International Business Law: Torts, Sales, and Transportation
Reading Questions – Class 9
Chapter Four, Part 2: Torts and Products Liability, Host State Regulation
4.4 Dow Jones
An online and print article published by Dow Jones (a US company) was insulting to Joe Gutnick (a resident of Victoria, Australia). Trial and appellate courts found that Australian courts had personal jurisdiction over Dow Jones, which appealed to the High Court of Australia. All seven high court justices stated that defamation does not occur when an article is published, but rather when a third party reads about Gutnick and subsequently thinks less of him, thereby damaging his reputation. The article alleged that Gutnick was a tax evader and money launderer.
4.5 Volkswagen v. Woodson
The Robinsons (New York residents) purchased an Audi from Seaway Volkswagen in New York. They relocated to Arizona a year later. While driving through Oklahoma, their car was rear-ended, causing a fire that burned the father and two children. They filed a tort lawsuit in Oklahoma, alleging product liability. The defendants were the retailer (Seaway) and the wholesaler (Worldwide Volkswagen), both New York corporations that conducted no business in Oklahoma. The defendants entered special appearances, arguing that Oklahoma lacked personal jurisdiction over them under the Fourteenth Amendment’s Due Process Clause. The trial court asserted jurisdiction, and the Oklahoma Supreme Court denied the defendants’ request for a writ of prohibition to prevent the trial judge from exercising personal jurisdiction. The U.S. Supreme Court granted certiorari.
4.7 US v. Blondek
From July 1989 to February 1990, John Blondek and Vernon Tull, former employees of Eagle Bus Manufacturing, Inc., allegedly participated in a bribery scheme involving the payment of $50,000 CAD to foreign officials in Saskatchewan in connection with the sale of 11 buses to the province. According to the indictment, Darrell Lowry and Donald Castle, the Vice-President and President of the Saskatchewan Transportation Company (“STC”), a Canadian government instrumentality, requested a payment of approximately two percent of the purchase price to ensure Eagle’s contract award. Subsequently, George Morton, Eagle’s Canadian agent, issued a check for $52,000 CAD to his own Canadian corporation. Morton then allegedly delivered $50,000 CAD in cash to Castle and, following Tull’s instructions, prepared a false letter on the letterhead of Eagle Ontario Bus Industries, Inc. (the Canadian firm assisting Eagle in the sale) stating that STC had received a “volume discount” of US $43,940. The District Court dismissed the charges against Castle, ruling that bribe recipients could not be prosecuted for conspiring to violate the FCPA. The Fifth Circuit Court of Appeals later affirmed.
4.8 Touche Ross v. Bank Intercontinental
Touche Ross, an accounting firm operating in the Cayman Islands, conducted audit work for Bank Intercontinental, Limited, a company incorporated under Cayman law. The bank filed a lawsuit in Florida alleging professional negligence, claiming that Touche Ross was a multinational accounting partnership with offices in Florida, New York, the Cayman Islands, and worldwide. Touche Ross then filed a lawsuit in the Cayman Islands seeking to restrain the bank from pursuing the Florida lawsuit. The court initially granted an ex parte order (a judicial proceeding conducted for the benefit of only one party) based on the plaintiff’s (the party initiating the lawsuit) allegations that the Florida proceeding appeared to be an attempt to portray Touche Ross as a multinational entity with connections to Florida as a pretext for suing there. When a firm is considered part of a common enterprise, all firms within the enterprise are jointly liable for each other’s obligations. However, any particular court may not have personal jurisdiction over many of the foreign firms that comprise the common enterprise. In such cases, plaintiffs would be well-advised to file suit in a state where at least one firm has substantial assets.
Explain strict liability. Compare strict liability with negligence.
Strict Liability: Makes a person legally responsible for the damage and loss caused by his/her acts and omissions regardless of culpability. Under strict liability, there is no requirement to prove fault, negligence, or intention. Strict liability is prominent in tort law (especially product liability), corporate law, and criminal law.
Negligence: Involves harm caused by carelessness, not intentional harm.
What are sharp practices?
Sharp practices are sneaky or cunning behaviors that are technically within the rules of the law but border on being unethical.
What is FCPA?
FCPA stands for the Foreign Corrupt Practices Act of 1977. It is a United States federal law known primarily for two of its main provisions: one that addresses accounting transparency requirements under the Securities Exchange Act of 1934 and another concerning bribery of foreign officials.
What is common enterprise liability?
Common enterprise liability means that each member of a common enterprise is individually liable for its conduct and obligations.
Reading Questions – Week 10
Chapter Five, Part 1: Foreign Investment
1. Please familiarize yourself with the case 5-5, Bhutan case.
The Bhopal case is an in-depth study of the industrial accident at the Union Carbide factory in India that immediately killed 2,000 people and injured another 200,000 to 300,000 more. It immediately raised questions about plant safety and corporate responsibility around the world. The case study includes seven detailed appendices: A) Chronology, B) Stakeholders and Level of Responsibility, C) Economic/industrial climate of India, D) Union Carbide Corporation, E) Issues in Chemical Processing, F) Assessing Responsibility: The Legal/Regulatory System, G) Assessing Responsibility: The Engineers and Scientists, and H) Technical Expertise and Managerial Responsibility.
2. Please read the memorandum attached.
Reading Questions – Week 11
Chapter 9: Intellectual Property
1. One way of approaching this topic is paying particular attention to the general terms: what is intellectual property, artistic and industrial property, copyright, pecuniary right, right of reproduction, distribution rights, etc.
Intellectual Property: Refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names, and images used in commerce. It includes copyright, patent, and trademark.
Artistic and Industrial Property: Artistic, literary, and musical works. Inventions and trademarks.
Copyright: An incorporeal statutory right that gives the author of an artistic work, for a limited period, the exclusive privilege of making copies of the work and publishing and selling the copies.
Pecuniary Right: The right of an author to exploit a copyrighted work for economic gain.
Right of Reproduction: The exclusive right of an author to make multiple copies of a copyrighted work.
Distribution Rights: The right of an author to place a copy of a copyrighted work into circulation for the first time.
2. Another way of approaching the topic is to study the examples, i.e., cases, against the general definition.
Example 1:
-What is the right of performance? (How would you explain it to a friend?)
The right of performance is the right of an author to communicate a copyrighted work to the public.
-Read 9-1, Hickey case. What was the performance in question? How is the Zambian scenario relevant to current Europe, including the Czech Republic?
The Hickey case involved a man running a dance club who was violating the copyrights of the music played. He ignored warnings and was taken to court. He claimed he was unaware of the copyright infringement and thought the mail informing him of his illegal actions was a scam because friends told him it was okay. He was found to be infringing copyright.
This scenario is relevant to current Europe, including the Czech Republic, as unauthorized public performance of copyrighted music in commercial establishments is a common issue. Copyright laws are in place to protect the rights of music creators and ensure they are compensated for the use of their work.
Example 2:
-What are moral rights? Explain.
Moral rights are the rights of an author to prohibit others from tampering (interfering in a harmful manner) with a copyrighted work.
-Read 9-2, Seghal. What are the moral rights in question?
-How can moral rights be relevant now in Prague? Try to find specific examples.
In the Seghal case, Amar Seghal designed a mural in New Delhi that became world-famous. After 20 years, the government decided to dismantle it and put it into storage. Seghal sued them for the violation of his moral rights, specifically the act of mutilation, as they dismembered the art, and he was hurt as an artist. The government’s counter-argument was that the mural was damaged by fire and that the defendant had all rights transferred under the Berne Convention. The court decided to return the mural to the artist.
Moral rights can be relevant in Prague today in various situations, such as the alteration or destruction of public art, unauthorized modifications to architectural works, or the misattribution of authorship in literary or artistic creations.
3. Yet another way is to find typical issues and discuss them. The IP chapter is ideal for that. Consider the following:
a) Should downloading music and films online be illegal? Discuss. You must bring an argument, a counter-argument, and make a conclusion.
Argument: Downloading copyrighted music and films without permission infringes on the rights of creators and copyright holders. It deprives them of revenue and discourages further artistic creation.
Counter-argument: Downloading can be a form of sampling, allowing individuals to discover new artists and potentially purchase their work later. It can also be a way to access content that is not readily available through legal channels.
Conclusion: While downloading can have some benefits, unauthorized downloading of copyrighted material remains illegal and unethical. Legal alternatives, such as streaming services and online stores, should be utilized to support creators and ensure the sustainability of the creative industries.
b) If UNYP makes copies of the textbook, would that be a violation of the copyright? Discuss. You must bring an argument, a counter-argument, and make a conclusion.
Argument: Making unauthorized copies of a textbook violates the copyright of the publisher and authors. It deprives them of revenue and undermines the incentive to create and publish educational materials.
Counter-argument: Making copies for educational purposes, such as providing students with excerpts or supplementary materials, could fall under fair use exceptions to copyright law.
Conclusion: While limited copying for educational purposes might be permissible under fair use, making extensive copies of a textbook without permission is a copyright violation. UNYP should obtain licenses or explore alternative options, such as digital course materials, to ensure compliance with copyright law.
c) Should making counterfeit products (typically in China) be illegal? Discuss. You must bring an argument, a counter-argument, and make a conclusion. If you reach a different conclusion than in a), explain.
Argument: Counterfeit products infringe on trademarks and intellectual property rights, harming brand owners and consumers. They can be of inferior quality, pose safety risks, and undermine legitimate businesses.
Counter-argument: Counterfeit products can provide affordable alternatives for consumers who cannot afford genuine products. They can also stimulate competition and innovation.
Conclusion: Counterfeiting is illegal and harmful. It undermines intellectual property rights, damages brand reputation, and poses risks to consumers. While affordability concerns exist, promoting legitimate businesses and ensuring consumer safety should be prioritized.
4. What is a patent? When can an idea (invention) be patented?
A patent is an incorporeal statutory right that gives an inventor, for a limited period, the exclusive right to use or sell a patented product or to use a patented method or process.
Patents serve two purposes: they confirm the private property rights of the inventor, and they grant a special monopoly to encourage invention and industrial development.
An idea (invention) can be patented if it meets certain criteria, including novelty, usefulness, and non-obviousness. It must be a new invention that is not already known or used by others, it must have a practical application, and it must not be an obvious modification of existing technology.
5. What is a trademark? What is the main requirement for a trademark to be registered?
A trademark is a mark/symbol/sign that you can use to distinguish your business’ goods or services from those of other traders.
The main requirement for a trademark to be registered is distinctiveness, meaning that the design must be unique enough to distinguish the goods or services of one trader from those of another.
6. Consider 9-5, L’Oréal v. eBay. Is eBay in a position to enforce trademark rights of right holders?
In L’Oréal v. eBay, the court addressed the issue of whether online marketplaces like eBay have a responsibility to prevent the sale of counterfeit goods on their platforms. The court found that eBay could be held liable for trademark infringement if it had knowledge of counterfeit goods being sold and failed to take appropriate action. This case highlights the challenges of enforcing trademark rights in the online environment and the role of intermediaries in protecting intellectual property.
7. One part of Chapter 9 applies IP to competition law (534 – 554). You may find it useful to review the old competition law we studied so far, under the light of the IP rules. In general, though, this part may not require your full attention.
8. What is a compulsory license? Why does such a rule exist?
A compulsory license is a government authorization that allows someone other than the patent holder to produce and sell a patented invention without the patent holder’s consent. This is typically done in situations where there is a public interest in making the invention more widely available, such as in the case of essential medicines.
Compulsory licensing rules exist to balance the rights of patent holders with the needs of society. They allow governments to override patent monopolies in certain circumstances to ensure access to important inventions or to address public health emergencies.
Reading Questions – Week 12
Chapter 10: Sales, Part I.
CISG: Convention for the International Sale of Goods
1. How can parties opt into CISG and how can they opt out of it? Explain.
Parties to a contract may exclude or modify CISG’s application by using a choice-of-law clause: a contractual provision that identifies the law to be applied in the event of a dispute over the terms or performance of the contract.
“Opting in” could be problematic unless the parties end up in a state that applies CISG only to CISG-ratifying states.
2. Study Case 10-1. What did the parties want? What did they have in the contract?
The lawsuit arose from a dispute involving the sale of electronic components. The plaintiff (Asante Technologies Inc.) filed the action in the Superior Court for the state of California. The defendant (PMC Sierra, Inc.) removed the action to federal court, asserting that the plaintiff’s claims for breach of contract and breach of express warranty were governed by the UN Convention on Contracts for the International Sale of Goods (CISG). The plaintiff disputed jurisdiction and filed a Motion to Remand.
3. If a German buys goods in Prague, does CISG apply? Explain.
Yes, CISG applies unless the transaction falls under one of the six excluded categories: excluded transactions (a, b, c) and excluded goods (d, e, f).
a. Goods bought for personal, family, or household use
b. Auction sales
c. Sales “on execution or otherwise by authority of law”
d. Stocks, shares, investment securities, negotiable instruments, or money
e. Ships, vessels, hovercraft, or aircraft
f. Electricity
4. When the court tries to determine the intent of the parties, what does it look at?
a. Subjective Intent Approach: Rule that contracts should be interpreted according to the actual intent and understanding of the parties at the time they made their agreement.
b. Objective Intent Approach: Rule that contracts should be interpreted according to the understanding that a reasonable person would have had at the time the agreement was made.
5. What must an offer for international sales of goods contain to be definite?
According to Article 14 of the CISG, a proposal is sufficiently definite if it indicates the goods and expressly or implicitly fixes or makes provision for determining the quantity and price.
An offer must describe the goods with sufficient clarity that the parties know what is being offered for sale, and it must also state the quantity and price.
6. Must a contract for international sales of goods be in writing?
a. No, Article 11 of the CISG states that a contract of sale does not need to be concluded in or evidenced by writing; it may be proved by any means, including witnesses.
b. Article 96 authorizes a contracting state whose legislation requires contracts to be written to make a declaration at the time of ratification to disapply Article 11.
7. If the contract for international sales of goods does not state the price, is the contract invalid?
No, the contract is still valid. The offer is assumed to have “impliedly made reference to the price generally charged.”
8. What is a firm offer? Does CISG allow firm offers?
A firm offer is an offer that the offeror promises to keep open for a fixed period. The doctrine of consideration (i.e., one in which the offeree pays the offeror for the promise to keep the offer open) does not apply to CISG. However, firm offers are enforceable under CISG.
9. Can silence be acceptance?
Silence or inactivity, in and of itself, does not constitute acceptance. When someone makes you an offer and you do not respond, you normally will not be bound to a contract. Your silence is generally not considered acceptance if you do not truly intend to accept. This is generally true even if the person making the offer specifically says that your silence is considered acceptance.
10. What is an assent by performance? Explain.
If the offeror asks for performance of an act rather than an indication of acceptance, the acceptance is effective at the moment the act is performed. The offer must make it clear that the offeree is not required to notify the offeror.
11. What is the Battle of the Forms?
The Battle of the Forms refers to a situation where two persons intending to contract exchange differing form contracts, making it difficult to determine the terms of the contract or whether a contract exists at all.
12. What happens if the acceptance contains modifications?
This scenario occurs when merchants use preprinted forms both to make offers and to send back acceptances. Under CISG, if the inconsistencies are “material,” the would-be acceptance is a counteroffer.
Additional or different terms are considered to alter the terms of the offer materially.
Terms that are not material are considered to be proposals for addition that will become part of the contract unless the offeror promptly objects.
13. What is specific performance? Give a scenario when specific performance is a practical solution.
Specific performance is a court order directing a party to carry out the obligations they had contractually promised to do (such as delivering goods).
Example: Rina offers to buy Beth’s house, and Beth accepts but later decides to keep the property. Real estate is considered unique. Since there is no other piece of property or house exactly like Beth’s, Rina may be entitled to specific performance on the contract. Beth would be compelled to go through with the sale.
14. Read 10-3, Filanto.
Reading Questions (Class 13)
Chapter 10: Sales, Part II.
Study Problems 1-10 on pages 607–608.
Make sure you are able to refer to specific provisions of the CISG.
Fundamental Breach:
A fundamental breach of contract, sometimes known as a repudiatory breach, is a breach so fundamental that it permits the distressed party to terminate performance of the contract, in addition to entitling that party to sue for damages.
Avoidance:
Notification by a party that they are canceling a contract and returning everything already received.
Specific Performance:
A court order directing a party to carry out the obligations they had contractually promised to do.
Third-Party Claim:
A claim made by a defendant within existing legal proceedings seeking to enjoin a person not a party to the original action to enforce a related duty. Third-party claims include assertions of ownership and rights in intellectual property such as patents, copyrights, and trademarks.
Waiver:
An intentional relinquishment or abandonment of a known right or privilege.
A party may 1) excuse the seller from complying or 2) impliedly excuse the seller if the buyer knew or could not have been unaware that the goods were nonconforming.
Passage of Risk:
The point in time when the buyer becomes responsible for losses to the goods. The legal concept of passage of risk determines who is responsible for the loss.
Basic Incoterms: FOB, FAS, EXW
1. FOB (Free on Board): A term in international commercial law specifying at what point the seller transfers ownership of the goods to the buyer.
2. FAS (Free Alongside Ship): Means that the seller fulfills their obligation to deliver when the goods have been placed alongside the vessel on the quay or in lighters at the named port of shipment. This means that the buyer has to bear all costs and risks of loss of or damage to the goods from that moment.
3. EXW (Ex Works): The seller makes the goods available at their premises. This term places the maximum obligation on the buyer and minimum obligations on the seller.
Nachfrist Notice:
The fixing by the buyer of an additional reasonable period in which the seller may perform.
What are Buyer’s Remedies?
1. Suspension of performance
2. Avoidance in anticipation of a fundamental breach
3. Avoidance of an installment contract
4. Damages
Suspension of Performance:
A remedy available to either party when it becomes clear that the other party will not perform a substantial part of their obligation because of a serious deficiency in their ability to perform, their creditworthiness, their preparations for performing, or their performance.
Anticipatory Avoidance:
A remedy available to either party when it becomes clear that the other party will commit a fundamental breach.
Duty to Mitigate Losses:
The aggrieved (or non-breaching) party’s obligation to make reasonable efforts to limit additional losses after a damaging event (or a breach of contract) has occurred. Failure in this duty may prevent the aggrieved party from obtaining compensation for avoidable losses.
Force Majeure:
From French “superior force.” An event or effect that cannot be reasonably anticipated or controlled.
Cases
10-5, Chicago Prime Packers
Chicago Prime Packers, Inc. (“Chicago Prime”) brought a two-count amended complaint against Northam Food Trading Co. (“Northam”) and Nationwide Foods, Inc. d/b/a Brookfield Farms (“Brookfield”) for breach of contract. The purchaser of Chicago Prime’s ribs claimed they arrived in an “off condition.” Chicago Prime and Brookfield subsequently entered into a settlement, and Count II of Chicago Prime’s Amended Complaint, which was its claim against Brookfield, was dismissed with prejudice. Thus, the only remaining claim was against Northam for breach of contract.
In accordance with the foregoing Findings of Fact and Conclusions of Law, the Clerk of the Court was directed to enter judgment in favor of the plaintiff Chicago Prime Packers, Inc. and against the defendant Northam Food Trading Co. in the sum of $178,200.00 plus $27,242.63, representing prejudgment interest calculated at 5% from May 1, 2001, for a total payment of $205,442.63.
10-6, Shoe Seller’s Case
By a letter dated September 19, 1992, the Defendant [buyer], the owner of a shoe retail business, ordered 143 pairs of various types of shoes from the Plaintiff [seller], a shoe manufacturing firm in Italy. The shoes were delivered to the buyer on February 16, 1993. Upon the conclusion of the contract, the parties had agreed that payment of the net amount of the invoice was to be made either within ten days from the date of invoice, yielding a 3% cash discount, or within sixty days after the date of invoice.
By a letter dated February 5, 1993, the seller invoiced the buyer for the total price of the delivery, i.e., IT£ [Italian Lira] 8,411,000. The buyer did not pay and subsequently received a first reminder by the seller’s letter of April 7, 1993. The reminder did not lead to payment. Accordingly, the seller sent a second notice, this time also setting a time limit for payment until May 13, 1993. Subsequent to this notice, the buyer forwarded a check dated April 29, 1993, to the seller, deducting IT£ 2,886,000 for shoes [buyer] noticed as being defective. The shoes for which the buyer gave notice of defect are item nos. (…). The check the buyer sent to the seller was only received on May 18, 1993.
The seller maintains that the shoes for which the buyer refuses to pay were neither defective nor had the buyer validly avoided the sales contract.
The seller’s claim is denied.
The seller does not have a right to the residual price and therefore also lacks a valid claim to either the interest sought or any additional damages.
The fact that the buyer gave notice of defect (Article 39(1) CISG) in the correct manner and within the prescribed time limit remains unchallenged.
End of the chapter.
Question 9 – Article 73(2)
Question 10 – Article 35 & Article 50 & (37&48)
Reading Questions – Week 14
Chapter 11: Transportation
1) INCOTERMS:
Trade terms published by the International Chamber of Commerce. If you want to refer to Incoterms, then you have to mention them. For example, CIF (Incoterms 2010)
‘Free’ Terms: ‘Free’ means that the seller has an obligation to deliver goods to a named place for transfer to a carrier.
FOB (Free on Board) (named port of shipment): Seller fulfills their obligations to deliver when the goods have passed over the ship’s rail at the named port of shipment.
FAS (Free Alongside Ship) (named port of shipment): The seller fulfills their obligations to deliver when the goods have been placed alongside the vessel on the quay or in lighters at the named port of shipment.
CIF (Cost, Insurance & Freight) (named port of destination): The seller must pay the costs and freight necessary to bring the goods to a named port of destination and must procure marine insurance against the buyer’s risk of loss to the goods during carriage.
CFR (Cost and Freight) (named port of destination): The seller must pay the cost and freight necessary to bring the goods to the named port.
FCA (Free Carrier) (named place of delivery): Applies to any form of transportation and requires the seller to deliver goods to a particular carrier at a named terminal, depot, airport, or other place where the carrier operates. The costs of transportation and the risks for loss shift to the buyer at that time.
EXW (Ex Works) (named place of delivery): The seller fulfills their obligations to deliver by making the goods available at their premises. The least demanding on the seller.
2) Bill of Lading:
An instrument issued by an ocean carrier to a shipper that serves as a receipt for goods shipped, as evidence of the contract of carriage, and as a document of title for the goods.
3) Piracy on the Seas:
Pirates with heavy firepower are a growing concern. The Seychelles invited China to set up an anti-piracy base in the islands to help fight the regular piracy attacks. China is considering the proposition. The US wants merchant vessels to have heavily armed security teams.