1. The Regulation of International Transactions What are some of the risks of international trade?

2. Chapter Objectives 1. Basic Doctrines. Identify and discuss some basic principles and doctrines that frame international business transactions. 2. Doing Business Internationally. Describe some ways in which U.S. businesspersons do business internationally. 3. Letters of Credit. Explain how parties to international contracts protect against various risks through contractual clauses and letters of credit.

3. International Doctrines Principle of Comity (Defer to the laws/judgments of another nation) The Act of State Doctrine (the judicial branch of one country will not examine the validity of public acts of another country) – Expropriation (w/ proper compensation) – Confiscation (w/o proper compensation) The Doctrine of Sovereign Immunity (immune from US jurisdiction unless waived -- commercial activities exception) (Foreign Sovereign Immunity Act)

4. What Is a “Commercial Activity”? According to the U.S. Supreme Court, a state engages in a commercial activity “where it exercises ‘only those powers that can also be exercised by private citizens’ as distinct from those ‘powers peculiar to sovereigns.’” In addition to finding that a government-controlled foreign defendant has engaged in a commercial activity, what other requirement must be met before a U.S. court can exercise jurisdiction over the defendant?

5. Contract Issues Choice of Language Choice of Forum Choice of Law Force Majeure Civil Dispute Resolution Contract

6. Legal Documents in French In 1995, France implemented a law making the use of French mandatory in certain legal documents. Certain legal terms in documents governed by U.S. or English law have no equivalent terms or phrases in the French legal system. How might language differences affect the meaning of certain terms or phrases in an international contract?

7. Making Payment on International Transactions Foreign Exchange Markets Correspondent Banking

8. Letters of Credit – Issuer - Bank – Seller - Beneficiary – Account party (buyer) – Three contracts buyer and seller issuer and the buyer letter itself End-of-Chapter Q7-1, p. 230 The Swiss Credit Bank issued a letter of credit in favor on Antex Industries to cover the sale of 92,000 electronic Arrays. The letter of credit specified that the chips would be transported to Tokyo by ship. Antex shipped the circuits by air. The bank denied payment of the Letter of Credit. Should a court compel payment?

10. Discrimination Laws U.S. Discrimination Laws. There are laws in the U.S. prohibiting discrimination on the basis of race, color, national origin, religion, sex, age, and disability. Apply Overseas. – US Workers working for US company abroad – Foreign workers working for a US company abroad

11. Other International Rules No US Export Tax – technology (atari machines)(current oil policy) Import Restrictions – quotas (Japanese Cars in 70s) – Tariffs – Ethanol GATT AND WTO – most favored nations to members – EU – NAFTA