. It gained significant revenue and market share by purposefully targeting the Georgia market / D. It employed more than a dozen US sales reps who were based in Georgia

C. It gained significant revenue and market share by purposefully targeting the Georgia market

What type of IP protects the Nike Swoosh? A. Patent / B. Trademark / C. Copyright / D. Trade Secret

B. Trademark

How long does a US utility patent generally protect an invention in exchange for making the details public? A. 10 years / B. 20 years / C. 70 years / D. Forever

B. 20 years

The visual appearance and packaging of a product like the unique shape of a Hershey's Kiss is protected as what? A. Trade dress / B. Copyright / C. Design patent / D. Trade secret

A. Trade dress

Under US copyright law, who or what must be the author of a work for it to receive copyright protection? A. A US-government authorized AI program / B. A human being / C. A US corporation or non-profit / D. A registered author

B. A human being

Does the CISG apply to consumer purchases like buying shoes online for yourself? A. Only if there was consideration for the purchase / B. Yes, but only in countries that have adopted the CISG / C. Yes, but only in civil law countries / D. No, it explicitly excludes consumer sales for personal or household use

D. No, it explicitly excludes consumer sales for personal or household use

Under the CISG, what level of breach is required for a party to cancel (avoid) the contract and reject the goods entirely? A. Any minor breach / B. Non-material breach / C. Punitive breach / D. Fundamental breach

D. Fundamental breach

Under the CISG, when does an acceptance of an offer take effect? A. As soon as it is put in the mail (Mailbox Rule) / B. When it reaches the offeror / C. 24 hours after sending / D. 24 hours after reaching the offeror

B. When it reaches the offeror