Chapter 19 Legal Environment of Business

Term Definition
Treaty A formal international agreement negotiated between two nations or among several nations.
International Organization An organization composed mainly of member nations and usually established by treaty (example: United Nations); also includes nongovernmental organizations such as the Red Cross
Comity The principle by which one nation defers to and gives effect to the laws and judicial decrees of another nation. This recognition is based primarily on respect.
Treaty A formal international agreement negotiated between two nations or among several nations.
Act of State Doctrine A doctrine providing that the judicial branch of one country will not examine the validity of public acts committed by a recognized foreign government within its own territory.
International Organization An organization composed mainly of member nations and usually established by treaty (example: United Nations); also includes nongovernmental organizations such as the Red Cross
Expropriation A government's seizure of a privately owned business or personal property for a proper public purpose and with just compensation.
Comity The principle by which one nation defers to and gives effect to the laws and judicial decrees of another nation. This recognition is based primarily on respect.
Confiscation A government's taking of a privately owned business or personal property without a proper public purpose or an award of just compensation.
Act of State Doctrine A doctrine providing that the judicial branch of one country will not examine the validity of public acts committed by a recognized foreign government within its own territory.
Expropriation A government's seizure of a privately owned business or personal property for a proper public purpose and with just compensation.
Confiscation A government's taking of a privately owned business or personal property without a proper public purpose or an award of just compensation.
Sovereign Immunity A doctrine that immunized foreign nations from the jurisdiction of U.S. courts when certain conditions are satisfied.
Export The sale of goods and services by domestic firms to buyers located in other countries.
Distribution Agreement A contract between a seller and a distributor of the seller's products setting out the terms and conditions of the distributorship.
Quota A set limit on the amount of goods that can be imported.
Tariff A tax on imported goods.
Dumping The sale of goods in a foreign country at a price below the price charged for the same goods in the domestic market.
Normal Trade Relations Status A legal trade status granted to member countries of the World Trade Organization
Choice-of-Language Clause A clause in a contract designating the official language by which the contract will be interpreted in the event of a disagreement over the contract's terms.
Forum-Selection Clause A provision in a contract designating the court, jurisdiction, or tribunal that will decide any disputes arising under the contract.
Choice-of-Law Clause A clause in a contract designating the law (such as the law of a particular state or nation) that will govern the contract.
Force Majeure Clause A provision in a contract stipulating that certain unforeseen events -such as war, political upheavals, or acts of god- will excuse a party from liability for nonperformance of contractual obligations.
Foreign Exchange Market A worldwide system in which foreign currencies are bought and sold
Correspondent Bank A bank that acts on behalf of another bank for the purpose of facilitating fund transfers
Letter of Credit A written document in which the issuer (usually a bank) promises to honor drafts or other demands for payment by third persons in accordance with the terms of instrument.

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