Solution and Answer Guide
International Business Law and Its Environment 11th Edition Copyright 2025 by Richard
Schaffer, Filiberto Agusti, Lucien J. Dhooge, Gerlinde Berger-Walliser
Chapter 1: Introduction to International Business
TABLE OF CONTENTS
Case Questions and Answers ..............................................................................................................2
Gaskin v. Stumm Handel, GMBH, p. 3 ....................................................................................................... 2
Coker International, Inc. v. Burlington Industries, Inc., p. 5 ..................................................................... 2
Bernina Distributors v. Bernina Sewing Machine Co., p. 7 ....................................................................... 3
Tarbert Trading Ltd. v. Cometals, Inc., p. 11 ............................................................................................. 4
Lifestyle Equities CV v. Amazon UK Ser. Ltd, et al., p. 14 .......................................................................... 4
Dayan v. McDonald’s Corp., p.17 .............................................................................................................. 5
Anton Las v. PSA Antwerp NV, p. 19 ......................................................................................................... 6
In re Union Carbide Corporation Gas Plant Disaster at Bhopal, p. 21 ...................................................... 6
Answers to Questions and Case Problems...........................................................................................9
Managerial Implications ................................................................................................................... 13
Part 1. Quiet-Maid exporting to Europe ................................................................................................. 13
Part 2. Quiet-Maid’s Joint Venture with Spanish Manufacturer ............................................................ 14
Part 3. Quiet-Maid’s “discovery” makes it reevaluate its joint venture strategy ................................... 15
Ethical Considerations ...................................................................................................................... 17
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,CASE QUESTIONS AND ANSWERS
GASKIN V. STUMM HANDEL, GMBH, P. 3
1. Why did Gaskin claim that he was not bound by the forum selection clause included in the
contract to which he agreed?
Answer: Gaskin asserted that he did not understand the terms of the forum selection clause in
the contract because it was written in German and therefore, he could not have agreed to it.
2. In business, is a party to contract negotiations obligated to provide translation services to other
parties?
Answer: Neither party is obligated, but translation services are readily available. The local
offices of the U.S. Department of Commerce (International Trade Administration) can assist a
U.S. firm in arranging translation services abroad. One should clarify this in advance with the
host. Of course, it's generally considered good business practice to ensure clear communication,
especially in international contracts.
3. If the parties to a contract execute two copies of a contract, one in each language, which is the
operable and effective document?
Answer: Both represent the understanding of the parties, but this may depend in part on
specific terms of the contract or on the country’s law that is applied to the dispute. If the
contract fails to state which language contract is governing, then any differences in
interpretation can lead to a dispute. Many contracts therefore do state which language is the
governing language, or which prevails in the event of a discrepancy. These provisions should be
drafted by attorneys experienced in international contract negotiations. As per later material in
this chapter, many national laws do require multilanguage contracts for certain contracts on
specific subjects.
The drafting party should provide a translated copy or translation services to their counterpart
as a matter of ethical conduct and good business practice. In some countries the law requires
contracts to be executed at least in one of the official national languages.
COKER INTERNATIONAL, INC. V. BURLINGTON INDUSTRIES, INC., P. 5
1. What do you think Coker could have done differently to evaluate the risks of his business plan?
Answer: Coker obviously didn’t do his homework before contracting. How well did he know and
trust his customer? Did Coker investigate the country risk in Peru, or the even the risk of selling
to a buyer in a developing country? Information would have been available from U.S.
government agencies, such as the International Trade Administration and their online
publication, Country Commercial Guides. Other sources are the U.S. AID, and the CIA World
Factbook. Also consider private sources such as the international divisions of major banks, as
well as credit insurance companies. More detailed information on foreign country trade barriers
might have shed light on import licensing in South America or even Peru. Equally important, did
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, Coker calculate that the U.S. textile industry was in rapid transition due to foreign competition
and that there would be no market for the outdated looms in the U.S. if the contract failed?
2. Can you imagine any safer business arrangement for Coker other than putting money up front
and taking possession of the looms?
Answer: Perhaps Coker could have acted as Burlington’s agent in finding a buyer in return for a
commission. Perhaps Coker could have negotiated more favorable terms than a nonrefundable
down payment such as making its contract with Burlington conditional on the buyer’s obtaining
import licenses. Coker could have considered sending a proforma invoice to the buyer so that
the buyer could obtain necessary import licenses in advance. In any case, Coker could have
consulted an attorney experienced in negotiating foreign sales contracts.
3. Although the answer may lie ahead in this chapter, why do you think Peru denied import
licenses for the looms? There might have been several.
Answer: There may be several reasons why a developing country such as Peru denied an import
license. It may be that there was inadequate U.S. dollars or other readily convertible currency in
the national treasury to exchange for the import of non-essential (in the government’s view)
goods. It also might have been the government’s attempt to restrict imports of outdated
technology, by instead motivating foreign companies to sell only newer technology goods. These
looms were already outdated.
BERNINA DISTRIBUTORS V. BERNINA SEWING MACHINE CO., P. 7
1. What were the importer’s two arguments in this case? How did the court address each?
Answer: Importer argued that as its costs increased the contract permitted it to increase its
price to the distributor and that it could therefore pass along the increased “cost” of paying in
Swiss francs. However, the court said the contract “costs” referred to cost of insurance, freight,
handling, and similar charges, but not the fluctuation in currency values. Importer also argued
that increased cost made it “commercially impracticable” to fulfill the contract and thus it was
legally excused from performing. The court said the contract was clear that the importer was
aware of and assumed the risk of currency exchange fluctuations, and that UCC provision
regarding commercial impracticability did not include risks assumed by a party to the contract.
2. What is the effect of the fact that just prior to executing the contract, the dollar had fallen by 7
percent against the Swiss franc?
Answer: The importer’s costs increased by 7 percent.
3. In any international business transaction, which party assumes the exchange rate risk?
Answer: The risk is assumed by the party whose currency is NOT being used; it is usually the
buyer. Both parties would normally prefer to contract in their own currency and that is a
bargaining term just like any other and the outcome depends on their relative bargaining
position. Sellers will typically initiate a price quote specifying their own currency. The exchange
rate risk occurs when the relative value between two currencies fluctuates between the date of
the contract and the date the foreign currency is actually purchased to meet that obligation.
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, TARBERT TRADING LTD. V. COMETALS, INC., P. 11
1. Import/export transactions usually require much more documentation than domestic
transactions. These include detailed invoices, packing lists, shipping and insurance documents,
and specialized certificates. In this case, a “certificate of origin” identifying the country of origin
was required by the government of Columbia before the goods could be imported. Does it refer
to the country from which the goods were shipped or where they were grown or made? Why do
you think Columbia required a certificate of origin? What is its purpose?
Answer: The certificate of origin refers to the country where the goods were grown, made, or
produced, not from where they were shipped. Countries frequently have different tariff rates
(import duties) on the same item that originates from different countries. For example,
Columbia may have one tariff rate for beans from Kenya and a much higher or lower rate for
beans from, say, the U.S. These rates are based on Columbia’s trading status and relationship
with “red bean producing” countries. The country of origin on the documentation also
determines how the goods must be labeled for the consumer. The certificate identifies for the
buyer where the goods come from, so if goods from Country A have a better reputation than
those from Country B, the buyer will know which goods it is receiving.
2. Suppose that the beans had arrived in Columbia and were then stopped by Columbian customs
authorities because of a fraudulent certificate. What do you think might have happened to the
beans? What would the risk have been to Cometals and Tarbert? What if the Columbian buyer
had already paid for the beans?
Answer: They likely would have been impounded, i.e., not allowed to enter the country.
Cometals and Tarbert likely would face civil fines and perhaps criminal penalties. If the buyer
had already paid for the beans, the buyer could sue in Columbian court to recover damages as
the buyer did not get what he bargained and paid for, however the likelihood of success is
questionable at best.
3. Evaluate and discuss the conduct of Cometals and Tarbert. Fraudulent documentation is not
uncommon in international trade, especially when parties do not have a history of business
together. What are the lessons to be learned by all parties?
Answer: Their conduct was illegal and unethical. There is no better rule than to “know your
supplier.” If that is difficult or impossible, the risk of entering into a contract may be too great to
continue.
LIFESTYLE EQUITIES CV V. AMAZON UK SER. LTD, ET AL., P. 14
Note: The case in the textbook is the judgment of the England and Wales Court of Appeal,
[2022] EWCA Civ 552. An appeal to the UK Supreme Court was dismissed in [2024] UKSC 8 (06
Mar 2024). The case addresses the conflict between the territoriality of trademark protection
and the cross-border marketing and sale of goods on the Internet. Assume a UK visitor to the
United States purchases a UK branded item in an American shop and carries it home to London
in a suitcase. Here, the seller clearly did not use the mark in the UK, target UK customers, or
violate the holder’s IPR. But today consumers can order goods from around the world with the
seller arranging shipping and with fine-print contractual provisions passing title to the goods
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