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Simple English definitions for legal terms
stream-of-commerce theory
Read a random definition: ex works
A quick definition of stream-of-commerce theory:
Stream-of-commerce theory: This means that if a company sells a product in many different places and that product causes harm in a specific place, that place can hold the company responsible for the harm. The company must also have some connection to that place, like advertising or having a salesperson there.
A more thorough explanation:
The stream-of-commerce theory is a legal principle that allows a state to have jurisdiction over a defendant if the defendant sells a product in the general marketplace and that product causes harm or injury in the state. This is true as long as the defendant also takes other actions to establish a connection with the state, such as advertising or hiring a sales agent there.
For example, if a company based in California sells a defective product that causes harm to a consumer in New York, the state of New York can use the stream-of-commerce theory to establish jurisdiction over the California company. This is because the company placed the product in the general marketplace and took actions to establish a connection with New York, such as advertising or hiring a sales agent there.
Another example could be a company based in Texas that sells a product online and ships it to customers all over the country. If a customer in Florida is injured by the product, Florida can use the stream-of-commerce theory to establish jurisdiction over the Texas company. This is because the company placed the product in the general marketplace and took actions to establish a connection with Florida by shipping the product there.