Dale E. Fowler School of Law, Chapman UniversityInternational .docx

Dale E. Fowler School of Law, Chapman University
International Business Transactions, Fall 2014 Final
Examination
Professor Cao
This is the final examination in International Business
Transactions. This exam is sent to you December 2, 8:00 am
California time. It is due December 5, 4:30 pm California time.
Please return the exam to the Registrar’s office by that date and
time. If you are not able to return the examination in person,
please email the examination back to the registrar and make
sure it is RECEIVED by 4:30 pm December 5.
Do not put your name on the examination questions or on your
examination answers. Only use your exam I.D. Do not contact
me with any questions you may have. If you must ask questions
because something is unclear, contact the Registrar.
Accept the facts as stated, even if they seem implausible to you.
If you feel you need additional information to resolve an issue,
briefly describe the information that you need and how
it would alter your analysis. If you believe there are mistakes
(new names of characters, strange dates, something that doesn’t
make sense, just state your belief and provide the answer that
you think best makes sense).
If you are handwriting, write legibly. I will skip words that I
cannot decipher.
Please use only blue or black pens. Do not use pencil.
You may not discuss this examination with any person. Doing
so will result in an F.
You may not photocopy the exam or take any photographs of it.

You MUST return the examination question sheets with your
examination answer.
I RESERVE THE RIGHT TO PENALIZE THE
GRADE OF ANY STUDENT WHO FAILS TO RETURN ANY
PART OF THE EXAMINATION WITH THE EXAMINATION
ANSWER.
· What is the difference between an express and an implied
contract?
· A unilateral and a bilateral contract?
· A contract that is void or voidable?
· What elements must be in place for formation of a contract?
· What are three examples of valid consideration?
· The Uniform Commercial Code generally regulates commerce
or trade on a national basis.
· Does the UCC directly or indirectly have any effect on
international commerce? If so, what effect on international or
worldwide commerce might the UCC cause?
Please use at least four quality research sources to support your
statements. The deliverable length requirement is 7–10 content
PowerPoint slides (excludes the title and references
slides).Background on Course Research Requirements: In the
business world, it is important to use research to strengthen
points made in presentations and projects. Learning to use the
search functions in databases for research is a crucial critical
thinking skill that complements other research techniques.
There are two main types of databases. You must stay away
from inferior Web sites with anonymous writers; articles found
on consultant Web sites, and materials on Web sites that are not
reputable. Dictionaries and encyclopedias most often repeat the
information from textbooks. Acceptable Internet resources
include, among others, government sites (especially for
statistics). Wikipedia and open source Web sites are not
permitted.
For additional research and APA information, please read
Appendix A, B, C, G, and R.

Individual Project Rubric
Grading Criteria
Percentage
Deliverable requirements addressed; understanding of material
and writer's message and intent are clear.
35%
Scholarly research that supports the writer's position is properly
acknowledged and cited, and direct quotations may not exceed
10% of the word count of the body of the assignment
deliverable (excluding title page, abstract, table of contents,
tables, exhibits, appendices, and reference pages). Inclusion of
plagiarized content will not be tolerated and may result in
adverse academic consequences.
20%
Critical thinking: Position is well-justified; logical flow;
examples provided where appropriate.
20%
Structure: Includes introduction and conclusion; proper
paragraph format; reads as a polished academic paper or
professional presentation, as appropriate for the required
assignment deliverable.
10%
Mechanical: No spelling, grammatical, or punctuation errors.
10%
APA: Deliverable is cited properly according to the APA
Publication Manual (6th ed.).
5%
INTERNATIONAL BUSINESS TRANSACTIONS
Professor Lan Cao
Office Room 413
[email protected]
Office Hours, Mondays Wednesdays 9 to 10:15 or by
appointment
Syllabus

Fall Term 2014
Readings will be assigned each week from the following
required texts:
1.Folsom, Gordon & Spanogle, Fitzgerald, Van Alstine,
International Business Transactions (11th edition) (the
"Casebook").
2. Documents Supplement to casebook
Course Description
This is a three-credit survey course designed to acquaint
students with some of the issues involved in the conduct of
international business transactions. We will examine the various
methods of doing business abroad, moving from relatively
simple to progressively more involved transactions -- for
example, beginning with a basic sale and financing of goods
across national borders to the establishment of a productive
operation abroad through foreign franchisees, technology
licensing arrangements and finally, direct investment in foreign
enterprises. The last part of the course will focus on the
resolution of international commercial disputes.
PLEASE NOTE THAT FOR MOST OF YOU, THE COURSE
WILL INTRODUCE YOU TO A RADICALLY DIFFERENT
APPROACH TO THE PRACTICE OF LAW: THE
TRANSACTIONAL RATHER THAN THE LITIGATION
APPROACH. THIS REQUIRES A DIFFERENT WAY OF
THINKING ABOUT CLIENT REPRESENTATION (FOR
EXAMPLE, THINKING ABOUT HOW TO STRUCTURE A
TRANSACTION RATHER THAN HOW TO LITIGATE).
We will study these transactions in a variety of political and
economic settings -- economically developed
nations,developing-country markets and non-market economies
in transition.
Even though there will be some discussion of national controls
and international regulation of trade, for example, the World
Trade Organization and the North American Free Trade
Agreement, the primary focus of the course is on private
international business law (sales contracts, trademark licenses,

intellectual property infringements, investment contracts, etc.).
We will touch on an extensive range of substantive laws, such
as the law of corporations, commercial transactions and the
uniform commercial code, antitrust, intellectual property
(copyright, trademark, patent), conflict of laws, civil procedure,
contracts, international trade as well as public international law.
Any knowledge or background in some of these areas will be
helpful. However, there are no prerequisites for this course.
Program Learning Objectives
The learning objectives for the law school curriculum generally
involve client representation, legal analysis, and legal writing.
Course Learning Objectives
This course supports both the legal analysis and the client
representation objectives, but in a transactional, deal-planning
context. Therefore, although we will read cases that address
substantive legal issues arising from international business,
such as letters of credit, intellectual property, international
litigation, you will learn to read those cases in order to plan a
transaction in ways that best represent your client’s interests or
minimize the possibility of conflict between the parties in the
future.
To do this, you will of course need to know the substantive laws
that govern the transaction. As noted above, this includes a
wide range of substantive laws such as contract (sales of goods
contract, transportation contract, financing contract, for
example), corporations, conflicts of law, intellectual property,
investment laws, international dispute resolution. After the
course, you will be able demonstrate an understanding of these
myriad areas of law. Students will learn to utilize legal rules
and policy principles underlying these substantive laws to
resolve international business issues, and thereby strengthen
their skills in legal analysis, reasoning, and argumentation.
In addition, students will explore all the issues identified above
in an international setting and in a transactional setting. With
respect to the former, the parties to transactions studied in the

course will be from different countries; thus, business
principles and business law will be examined in this context.
For example, we will look at a trademark licensing contract
between parties from the same country and we will also study
how this contract should be modified when the licensor and
licensee are from different countries. Students will learn to
think in the transactional, rather than only litigation context,
and will learn to draft clauses that take international business
issues into account.
In sum, the primary objectives of the course are: legal analysis,
client representation, (which for this course encompasses
transactional planning and practice) and skills training,
particularly drafting skills. These objectives will be undertaken
in an international or transnational context.
Course Requirements:
1.Class attendance. In accordance with the university’s policy,
you must sign your name on the sign-in sheet. Excessive
absence will result in your being dropped from the course.
Signing-in for another person, or for a day you were not in
class, is subject to disciplinary actions by the Law School.
If there is a discrepancy on the sign-in sheet between your
actual attendance for a particular class and what appears on the
Sheet, please contact Ms. Maria Sanchez to correct the
discrepancy.
2.Class preparation and participation. Class preparation means
reading the materials and being prepared to discuss the
materials. This might mean rereading the assignment if needed.
There may be occasions when you feel you are not fully
prepared because of extenuating circumstances. In such
instances, please sign your name on the notepad I will have at
the podium. I will not call on students who have signed this
notepad. No explanation is necessary. Just put your name and
the word "Pass." You have three “free passes” for the semester.
After that, I will need an explanation if you are unprepared and
your final grade might be affected. If you did not sign your
name and yet are unprepared to discuss the materials when

called on, I consider this a serious infraction.
3.You will have one or two collaborative group project. Each
project will be worth 10% of your final grade. I will assign
problems in the casebook. You and your group will work
together to represent a client and solve the client’s problems.
When the project is assigned, you will have the week off so you
can use class time to prepare for the problem and write the
memo.
The grade will be only pass/fail. You will get a pass if you and
your group do the project, write up your legal analysis and
recommendation in a memo form. In class, I will go over the
different approaches after the memos have been turned in.
4.Final exam. Take home. 48 hours.
5.I reserve the right to give you a grade boost (by half a grade)
for class participation. For example, if your final exam grade is
a B, you may get a B plus to take into account class
participation.
Information Concerning Use of Computers and Cell Phones
(This Policy Will be Strictly Enforced)
Students in the course may use their computers during the class
period for -- and only for -- course-related purposes. This
includes taking notes, using existing notes, and looking up
materials that specifically relate to the course. It does not
include such uses as checking email, sending messages, or
viewing any web site other than those specifically instructed by
me during class time. Violation of this rule may result in the
loss of permission to use your computer during class hours and
other sanctions, including grade reduction, at my discretion.
Cell phones must be turned off or put on silent during class
period. No texting is allowed.
Last, private conversation between students is not allowed
during class time. If I see you talking during class, I will ask
you to stop.
Disability Accommodations
In compliance with ADA guidelines, students who have any
condition, either permanent or temporary, that may affect their

ability to perform in this class are encouraged to contact
Associate Dean of Student Affairs and Administration Jayne
Kacer or the University Disability Services Office. Dean Kacer
is located in the law school Dean's Suite and can be reached at
[email protected]or 714-628-2641. You also may contact the
Office of Disability Services at 714-516-4520 or
www.chapman.edu/disabilities. If your request for an
accommodation is granted, please discuss with your professor
only those accommodations that relate to classroom learning,
e.g., the need to sit in a special location, audio taping, etc.
Because exam grading is anonymous, please do not discuss with
your professors any accommodations related to exams. These
accommodations will be handled by the Registrar's Office. The
granting of any accommodation will not be retroactive and
cannot jeopardize the academic standards or integrity of the
course.
Syllabus
The syllabus may be subject to revision -- materials may be
added or deleted dependent on how the course progresses. If
you are absent, it is your responsibility to check with a
colleague to see if the reading assignment has been revised.
Readings will be assigned from the following required texts:
1. Folsom, Gordon & Spanogle, International Business
Transactions
(the "Casebook").
2. Documents Supplement to Folsom, Gordon & Spanogle,
International Business Transactions Copies of the Supplement
will be on reserve. You may opt to consult the reserve copies or
photocopy the entire statute or relevant portions assigned
instead of purchasing the Supplement. These documents are also
readily available online.
3. As a general rule, make sure you always read the problem at
the beginning of each assignment, and the "Questions and
Comments" (Q&C) sections – even though the Q&C sections
tend to be at the end of the problem and thus might not be
assigned when I assign the first part of an assignment. At times

the Q&C will provide you with the information and clues
necessary to evaluate the problem. Even if it only raises
questions more than provide answers, it will help you shape the
framework through which to conceptualize the topic and the
problem to be addressed.
Keep in mind that I have at times divided each problem into two
parts for purposes of assigning your reading per class (so that
the reading is not [email protected]) The Q&C tends to be at the
end of, or occasionally, the middle of the problem. This means
that when you are reading the first part of the assignment, this
part might not contain the pages that the Q&C are on. You need
to read the Q&C nonetheless to give you greater overview of the
problem.
TOPICS AND READING ASSIGNMENTS
I.FORMS OF DOING BUSINESS: INTERNATIONAL
TRADING OF GOODS
A.The Basic Transaction: Toys to Greece
1.Casebook, Read 28-40. Focus on Forms 1 through 6 and Form
11 and chart on p. 52 (yes, chart on page 52 although you’re not
assigned to READ beyond page 40 for this first assignment)
2.Casebook, Read 41-58. Focus on Form 13. Note that the two
main terms you are expected to know, FOB and CIF (Incoterm)
are fully set forth on pp 95-97; these pages are in a problem that
is not assigned. But so that you understand FOB and CIF, we
will go through those specific pages even though we will not be
doing that problem.
B.Formation of An International Transaction: Insulation to
Germany (Problem 4.1)
1.Casebook, Read 58-73. You will need to study UCC 2-207 (in
the supplement), or get the same from some other source
(online) if you choose not to get the supplement. Also, read
UCC 2-314 to 2-316. It is very important that you focus on
statutory sections assigned for this problem.
2.Read pp 73- 79 (up to Perillo article) ; p 81(Unidroit
Principles, esp. article 2.22). You need to study the UN

Convention on Contracts for the International Sale of Goods, in
the Supplement, Arts 1, 6, 18, 19, 35, 36 (Focus on Article 1
and Article 19) (or get the Convention some other way).
Read Q&A, pp 84-90
C.Wars and Other Frustrations: Oil from Araby(Problem 4.3)
1.Casebook, Read 125-137; 138-140
2.Read 149-157.
II.FINANCING THE INTERNATIONAL SALE OF GOODS
A.Intro: Letters of Credit
The Letter of Credit and Electronic Communication: Gold
Watch Pens for France
(Problem 5.1)
1.Casebook, Read 224-242
2.Casebook p 243-268
Docs Supp, Read UCC 5-107; 5-108
B.Enjoining Payment of Lettersof Credit for Fraud: VCRs from
China (Problem 5.2)
1.Casebook 268-289; 298-301. You need to read UCC-5-109
III.FORMS OF DOING BUSINESS: LICENSING, THEFT AND
PROTECTION OF INTELLECTUAL PROPERTY
A.Franchising & Trademark Licensing: Colonel Chicken Goes
Abroad (Problem 9.1)
1.Casebook 752-765 (intro to international IP treaties); 765-770
(intro to franchising); 778-779(Q&C)
2.Casebook 783-799 (antitrust issues in the U.S. and E.U. and
Q&C); 770-778 (franchising contract)
B.Protection of I.P: Piracy & Gray Market Rockers Tapes &
CDs (Problem 9.2)
1.Read Casebook 799-813;816-817
You need to look at Section 526 of the Tariff Act of 1930
(document supplement, 19 U.S.C.A. section 1526(a))
2.Casebook 817-824 (focus on K mart case); 826-829; 832-836
C.Protection of Intellectual Property: Section 337 Proceedings,
Special 301 Procedures, TRIPS and Pharmaceuticals from
Thailand(Problem 9.3)
1.Read Casebook 836-857

Class discussion for this part will focus on the Q&C on pp
1013-1014. Please read the Q&C carefully and apply the issues
raised to the problem laid out in the fact pattern.
Docs Supp., Read Section 337 of the Tariff Act of 1930. Focus
on section 337(a) through (d).
2.Casebook 857-868
Class discussion will focus on the Q&C on pp 1026-27. Please
read the Q&C
carefully and apply the issues raised to the problem laid out in
the fact pattern.
Also Docs Supp., Agreement on Trade Related Aspects of
Intellectual Property Rights (TRIPS) Articles 27-31.
IV. FORMS OF DOING BUSINESS: FOREIGN INVESTMENT
A. Introduction 10.0 The Decision and Ways to Invest Abroad B
Domestic Goods in France
1.Read Casebook 900-912 ; 913-919 (introduction to basic
issues to consider)
Joint Venture Contract (handout)
PLEASE BRING THE HANDOUT JOINT VENTURE
CONTRACT TO EVERY CLASS FROM NOW UNTIL THE
END OF CLASS. WE WILL MAKE CONTINUING
REFERENCES TO IT AS RELEVANT
1.Casebook 954-966 (currency controls)
2.Casebook 966-972 (transfer pricing). We will not address
transnational insolvency
C.The Taking of an Investment By a Third World Nation;
Obstacles to Recovery; and Lump Sum Settlements, Claims
Commissions, and Insurance: Fishing Rods in Marnesia
(Problem 10.6)
1.Casebook 1075-1089 (up to sovereign immunity)
2.Casebook 1089 (sovereign immunity) -1098 (focus on Banco
Nacional v. Sabbatino); 1101-1106
You need to read from Doc. Supp, Foreign Sovereign
Immunities Act of 1976 (Focus on section 1605(a)(1) through
(a)(6 )
V. TRANSNATIONAL DISPUTE RESOLUTIONS

A.Resolution of International Disputes: Televisions
Everywhere: Choice of Forum and Jurisdiction(Problem 11.1)
1.Casebook 1152-1162 (forum)
B.International Enforcement of Foreign Arbitral Awards: Cars
from Malaysia (Problem 11.5)
1.Casebook 1277-1297, 1303-1307
5
Chapman University, Dale E. Fowler School of Law
International Business Transactions, Fall 2014, Professor Cao,
Final Exam
Facts: These facts are core facts common to all questions in this
ENTIRE exam to the extent the questions involve Xantera,
Mary, MMM, Carlos and Carlosta.
Mary, President of Mary’s Miracle Mart (“MMM”), a
corporation incorporated in the State of New York, is a
manufacturer and seller of a patented medication used to
alleviate symptoms of asthma and bronchitis. The medication is
sold under the trademark Mary’s Miracle Mart (“MMM”). Mary
is interested in doing business in Xantera, a developing country
in South America. It is also known that Xantera faces hard
currency shortages and it is foreseeable that the government
will impose hard currency restrictions on hard currency outflow.
Although Xantera is politically stable, surrounding countries
have had to deal with internal uprisings and other acts of
violence that have created instability in the region. Many
Xanteran companies have been buying MMM drugs from MMM
because Xantera’s pollution is high and its citizens suffer from
respiratory problems. MMM drugs are one of the most popular
import items in Xantera.

Question 1.
Mary wants to sell 100 crates of her medication to a buyer,
Carlos, in Xantera. Carlos is the President of Carlosta, a
corporation incorporated in Xantera. Carlos hopes to be able to
strike a good deal so he can take advantage of the existing
demand for MMM medication.
Mary is starting negotiations with Carlos. She knows that
shipping from New York to Xantera will take 21 days. Carlos
has a liquidity problem (not a lot of cash on hand) but is certain
that he will be able to get the hard currency in time to pay for
the drugs. The contract specifies that Carlos must make payment
in US dollars.
Carlos and Mary are discussing the following options for the
sales contract. You represent Mary. Mary does not trust Carlos
(only because she has never done business with him before) and
is concerned about being paid. But she also wants to have the
transaction go through because she hopes there will be repeat
transactions with Carlos and perhaps other transactions in other
South American countries.
For the purpose of Question 1 (all parts), assume that Xantera
has not ratified any treaty or convention discussed in the
course.
Note that under each part described below, you will be offered
several options to analyze and evaluate. In addition to analyzing
and evaluating the issues raised, (including defining any
relevant terms in the clauses), you must apply the issues to the
facts raised in the description above (Question 1 facts, which
apply to all the parts below). I am interested not just in your
knowledge but in your critical reasoning skills. I can only
assess your reasoning skills when you apply the legal issues to

the facts presented.
Part A. Sales contract terms (25 points)
Option 1. Sales contract, CIF Buyer’s warehouse at port of
Xantera. Time draft 30 days after sight.
Xantera, sight draft.
Xantera, Time draft 30 days after sight, with letter of credit.
Issuing Bank in Carlosta and confirming bank in New York.
Option 4. FOB port of New York City.
Please go through each option, explain what each involves,
apply each option to the fact pattern described above, and tell
Mary what the advantages and disadvantages for her are for
each option. Do not simply describe what each option means. It
is important that you analyze the options AS THEY APPLY TO
MARY’S CONCERNS. In addition, include your
recommendation as to which option she should choose. The
instructions contained here are applicable to every question
raised in all the parts below.
Also, tell Mary whether Option 1 and Option 4 are essentially
the same in terms of results for Mary – although one is FOB and
the other is CIF. How are they the same and how are they
different?
Part B. Sales contract choice of law (20 points)
The parties are discussing a choice of law clause. Mary is
worried about warranties that she might be subject to and is
trying to find a way to be free of warranties.

Option 1. All disputes arising out of the sales contract between
the parties will be governed by the laws of the state of New
York. The New York UCC shall be the applicable law.
the parties will be governed by the laws of Xantera.
the parties will be governed by the Convention on the
International Sale of Goods.
For this option 3 (only), assume the contract also has a choice
of forum which states that the courts of the state of New York
will hear disputes arising out of the contract. What would a
court of NY do with this choice of law?
Again, give your advice to Mary regarding each option. Point
out any issues that you think she needs to consider. Include in
your answer your recommendation as to which choice of law is
most advantageous for your client. See instructions in Part A
above, which, as stated, apply to all answers on this exam.
Part C. Sales Contract, Force Majeure (10 points)
Assume for the purpose of Part C ONLY that the parties have
chosen New York UCC as the applicable law. Assume also for
PART C only that the sales contract is CIF port of Xantera.
In case of fire, flood, earthquakes, hurricanes and any other acts
of nature, or in case of labor strikes, government shutdown,
government acts or controls or any other acts outside the control
of the buyer, the buyer shall be excused from performance of
his duties.
Carlos states that this is the only force majeure clause he will

agree to. The other option is to not have any force majeure
clause.
Which avenue would you recommend Mary choose? Have a
force majeure clause as stated above? Comment on the proposed
force majeure clause. Should you have no force majeure clause
or use that proposed clause? Why or why not?
Part D. Bill of Lading Contract, Choice of Forum, Choice of
Law (25 points)
Assume for Part D that the bill of lading contract is between
MMM and X carrier. X is incorporated in Xantera.
Option 1. All disputes arising between the parties shall be
governed by the laws of Xantera. The courts of Xantera shall
have exclusive jurisdiction over these disputes.
governed by the laws of Xantera. Disputes shall be submitted to
arbitration in Xantera.
governed by the laws of New York. The courts of New York
shall have exclusive jurisdiction over these disputes.
Analyze and evaluate options 1, 2, and 3. Which option do you
recommend for Mary? Give reasons why. Read these options
carefully. What related issues will need to be considered and
addressed in each option?
In addition, Mary asks you the following: If options 1 and 2 are
chosen, can Mary choose to ignore the chosen forum and
institute suit in a court in the US? What would a US court do?
Part E. Letter of Credit and sales contract (10 points)

Assume the parties agreed to have an issuing bank in Xantera
issue a letter of credit with MMM as the beneficiary. Assume
also that a confirming bank in NY has agreed to confirm the
letter of credit for the amount specified in the sales contract,
payable in US dollars.
MMM shipped the goods and presented the necessary
documents, including a sight draft, to the confirming bank.
Before the confirming bank paid, it was notified by the issuing
bank that the issuing bank will not be able to honor the letter
credit. The issuing bank gives the following reasons: 1) it was
told by the carrier that the seller (MMM) had shipped
counterfeit medication; 2) it has been ordered not to pay on the
letter of credit because the government has imposed hard
currency restrictions.
Advise Mary of all issues relevant to and arising out of the facts
as described in Part E. What options are available to her?
Question 2. (20 points)
Part A
Because the medication bearing the trademark MMM is so
successful in Xantera, Mary decides to find a licensee in
Xantera. Advise Mary on the following clauses.
Option 1. Licensor grants to the licensee an exclusive license to
use the trademark MMM on products made pursuant to the
license. Such products can only be sold in the licensed territory
(defined as Xantera).
Please comment on this clause. First analyze the clause under
the assumption that the laws of Xantera are similar to US laws
governing such license. Second analyze the clause under the

assumption that the laws of Xantera are similar to laws of the
EU governing such license.
Option 2. Licensee must purchase from the Licensor patented
medical equipment necessary to ensure the effective
manufacturing of the products bearing the trademark MMM.
Assume Xantera law governing this issue is similar to US law.
Option 3. Assume that the government in a neighboring country
Yanto also wishes to have MMM drugs for its citizens but there
is no Yanto company that can pay the licensing fee at market
rate. One company decides to use MMM’s patent without
authorization and manufactures the MMM drugs in Yanto. If
Yanto is a member of the World Trade Organization, what are
MMM’s options? If Yanto is NOT a member of the World Trade
Organization, what are MMM’s options?
Part B
Assume that Mary discovers that medication made under license
between MMM and a Xantera licensee in Xantera is being
imported into the United States. Discuss one cause of action
that is available to Mary to prevent such importation into the
United States. Pick one that will be fastest to institute and that
will have the broadest scope in terms of remedy.
Question 3 (30 points)
Assume Mary now wishes to establish a foreign direct
investment in Xantera. The government’s foreign investment
laws have a mandatory joint venture provision. It also requires
that the foreign investor have at a maximum 49% of the equity
in the joint venture. Mary would like MMM to be granted an
exemption from this requirement.

What would be the one best argument based on the facts you
have been given about the parties that would most strongly
support this claim and why?
Assume the following clauses have been offered by Carlosta,
the local party from Xantera who will be the joint venture
partner for MMM. How would you change the clause, if at all?
State reasons why each clause should be changed or modified. If
you keep it, explain why as well. For Question 3, assume
Xantera has become a member of the WTO.
Clause 1.
MMM shall contribute 49% of the equity of the joint venture.
Accordingly, 49% of the board of directors of the company shall
be nominated by MMM.
Clause 2.
Each party must get the other party’s consent before
transferring its interests to a third party. However, this clause is
not applicable in case Carlosta transfers its interests to OPIC.
Clause 3.
MMM shall not repatriate hard currency profits from Xantera
unless it gets approval from the authorities in accordance with
the published foreign investment laws of Xantera. Hard
currency repatriation can only be allowed if the joint venture
shows a positive hard currency balance.
Clause 4.
The joint venture must purchase supplies from local Xantera
companies. Such purchases will be paid in hard currency.

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