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# Governments of developing countries occasionally enter into

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Senior Manager
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Governments of developing countries occasionally enter into  [#permalink]

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Updated on: 02 Aug 2013, 23:13
1
Question 1
00:00

based on 45 sessions

60% (03:15) correct 40% (02:39) wrong

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Question 2
00:00

based on 48 sessions

74% (01:35) correct 26% (02:04) wrong

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Question 3
00:00

based on 45 sessions

87% (01:11) correct 13% (01:26) wrong

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Question 4
00:00

based on 47 sessions

40% (01:04) correct 60% (01:23) wrong

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Question 5
00:00

based on 41 sessions

85% (01:32) correct 15% (01:10) wrong

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Question 6
00:00

based on 44 sessions

59% (01:00) correct 41% (01:03) wrong

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Question 7
00:00

based on 40 sessions

63% (01:30) correct 37% (01:14) wrong

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Question 8
00:00

based on 36 sessions

36% (01:23) correct 64% (02:03) wrong

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Governments of developing countries occasionally enter into economic development agreements with foreign investors who provide capital and technological expertise that may not be readily available in such countries. Besides the normal economic risk that accompanies such enterprises, investors face the additional risk that the host government may attempt unilaterally to change in its favor the terms of the agreement or even to terminate the agreement altogether and appropriate the project for itself. In order to make economic development agreements more attractive to investors, some developing countries have attempted to strengthen the security of such agreements with clauses specifying that the agreements will be governed by “general principles of law recognized by civilized nations”—a set of legal principles or rules shared by the world’s major legal systems. However, advocates of governments’ freedom to modify or terminate such agreements argue that these agreements fall within a special class of contracts known as administrative contracts, a concept that originated in French law. They assert that under the theory of administrative contracts, a government retains inherent power to modify or terminate its own contract, and that this power indeed constitutes a general principle of law. However, their argument is flawed on at least two counts.

First, in French law not all government contracts are treated as administrative contracts. Some contracts are designated as administrative by specific statute, in which case the contractor is made aware of the applicable legal rules upon entering into agreement with the government. Alternatively, the contracting government agency can itself designate a contract as administrative by including certain terms not found in private civil contracts. Moreover, even in the case of administrative contracts, French law requires that in the event that the government unilaterally modifies the terms of the contract, it must compensate the contractor for any increased burden resulting from the government’s action. In effect, the government is thus prevented from modifying those contractual terms that define the financial balance of the contract.

Second, the French law of administrative contracts, although adopted by several countries, is not so universally accepted that it can be embraced as a general principle of law. In both the United States and the United Kingdom, government contracts are governed by the ordinary law of contracts, with the result that the government can reserve the power to modify or terminate a contract unilaterally only by writing such power into the contract as a specific provision. Indeed, the very fact that termination and modification clauses are commonly found in government contracts suggests that a government’s capacity to modify or terminate agreements unilaterally derives from specific contract provisions, not from inherent state power.
1. In the passage, the author is primarily concerned with doing which one of the following?
(A) pointing out flaws in an argument provided in support of a position
(B) analyzing the weaknesses inherent in the proposed solution to a problem
(C) marshaling evidence in support of a new explanation of a phenomenon
(D) analyzing the risks inherent in adopting a certain course of action
(E) advocating a new approach to a problem that has not been solved by traditional means

2. It can be inferred from the passage that the author would be most likely to agree with which one of the following assertions regarding the “general principles of law” mentioned in lines 16-17 of the passage?
(A) They fail to take into account the special needs and interests of developing countries that enter into agreements with foreign investors.
(B) They have only recently been invoked as criteria for adjudicating disputes between governments and foreign investors.
(C) They are more compatible with the laws of France and the United States than with those of the United Kingdom.
(D) They do not assert that governments have an inherent right to modify unilaterally the terms of agreements that they have entered into with foreign investors.
(E) They are not useful in adjudicating disputes between developing countries and foreign investors.

3. The author implies that which one of the following is true of economic development agreements?
(A) They provide greater economic benefits to the governments that are parties to such agreements than to foreign investors.
(B) They are interpreted differently by courts in the United Kingdom than they are by courts in the United States.
(C) They have proliferated in recent years as a result of governments’ attempts to make them more legally secure.
(D) They entail greater risk to investors when the governments that enter into such agreements reserve the right to modify unilaterally the terms of the agreements.
(E) They have become less attractive to foreign investors as an increasing number of governments that enter into such agreements consider them governed by the law of ordinary contracts.

4. According to the author, which one of the following is true of a contract that is designated by a French government agency as an administrative contract?
(A) It requires the government agency to pay for unanticipated increases in the cost of delivering the goods and services specified in the contract.
(B) It provides the contractor with certain guarantees that are not normally provided in private civil contracts.
(C) It must be ratified by the passage of a statute.
(D) It discourages foreign companies from bidding on the contract.
(E) It contains terms that distinguish it from a private civil contract.

5. It can be inferred from the passage that under the “ordinary law of contracts” (lines 53-54), a government would have the right to modify unilaterally the terms of a contract that it had entered into with a foreign investor if which one of the following were true?
(A) The government undertook a greater economic risk by entering into the contract than did the foreign investor.
(B) The cost to the foreign investor of abiding by the terms of the contract exceeded the original estimates of such costs.
(C) The modification of the contract did not result in any increased financial burden for the investor.
(D) Both the government and the investor had agreed to abide by the general principles of law recognized by civilized nations.
(E) The contract contains a specific provision allowing the government to modify the contract.

6. In the last paragraph, the author refers to government contracts in the United States and the United Kingdom primarily in order to
(A) Cite two governments that often reserve the right to modify unilaterally contracts that they enter into with foreign investors.
(B) Support the assertion that there is no general principle of law governing contracts between private individuals and governments.
(C) Cast doubt on the alleged universality of the concept of administrative contracts.
(D) Provide examples of legal systems that might benefit from the concept of administrative contracts.
(E) Provide examples of characteristics that typically distinguish government contracts from private civil contracts.

7. Which one of the following best states the author’s main conclusion in the passage?
(A) Providing that an international agreement be governed by general principles of law is not a viable method of guaranteeing the legal security of such an agreement.
(B) French law regarding contracts is significantly different from those in the United States and the United Kingdom.
(C) Contracts between governments and private investors in most nations are governed by ordinary contract law.
(D) An inherent power of a government to modify or terminate a contract cannot be considered a general principle of law.
(E) Contracts between governments and private investors can be secured only by reliance on general principles of law.

8. The author’s argument in lines 57-62 would be most weakened if which one of the following were true?
(A) The specific provisions of government contracts often contain explicit statements of what all parties to the contracts already agree are inherent state powers.
(B) Governments are more frequently put in the position of having to modify or terminate contracts than are private individuals.
(C) Modification clauses in economic development agreements have frequently been challenged in international tribunals by foreign investors who were a party to such agreements.
(D) The general principles of law provide that modification clauses cannot allow the terms of a contract to be modified in such a way that the financial balance of the contract is affected.
(E) Termination and modification agreements are often interpreted differently by national courts than they are by international tribunals.

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Lahoosaher

Originally posted by lahoosaher on 14 Sep 2009, 04:24.
Last edited by fameatop on 02 Aug 2013, 23:13, edited 1 time in total.
OA not Provided & improper formatting
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14 Sep 2009, 04:27
A
A
D
E
E
C
D
A

Total Time : 14 mins
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13 Nov 2009, 15:24
A
D
D
E
E
C
D
A

These are a few of the favorite things.
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18 Nov 2009, 06:43
1. A
2. D
3. D
4. E
5. E
6. B
7. D
8. A

What is the OA?
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18 Nov 2009, 10:22
IMO
1)A
2)D
3)D
4)A
5)E
6)C
7)D
8)Cant say because the line numbers arent specified
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29 Dec 2009, 06:43
a
d
d
e
e
c
a
d

I see that my answer for 7th question is different from others'.
Can anyone explain why 'a' can't be the answer ?
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03 Jan 2010, 05:33
amolsk11 wrote:
Governments of developing countries occasionally enter into economic development agreements with foreign investors who provide capital and technological expertise that may not be readily available in such countries. Besides the normal economic risk that accompanies such enterprises, investors face the additional risk that the host government may attempt unilaterally to change in its favor the terms of the agreement or even to terminate the agreement altogether and appropriate the project for itself. In order to make economic development agreements more attractive to investors, some developing countries have attempted to strengthen the security of such agreements with clauses specifying that the agreements will be governed by “general principles of law recognized by civilized nations”—a set of legal principles or rules shared by the world’s major legal systems. However, advocates of governments’ freedom to modify or terminate such agreements argue that these agreements fall within a special class of contracts known as administrative contracts, a concept that originated in French law. They assert that under the theory of administrative contracts, a government retains inherent power to modify or terminate its own contract, and that this power indeed constitutes a general principle of law. However, their argument is flawed on at least two counts.

First, in French law not all government contracts are treated as administrative contracts. Some contracts are designated as administrative by specific statute, in which case the contractor is made aware of the applicable legal rules upon entering into agreement with the government. Alternatively, the contracting government agency can itself designate a contract as administrative by including certain terms not found in private civil contracts. Moreover, even in the case of administrative contracts, French law requires that in the event that the government unilaterally modifies the terms of the contract, it must compensate the contractor for any increased burden resulting from the government’s action. In effect, the government is thus prevented from modifying those contractual terms that define the financial balance of the contract.

Second, the French law of administrative contracts, although adopted by several countries, is not so universally accepted that it can be embraced as a general principle of law. In both the United States and the United Kingdom, government contracts are governed by the ordinary law of contracts, with the result that the government can reserve the power to modify or terminate a contract unilaterally only by writing such power into the contract as a specific provision. Indeed, the very fact that termination and modification clauses are commonly found in government contracts suggests that a government’s capacity to modify or terminate agreements unilaterally derives from specific contract provisions, not from inherent state power.

1. In the passage, the author is primarily concerned with doing which one of the following?
(A) pointing out flaws in an argument provided in support of a position
(B) analyzing the weaknesses inherent in the proposed solution to a problem
(C) marshaling evidence in support of a new explanation of a phenomenon
(D) analyzing the risks inherent in adopting a certain course of action
(E) advocating a new approach to a problem that has not been solved by traditional means
2. It can be inferred from the passage that the author would be most likely to agree with which one of the following assertions regarding the “general principles of law” mentioned in lines 16-17 of the passage?
(A) They fail to take into account the special needs and interests of developing countries that enter into agreements with foreign investors.
(B) They have only recently been invoked as criteria for adjudicating disputes between governments and foreign investors.
(C) They are more compatible with the laws of France and the United States than with those of the United Kingdom.
(D) They do not assert that governments have an inherent right to modify unilaterally the terms of agreements that they have entered into with foreign investors.
(E) They are not useful in adjudicating disputes between developing countries and foreign investors.
3. The author implies that which one of the following is true of economic development agreements?
(A) They provide greater economic benefits to the governments that are parties to such agreements than to foreign investors.
(B) They are interpreted differently by courts in the United Kingdom than they are by courts in the United States.
(C) They have proliferated in recent years as a result of governments’ attempts to make them more legally secure.
(D) They entail greater risk to investors when the governments that enter into such agreements reserve the right to modify unilaterally the terms of the agreements.
(E) They have become less attractive to foreign investors as an increasing number of governments that enter into such agreements consider them governed by the law of ordinary contracts.
4. According to the author, which one of the following is true of a contract that is designated by a French government agency as an administrative contract?
(A) It requires the government agency to pay for unanticipated increases in the cost of delivering the goods and services specified in the contract.
(B) It provides the contractor with certain guarantees that are not normally provided in private civil contracts.
(C) It must be ratified by the passage of a statute.
(D) It discourages foreign companies from bidding on the contract.
(E) It contains terms that distinguish it from a private civil contract.
5. It can be inferred from the passage that under the “ordinary law of contracts” (lines 53-54), a government would have the right to modify unilaterally the terms of a contract that it had entered into with a foreign investor if which one of the following were true?
(A) The government undertook a greater economic risk by entering into the contract than did the foreign investor.
(B) The cost to the foreign investor of abiding by the terms of the contract exceeded the original estimates of such costs.
(C) The modification of the contract did not result in any increased financial burden for the investor.
(D) Both the government and the investor had agreed to abide by the general principles of law recognized by civilized nations.
(E) The contract contains a specific provision allowing the government to modify the contract.
6. In the last paragraph, the author refers to government contracts in the United States and the United Kingdom primarily in order to
(A) Cite two governments that often reserve the right to modify unilaterally contracts that they enter into with foreign investors.
(B) Support the assertion that there is no general principle of law governing contracts between private individuals and governments.
(C) Cast doubt on the alleged universality of the concept of administrative contracts.
(D) Provide examples of legal systems that might benefit from the concept of administrative contracts.
(E) Provide examples of characteristics that typically distinguish government contracts from private civil contracts.
7. Which one of the following best states the author’s main conclusion in the passage?
(A) Providing that an international agreement be governed by general principles of law is not a viable method of guaranteeing the legal security of such an agreement.
(B) French law regarding contracts is significantly different from those in the United States and the United Kingdom.
(C) Contracts between governments and private investors in most nations are governed by ordinary contract law.
(D) An inherent power of a government to modify or terminate a contract cannot be considered a general principle of law.
(E) Contracts between governments and private investors can be secured only by reliance on general principles of law.
8. The author’s argument in lines 57-62 would be most weakened if which one of the following were true?
(A) The specific provisions of government contracts often contain explicit statements of what all parties to the contracts already agree are inherent state powers.
(B) Governments are more frequently put in the position of having to modify or terminate contracts than are private individuals.
(C) Modification clauses in economic development agreements have frequently been challenged in international tribunals by foreign investors who were a party to such agreements.
(D) The general principles of law provide that modification clauses cannot allow the terms of a contract to be modified in such a way that the financial balance of the contract is affected.
(E) Termination and modification agreements are often interpreted differently by national courts than they are by international tribunals.

A
D
A
E
C
C
D

total time 14 mins..
OA plz??
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23 Jun 2010, 09:59
1A
2D
3D
4E
5E
6C
7D
8 Cannot say no line numbers
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27 Sep 2010, 10:02
1 a
2 d
3 d
4 a
5 e
6 c
7 d
8 c

OAAAAA Plz ?
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09 Oct 2010, 21:00
1) a
2) d
3) d
4) c
5) c
6) c
7) a
8) c

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13 Oct 2010, 06:35
A
D
D
B
E
B
D
E
TIME = 17 MINS

OA PLZ
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29 Oct 2010, 19:31
a
a
e
a
e
b
c
a
.. 20 Mins
Pls post OA
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01 Nov 2010, 00:49
amolsk11 wrote:
A
A
D
E
E
C
D
A

Total Time : 14 mins

1. A
2. A
3. D
4. E
5. E
6. C
7. D
8. A
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Re: Governments of developing countries occasionally enter into  [#permalink]

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02 Aug 2013, 19:53

1. A
2. D
3. D
4. B
5. E
6. C
7. D
8. A

I think I have got one incorrect. The answer to question should be E) and not B)
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Re: Governments of developing countries occasionally enter into  [#permalink]

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26 Oct 2013, 06:01
Can anyone explain q2 and q7? ...
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Re: Governments of developing countries occasionally enter into  [#permalink]

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28 Oct 2013, 00:15
d
d
e
b
e
b
d
d

8th is aguess as cant c the line numbers
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Re: Governments of developing countries occasionally enter into  [#permalink]

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05 Dec 2013, 22:51
1
OA:
1. (A)
This answer choice very nicely captures the author’s purpose as revealed to us in lines 28-29

(B) is beyond the scope of the text. What solution? What problem?

(C) The author doesn’t offer any “new explanation;” he simply marshals evidence to rebut an
argument with which he’s not in agreement.

(D), too, is beyond the scope of the text. What “course of action” does the author supposedly
analyze?

(E) Again, what problem? The author’s just countering an argument; he’s not out to solve any
problem.

• Don’t be thrown by choices phrased in abstract language. In global questions, always
look for the choice that’s consistent with the passage’s topic, scope, and purpose,
however it’s phrased.
2. (D)
In ¶s 2 and 3, the author contends that “general principles of law” don’t give governments the
right to alter unilaterally contracts that they’ve entered into.

(A) is beyond the scope of the text. The author isn’t concerned with the “special needs and
interests of developing countries” per se. He’s interested in the legal relationship between
governments and investors in general.

(B) is also beyond the scope of the text. The passage provides no information about when these
principles were first used to settle disputes.

(C) distorts the text. ¶3 makes it clear that American and British law are more akin to each
other than to French law.

(E) The author doesn’t take issue with the “general principles of law” themselves. He simply
argues that what some consider a general principle of law—the concept of administrative
contracts as described in the passage—is not in fact a general principle of law.
3. (D)
In lines 7-11, the author says that an “additional risk” (i.e., a risk on top of “normal economic
risk”) faced by foreign investors that enter into economic development agreements with
governments is that some governments may try to alter unilaterally the agreements’ original
terms to the detriment of foreign investors. That’s why some governments, the author notes in
lines 11-19, have made these agreements “more attractive” to foreign investors by, in effect,
telling investors that they (the governments) won’t try to change unilaterally the terms of
agreements.

(A) The author never discusses the extent to which either governments or foreign investors
benefit from such agreements.

(B) draws a bogus distinction between the American and British legal systems. Indeed, the text
doesn’t allude to any differences between these legal systems.

(C) The passage doesn’t give any indication that economic development agreements have
become more numerous of late, even though it does say that some governments have recently
tried to make them more appealing to foreign investors.

(E) Since some governments have tried to make economic development agreements more
palatable to foreign investors, chances are that they’ve become more, not less, attractive to
those investors; but there’s no hard info in the passage one way or the other.
4. (E)
In lines 36-39, the author notes that contracts designated by French government agencies as

(A) Lines 39-44 reveal that government agencies are only required to pay unanticipated costs
if these costs result from a unilateral change in the contract made by the government.

(B) Au contraire. If anything, administrative contracts generally provide contractors with fewer
guarantees than private civil contracts.

(C) distorts info in ¶2, which says that there are two ways that an administrative contract can
be created in France: (1) by statute or (2) through the initiative of a government agency.

(D) The passage says nothing about foreigners being discouraged from bidding on French
contracts. What the passage does imply is that some foreigners have been concerned about
entering into contracts with governments in developing countries.

5. (E)
Lines 54-56 explicitly state that, under the ordinary law of contracts, governments can
unilaterally change the terms of an agreement only if a provision allowing unilateral change is
incorporated into the original agreement itself.

(A), (B), and (C) ¶3, the only one that discusses the ordinary law of contracts, doesn’t refer to
government “economic risks” (A), “costs” to foreign investors (B), or increased “financial
burden” to investors (C). Moreover, (A) and (C) distort details from the wrong ¶s—¶s 1 and 2,
respectively.

(D) The passage draws no connection between the ordinary law of contracts and “the general
principles of law recognized by civilized nations” (mentioned in ¶1).
6. (C)
In lines 48-51, the author contends that the concept of administrative contracts is not a “general
principle of law.” He then proceeds to show that contracts in both America and Britain are
governed by the ordinary law of contracts in order to support his point with evidence.

(A) Au contraire. American and British contract law doesn’t allow a government to “reserve
the right to modify unilaterally contracts that [it] enter[s] into....” If the government desires this
right, it must be explicitly written into the terms of the contract itself.

(B) is too broad an assertion. While the author does argue that the concept of administrative
contracts isn’t a “general principle of law,” he doesn’t conclude that there is no general
principle of law that governs contracts between governments and private individuals.

(D) If anything, the author is a critic of the concept of administrative contracts. He certainly
can’t be considered a champion of this notion.

(E) This answer choice is inconsistent with the entire thrust of ¶3, which suggests that, under
the ordinary law of contracts, government contracts are absolutely no different than private
contracts. In fact, answer choice (E) plays on a detail in the entirely wrong paragraph—¶2.

8. (A)
In lines 57-62, the author argues that “termination or modification clauses” in contracts are
proof that government has no inherent right to change unilaterally the terms of a contract to
which it is a party. If such clauses, however, were a mere acknowledgment of an inherent
government right, and had no legal standing of their own, the author’s reasoning would be
undercut.

(B), (C), (D), and (E) bring up issues that are not relevant to the author’s point about the lack of
an inherent government right to terminate or modify contracts.
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Re: Governments of developing countries occasionally enter into  [#permalink]

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02 Mar 2019, 00:22
Explaination to Answer to question 7?

A vs C vs D?
Re: Governments of developing countries occasionally enter into   [#permalink] 02 Mar 2019, 00:22
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