Shared Flashcard Set

Details

MGT 218- Final Exam
Business Law- Volpe
109
Management
Undergraduate 2
12/12/2010

Additional Management Flashcards

 


 

Cards

Term
Employee as Agent
Definition

An employee is the agent if he or she agrees to act on behalf of the employer.

 

Ex: An actor/actress' agent acts on behalf of them by making their appointments, speaking on their behalf during interviews, and attending important events for them.

Term
Independent Contractor
Definition

A person/business that is not an employee but is employed by a principal to perform a certain task on behalf of the principal.

 

  • They can be authorized by the employer to enter into contracts-- agreements are binding.
  • Common for stockbrokers, doctors, lawyers, etc.
* A roofer is employed by the roofing company; However, a homebuilder may contract them to lay shingles on their model homes. Therefor, the roofer is "employed" by the home builder based on principal. 

 

Term

Employee vs. Interdependent Contractor

Definition

An independent contractor is essentially an outsider hired by the employer; independent contractor are non-employees, so they can only perform certain tasks.

Term
Express Agency Formation
Definition

express agency contracts may be either oral or written, unless the Statute of Frauds stipulates that they must be written; May be Exclusive Agency Agreement, or Power of Attorney.

 

* Agency agreement with a real estate agent must be in writing.

Term
Implied Agency Formation
Definition

Agency is implied from the conduct of the parties; the extent of the agent's authority is determined from facts and circumstances of the particular situation.

 

* Determining facts and circumstances may be: industry custom, prior dealings with parties, agent's position, acts necessary to carry out agent's express duties, etc.

Term
Ratification Agency Formation
Definition

Agency that occurs when:

  1. A person misrepresents him/herself as another's agent when in facts he/she is not.
  2. The purported principal ratifies (accepts) the unauthorized act; the principal and the third party are not bound to the contract unless the principal ratifies the contract.

Term
Agents Duty of Performance
Definition

The Agent must perform the lawful duties expressed int he contract; meeting the standards of reasonable care, skill, and diligence implicit in all contracts.

Term
Agents Duty of Notification
Definition
The agent must notify principal of relevant information.
Term
Agent's Duty of Accounting
Definition

The agent must maintain accurate accounting of all transaction and money received;l money or other benefits belong to principal (held in constructive trust).

 

* Mike Pieffer of AKPsi.

Term
Agent's Apparent Authority
Definition

Agency that arises when a principal creates the appearance of an agency that does not actually exist

  • When an apparent agency is established, the principal is stopped from denying the agency relationship
  • To enforce the contract, the principal and the third party are bound to the contract

Term
Agent's Actual (express or implied) Authority
Definition

the agent's authority depends on the relationship determined by the contract.

  • Principal-Agent: the agent has the authority to act on behalf of the principal as authorized by principal and implied from the agency
  • Employer-Employee: the employer has the right to control the physical conduct of the employee-- an employee is often the agent of his employer
  • Principal-Independent Contractor: the principal has no control over the details of the independent contractor's conduct-- an independent contractor is usually not an agent of the principal-- principal can authorize independent contractor to enter into contracts.

Term
Agent's Duty of Loyalty
Definition

Agents have a fiduciary duty not to act adversely to the the interests of the principal; common breaches include self-dealing, usurping an opportunity, competing with principal, misuse of confidential information, and undisclosed dual agency.

Term
Undisclosed Principal
Definition

the third party is unaware of the existence of an agency and the identity of the principal; both the principal and the agent are liable to the third party if the principal fails to perform.

Term
Principal's Liability for Agent's Torts
Definition

The principal and agent are each personally liable for their own tortuous conduct

  • The principal is liable for tortuous conduct of agent acting within the scope of authority
  • The agent is liable for tortuous conduct of principal only if the agent directly or indirectly participates in or aids the principal's conduct
  • Principals are liable for negligent conduct or agents acting within the scope of their employment-- principal derives benefits from acting through agent, and therefore should also bear liability

Term
Sole Proprietorship
Definition

Owner is actually the business

  • business is not a separate legal entity
  • most common form of business organization in the US
  • advantages include ease/low cost of formation
  • proprietor makes all management decisions and owns the entire business
  • etc.

Term
Partnership Agreements
Definition

May be written, oral, or implied under conduct (if they exist for less than one year or deal in real estate, they must be in writing under that Statute of Frauds)

  • no formalities are generally required
  • partners are free to determine the terms
  • if the agreement fails to specify an essential term, the UPA will fill gaps

Term
Partnership Taxation
Definition

partnerships do NOT pay federal income taxes-- they file information return; income and losses are reported on individuals partners' personal income tax returns (this is called "flow through" taxation)

Term
Partners ONLY Entitled to compensation if Partnership Agreement Permits
Definition
Term
Liability of Partners for Actions of Single Partner
Definition

the partnership is liable for tortuous acts of a partner, employee, or agent committed while the person is acting within the ordinary course of partnership business or with the authority of his or her co-partners.

Term
Indemnification of Partners
Definition

the right of a partner to be reimbursed for expenditures incurred on behalf of the partnership

Term
Limited Partnership
Definition

Must have at least one general partner and one limited partner.

Term
Limited Liability Company (LLC)
Definition
  1. Members liable for debts up to the amount of their capital contribution
  2. Must file articles of organization with appropriate state agency
  3. Taxed as a partnership, unless elected otherwise
Term
Domestic Corporation
Definition

a corporation is domestic in the state in which it is incorporated

Term
Foreign Corporation
Definition

a corporation is foreign in states other than the state it is incorporated in

Term
Alien Corporation
Definition

a corporation that is incorporated in a country other than the United States

Term
Private Corporation
Definition

a corporation formed to conduct privately owned business

 

* Microsoft, IBM, Starbucks, etc.

Term
Public Corporation
Definition

a corporation formed to meet a specific governmental or political purpose

 

* Cities, towns, park districts

Term
Closed Corporation
Definition

few shareholders, shareholders may have buy-an-sell agreements, shareholders often involved in management

 

* think of a "family business"

Term
Publicly-held Corporation
Definition

many shareholders, shares traded on organized security markets, shareholders rarely involved in management

Term
S-Corporation
Definition

corporations that pay no federal income tax at the corporate level

 

  • the corporation's income or less flows to the sharholder's individual income tax returns
  • Domestic corporation
  • Not a member of an affiliated group of corporations
  • Has no more than 100 shareholders (no partnerships/corporations as shareholders, only US citizens as shareholders)
  • Has only one class of stock

 

Term
Stock Options
Definition

a contract between two parties concerning the buying or selling of stock

Term
Stock Warrants
Definition

a security that entitles that holder to buy the underlying stock of the issuing company at a fixed exercise price until the expiry date 

Term
Corporations can issue stocks/bonds
Definition

many corporations rely on sticks and bonds to finance their activities

Term
Stock Certificates
Definition

a legal document that certifies legal ownership of a specific number of stock shares in a corporation

  • in large corporations, buying shares does not always lead to a stock certificate                                        * When a small number of shares is purchased by a private individual.

Term
Preferred Stock
Definition

a type of equity security that is given certain preferences and rights over common stock

Term
Directors elected by shareholders
Definition
Term
Directors duty of care
Definition

duty of care and diligence when acting on behalf of the corporation

 

  • A director/officer who breaches this duty of care is personally liable to the corporation and its shareholders for any damages caused by this breach
  • Duty is discharges if the officer/director acts:                                               a.) in good faith                                                                                     b.) With the care that an ordinary prudent person in a like position would          use under similar circumstances.                                                         c.) In a manner he/she reasonable believes to be in the best interest of         the corporation
  • Violations of care include acts of negligence and mismanagement such as:     a.) Failure to make a responsible investigation of a corporate matter           b.) Failure to attend board meetings on a regular basis                             c.) Failure to properly supervise a subordinate who causes a loss to the           corporation.                                                                                       d.) Failure to keep adequately informed about corporate matters                 e.) Failure to take other actions necessary to discharge duties         

 

Term

Directors Duty of Loyalty

Definition

duty not to act adversely to the interest of the corporation, and to subordinate their personal interest to those of the corporation and its shareholders

  • Breach of duty of loyalty usually occurs because of intentional conduct
  • Includes unauthorized:                                           a.) Self-dealing                                                                                     b.) Usurping a corporate opportunity.                                                       c.) Competing with the corporation                                                          d.) make a secret profit that belongs to the corporation                       

Term
Shareholders Power
Definition

they own the corporation, but they're not agents of the corporation (they cannot bind the corporation of contracts)

  • they have the right to vote on certain matters            * Election of directors and fundamental changes in       the corporation

Term
Pre-emption
Definition

federal law takes precedence over state and local law

Term
Corporation's right of first refusal to buy shares
Definition

selling your stock; you must offer other stockholders first pick before you give it to the public

Term
Shareholder's derivative suit
Definition

brought on behalf of corporation against a third party, when corporation fails to sue

  • Brought by shareholder who held shares at time of inquiry, who fairly represents interests of the corporation-- shareholder must first make written demand on corporation to bring lawsuit
  • Court may dismiss lawsuit is not in the best interests of the corporation
  • Any award goes to corporate treasury-- corporation pays shareholder's expenses

Term
One of two merging corporations is called the....
Definition
Surviving Corporation
Term
Liability of merged corporation survives as...
Definition
Liability for surviving corporation
Term
For a Merger to happen, there must be approval from _______ and _______ of both corporations.
Definition
Boards; Shareholders
Term
Tender Offer
Definition

made to the shareholders of the target corporation; the tender offeror offers to purchase their shares in the target corporation

  • Hostile transaction-- board of target corporation may oppose
  • Acquirer makes offer of merger or acquisition directly to target corporation's shareholders
  • Offer's board of directors must approve the offer
  • The tendering corporation and the target corporation retain their separate legal status                                                                                                   * This occurred with AB and Inbev

Term
State and Federal Filing Requirements
Definition
Term
Registration Statement
Definition

a covered issuer must file written registration with SEC

  • contains required information about the issuer and the securities to be issued
  • SEC does not pass upon the merits of the registered securities
  • Decides only whether the issuer has met the disclosure requirements

Term
Prospectus
Definition

a written disclosure document submitted to SEC with the registration statement

  • used as selling too by the issuer (provided to prospective investors to enable them to evaluate the financial risk of the investment
  • must contain prescribed boldface caveat: "these securities have not been approved or disproved by SEC"

Term
Tombstone Ad
Definition

advertisements often used in the financial industry; it is the announcement of a particular transaction such as the offering/placement of stock of a company

  • securities regulations require that it is in the form of a "tombstone format"-- this is to prevent the ad as being perceived as a promotion of the stock

Term
Exempt Securities
Definition

  • Government-issued securities                                     * Municipal Bonds
  • Short-Term notes and drafts w/ maturity date not exceeding 9 months                                                   * Certain commercial paper issued by a                        corporation
  • Securities issued by non-profit issuers                         * religious institutions, colleges, etc.

Term
Insider Trading 
Definition

when an insider makes a profit by personally purchasing shares of the corporation prior to the public release of favorable information or by selling shares of the corporation prior to the disclosure of unfavorable information

  • information is not public yet

Term
Insiders
Definition

Insiders are defines as officers, directors, and employees at all levels of the company (lawyers, accountants, consultants, and other agents/reps) who are hired by the company on a temporary and non-employee status to provide services or work to the commpany

  • Also includes others who owe a fiduciary duty to the company

Term
Tipper/Tippee Theory
Definition

both tipper and the tippee may be held civilly and criminally liable for insider trading-- the insider is USUALLY the tipper

  • Tipper: the person who discloses material non-public  information to another person
  • Tippee: the person who receives and acts on            non-public information from the tipper

Term

Federal Trade Commission Reqirements

(in regards to a Franchise)

Definition

the FTC required presale disclosures to prospective franchisees:

  • Disclosure of sales or earnings projections based on actual data
  • Disclosure of sales of earning projections based on hypothetical data
  • Prescribed, prominent, cautionary statements required-- "there is no assurance you'll do as well"

Term
Franchise
Definition

a franchise is an agreement that is established when on party (the franchisor) licenses another party (the franchisee) to use the franchisor's trade name, trademarks, commercial symbols, patents, copyrights, and other property in the distribution and selling of goods and services

Term
Four basic types of Franchises:
Definition

  1. Distributorship Franchise: the franchisor manufactures a product and licenses a retail dealer to distribute it to the public (ex: Ford Motor)
  2. Processing Plant Franchise: the franchisor provides a secret formula or the like to the franchisee-- the franchisee manufactures the product at its own location and distributes it to retail dealers (Ex. Coca Cola)
  3. Chain-Style Franchise: the franchisor licenses the franchisee to make and sell its products or services to the public from a retail outlet serving an exclusive geographic territory-- the product is provided by the franchise (ex: Pizza Hut and most other fast food restaurants)
  4. Area Franchise: the franchisor authorizes the franchisee to  negotiate and sell franchises on behalf of the franchisor-- the area franchisor is called the subfranchisor-- often use to enter the market of a different country (Ex: Starbucks did this when they entered Vietnam) 

Term
Liability for acts of the franchisee
Definition

as long as a franchise is properly organized and operated, the franchisor and franchisee as an INDEPENDANT CONTRACTOR; Franchisors and Franchisees are liable for their own contracts and torts; generally, neither party is liable for the other

  • If a franchisee is the actual/apparent agent of the franchisor, the franchisor is responsible for the torts and contracts the franchisee committed or entered into within the scope of the agency
  • Apparent Agency: agency that arises when a franchisor creates the appearance that a franchisee is the agent when in fact the actual agency does not exist

Term
Protections of the Franchisee
Definition
Term
Termination of the Franchise
Definition

most state and federal law regarding franchising prohibit franchisors for terminating franchises at will-- this prevents a franchisor from taking advantage of the good will developed at the franchise location by the franchisee

  • Wrongful termination: if the franchisor terminates a franchise agreement without just cause, the franchisee can sue the franchisor for wrongful termination                                                                              * The franchise can recover damages caused by the wrongful termination and     recover the franchise
  • Termination "for cause"-- breach of franchise agreement permits non-breaching party to terminate it                                                                     * Nonpayments of franchise fees, continues failure to meet quality                control standards, etc.

Term
Joint Ventures
Definition

two or more business entities combine their resources to pursue a single project or transaction

  • Unless otherwise specified, joint ventures have equal rights to manage the joint venture
  • Joint Ventures owe each other the fiduciary duties of loyalty and care
  • (There is also Join Venture- Partnerships, and Joint Venture- Corporations)

Term
Licensing
Definition

owner of intellectual property (the licensor) contracts to permit another party (the licensee) to use the intellectual property

  • Trademarks, service marks, trade names, copyrights
  • Licenses issued for distribution of good, services, software, and digital information                              * Walt Disney Co. licenses the right to Winnie the Pooh

Term
National Labor Relations Board
Definition

5 member board; oversees elections; prevents employer and union unfair labor practices; enforces and interprets federal labor laws

  • Established the National Labor Relations Act, which limits the means by which employers may react to employees who engage in collective bargaining, strikes, etc. to support their demands

Term
Picketing
Definition

strikers walking in front of the employer's premises carrying signs announcing their strike

  • the right to picket is implied by from the NLRA
  • an emplyer may seek an injunction against unlawful picketing-- picketing is lawful unless it:                                                                                          - accompanied by violence                                                                      - obstructs customers from entering the employer's place of biz                  - prevents non-striking employees from entering the premise                      - prevents pick-ups and deliveries                        

Term
Secondary Boycott
Definition

a type of picketing where unions try to bring pressure against an employer by picketing its suppliers or customers

  • It is illegal if directed against the neutral employer instead of the struck employer's product

Term
Wildcat Strike
Definition

strike action taken by workers without the authority of their trade union officials; also considered an unofficial industrial action

  • this occurred in France in 1968

Term
Union Shop
Definition

a union security agreement; employee is in union regardless of whether or not he wants to be

  • Employee must join the union within a certain number of days after being hired
  • Employees who do not join must be discharged by the employer upon notice from the union
  • Union members pay union dues to the union
  • Union shops ARE lawful

Term
Agency Shop
Definition

employees do not have to become members; they must pay an agency fee to the union (amt. equal to union dues) 

  • agency shops are lawful

Term
Right to Work Laws
Definition

states may enact right to work laws that outlaw union or agent shops

  • individual employees cannot be forced to join a union or pay union dies and fees
  • This applies even though a union has been elected by other employees
  • 22 states have enacted these right to work laws

Term
OSHA: Occupational Safety and Health Act 
Definition

  • Enacted to promote safety in the workplace
  • Established the Occupational Safety & Health Admin.
  • Federal, State, and Local governments are exempt
  • OSHA is empowered to inspect places of employment for health hazards and safety violations
  • Different Types:                                                                    - Specific Duty Standards (ex: requirements for safety guard on a certain       type of equipment, exposure limits for hazardous chem.)                         - General Duty Standards (ex: employers have duty to provide a work           environment "free from hazards"...)   

Term
Worker's Compensation Laws
Definition

compensate workers and their families when workers are injured in connection with their jobs

  • workers file claim with state agency
  • benefits vary by state and workers are paid according to preset limits established to statue or regulation

Term
Social Security
Definition

funded by employer and employee contributions

Term
Medicare
Definition

funded by employer and employee contributions

Term
Medicare
Definition

funded by income and payroll taxes

Term
Unemployment Insurance
Definition

programs administered by state, which set eligibility requirements and duration

  • Workers fired due to bad conduct are not eligible
  • Worker who quit voluntarily are not eligible
  • employers pay taxes to fund

Term

COBRA: Consolidated Omnibus Budget Reconciliation Act

 

Definition

Terminated employee must be offered the opportunity to continue group health insurance

  • Terminated employee bears the cost plus administrative fees

Term
Family and Medical Leave Act
Definition

Applies to private employers with 50 or more workers; federal, state and local government workers

  • employee must have worked for employer for at least one year
  • Employee must have performed 1250 hours of work in previous 12 months
  • provides up to 12 months of unpaid leave for: birth of child, placement of child for foster/adoption care, seriour health condition, care for spouse/child/or parent w/ serious health condition
  • Employee must be restored to the same/equiv. position upon return (If you're CFO, you may not get your job back if the firm can show economic burden)

Term
Equal Employment Opportunity Commission
Definition

federal administrative agency responsible for enforcing most federal anti-discrimination laws. Empowered to:

  • Conduct investigations
  • Interpret statuses
  • Encourage conciliation between employees/employers
  • Bring suit to force law

Term
Intentional Discrimination
Definition

There is disparate treatment and disparate impact:

  • Disparate Treatment: when the employer discriminates against a specific individual bc of race, color, national origin, sex, or religion
  • Disparate Impact: when the employer discriminates against an entire protected class                                  - often proven by statistical data about employers                       employment practices

Term
Employer-Required Tests for Hiring/Promotion
Definition
Term
Sexual Harassment
Definition

lewd remarks, touching, intimidation, posting pin-ups, and other verbal/physical conduct of a sexual nature

(ex: Supervisor offering positive review in exchange for sex)

 

  • Employers may defend if they can show that:               a.) employer exercised reasonable care to prevent and                 correct harassing behavior                                              b.) that the plaintiff failed to take adv. of employers                     programs of to otherwise avoid harm

Term
ADA: Americans with Disabilities Act
Definition

Employers and providers of public transportation, telecommunications, and public accommodations must accommodate individuals with disabilities

  • Employers may not discriminate against qualifies individuals with disabilities
  • Reasonable accommodations to be made by employer include:       - Making facilities accessible (wheelchairs), providing part-time/modified         work schedules, acquiring equipment/devices, etc.                                      

Term
Title VII
Definition

outlaws job discrimination based on five protected classes (race, color, national origin, sex, and religion. It applies to:

  • employers w/ 15 or more employees
  • all employment agencies
  • labor unions w/ 15 or more members
  • state/local governments and their agencies
  • most federal government emplyment

Term
Act of State Doctrine
Definition

a country has absolute authority over what transpires within its own territory

  • judges of one country cannot question the validity of an act committed by another country within that other country's borders

Term
Sovereign Immunity
Definition

countries are granted immunity from the suits in other countries

(ex: US citizens cannot sue the government of Chine in US court)

  • some countries provide absolute immunity
  • some countries provide limited immunity (such as the US)
  • Exceptions to sovereign immunity:                                            - under the US Foreign Sovereign Immunity Act, a foreign            country is not immune for suits in US court if:                           a.) immunity is waved, or                                                     b.) suit is based on commercial activity in US by a foreign              country or directly affecting the US

Term
Choice of Language Clause
Definition
Term
Foreign Selection Clause
Definition

a judicial procedure which designates the judicial or arbitral forum that hear and decide the case

(ex: US District Court)

Term
Choice-of-Law Clause
Definition

a judicial procedure which designates the law to be applied by the arbitrator by the court or arbitrator in deciding the case

(ex: French law)

Term
Foreign Corrupt Practices Act of 1977
Definition

states that it is illegal for a US company or its agent to bribe a foreign official to influence the awarding of new business or retention of existing business

  • Firms must keep accurate books to prove that any payments were in fact lawful
  • Violations are punishable with fines up to $2 million and 5 years of imprisonment

Term
Short Answer/Essay: Cumulative Voting
Definition

occurs when directors are elected, the shareholder can accumulate all of his/her votes and vote them all for one or a few candidates

  • this gives minority shareholders a better opportunity to elect someone to board

Term
Sarbanes-Oxley Act of 2002
Definition

passed in response to corporate scandals in the 1990s and early 2000s-- goeals are to improve corporate governance, eliminate conflicts of interest, and instill confidence in public companies. 

Provisions:

  • CEO/CFO certification of financial reports
  • Reimbursements of bonuses and incentive pay if company must restate financial statement due to noncompliance
  • prohibition on personal loans to directors or officers
  • tampering with evidence of frauds in crime
  • those who have committed securities fraud may not serve as officer or director

Term
Partners
Definition

the owners of a partnership are called partners

Term
Shareholders
Definition

the owners of a corporation are called shareholders

Term
Members
Definition

the owners of an LLC

Term
LLP: Limited Liability Partnership
Definition

partners can avoid personal liability for the malpractice of other partners

  • usually restricted to partnerships of professionals such as accountants, lawyers, doctors, etc.
  • they have flow-through tax benefits
  • LLP is created formally by filing articles of partnership with the secretary of the state in which the LLP is organized

 

Term
Ultra Vires Acts
Definition

act by a corporation that's beyond its express/implied powers

  • Remedies if an Ultra Vires Act is committed:             - Shareholders seek injunction                                 - Corp. sues officers/directors who cause the act for     damages                                                           - Attorney Gen. or the state of incorporation seeks       injunction or to dissolve the corporation

Term
Piercing the Corporate Veil
Definition

if a shareholder dominates corporation and uses it for improper purposes, the court can disregard the corporate entity, and hold the shareholder personally liable for the corporation's debts and obligations

(ex: thin capitalization, commingling or personal and corporate assets)

Term
Thin Capitalization
Definition

example of piercing the corporate veil; occurs when a company is made up of more debt than equity

  • this poses a high credit risk

Term
Commingling of Interests
Definition

example of piercing the corporate ceil

  • when the owner of a corporation combines his personal assets with the company's assets for tax or credit purposes, etc.

Term
Business Judgement Rule
Definition

determination of whether duty was met measured at the time the decision was made (hindsight is not implied)

  • not liable for honest mistakes of judgement

Term
Proxy Contest
Definition

opposing factions of shareholders may challenge managements in a proxy contest

  • the side that receives the greatest number of votes wins the proxy contest
  • management must supple a list of shareholders to the dissenting side or mail proxy solicitation materials for them

Term
Greenmailing
Definition

purchasing enough shares in a firm to threaten a takeover and essentially force the firm to buy back the shares at a premium in order to suspend the takeover

Term
Registration Process
Definition
Term
Accredited Investors
Definition
Term
Franchise Disclosure Document
Definition

specifies FDD disclosure compliance obligations as to who must prepare the disclosures, who must furnish them to prospective franchisees, how franchisees receive the disclosure, and how long franchisees must have to review the disclosure and any recisions to the standard franchise agreement.


Term
Short Answer/Essay: Collective Bargaining
Definition

Act of negotiating contract terms between an employer and the members of a union

  • Collective Bargaining Agreement: the resulting contract form a collective bargaining procedure
  • Employer and union must bargain with each other in good faith

Term
Short Answer/Essay: Sexual Harassment-- Two Types
Definition

  1. Hostile Work Environment: employee fears going to work because of offensive, intimidating, or oppressive atmosphere
  2. Quid Pro Quo: tit-for-tat; ex: good employee review in exchange for sex

Term
EU: European Union
Definition

comprised of many countries of Western and Eastern Europe

  • represents more than 500 million people
  • Euro is single monetary unit
  • developed to promote:                                                           - peace and security                                                                              - economic, social, and cultural development                                            - open border and trade                                                                          - provide free flow of capital, labor, goods, and services

Term
World Trade Organization
Definition

international organization of more than 130 member nations

  • Headquartered in Geneva, Switzerland
  • Created under the General Agreement on Tariffs and Trade (GATT)
  • One of the primary functions is to hear and decide trade disputes between member nations (TWO Dispute Resolution)          - 3-judge panel issues report                                                                   - report referred to dispute settlement body                                             - possibility of further appeal within WTO                                                   - if violation found, offending nation is ordered to stop and pay                     damages

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