Fundamentals of Business Law: Summarized Cases (9th Edition)

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Courts and Alternative Dispute Resolution. Ethics and Business Decision Making. Tort Law. Intellectual Property. Internet Law, Social Media, and Privacy. Criminal Law and Cyber Crime. Nature and Classification. Agreement in Traditional and E-Contracts. Consideration, Capacity, and Legality. Defenses to Contract Enforceability. Third Party Rights and Discharge. Breach and Remedies. Corporate Contacts A corporation is subject to the jurisdiction of the courts in any state in which it is incorporated, in which it has its main office, or in which it does business.

Jurisdiction over Subject Matter Subject-matter jurisdiction involves limitations on the types of cases a court can hear—a court of general jurisdiction can hear virtually any type of case, except a case that is appropriate for a court of limited jurisdiction. Courts of original jurisdiction are trial courts; courts of appel- late jurisdiction are reviewing courts.

Independence Plating Corp. IPC is a New Jersey firm that provides anodizing services. It does not advertise or otherwise solicit business in North Carolina. Southern Prestige Industries, Inc.


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After the parts were anodized, they were shipped back, and Southern Prestige forwarded the parts to a third party. IPC asked the court to dismiss the suit. The court refused, and IPC appealed, arguing that the court lacked personal jurisdiction.

Cengage Advantage Books Fundamentals of Business Law Summarized Cases

A state intermediate appellate court affirmed. Notes and Questions What are the factors that the court looked at in determining whether minimum contacts existed between the defendant and the state of North Carolina?

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Because the inconvenience to the parties was not weighted in favor of one party or the other, the inconvenience to the parties could not be determining factor in deciding the due process issue. Suppose that the two parties had engaged in a single business transaction.

Would the outcome of this case have been the same?


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Why or why not? The answer depends most probably on the size of the dispute in question. Had the single transaction been for several million dollars, the trial and appellate courts in North Carolina probably would have decided as they did in the actual case. Yes, it was fair to require Independence to litigate in North Carolina. Therefore, Independence should have expected to be hailed into court in North Carolina in the event of a dispute.

A state long 8. Typically, these circumstances include going into or com- municating with someone in the state for limited purposes, such as transacting business, to which the claim in which jurisdiction is sought must relate. Personal jurisdiction by acts of non-domiciliaries a Acts which are the basis of jurisdiction. As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any non-domiciliary, or his executor or administrator, who in person or through an agent: 1.

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A court in any matrimonial action or family court proceeding involving a demand for support, alimony, maintenance, distributive awards or special relief in matrimonial actions may exercise personal jurisdic- tion over the respondent or defendant notwithstanding the fact that he or she no longer is a resident or domiciliary of this state, or over his or her executor or administrator, if the party seeking support is a resident of or domiciled in this state at the time such demand is made, provided that this state was the matrimonial domicile of the parties before their separation, or the defendant abandoned the plaintiff in this state, or the claim for support, alimony, maintenance, distributive awards or special relief in mat- rimonial actions accrued under the laws of this state or under an agreement executed in this state.

Where personal jurisdiction is based solely upon this section, an appearance does not confer such jurisdiction with respect to causes of action not arising from an act enumerated in this section. Original and Appellate Jurisdiction Courts of original jurisdiction are trial courts; courts of appellate jurisdiction are reviewing courts. Jurisdiction of the Federal Courts a.

Federal Questions A suit can be brought in a federal court whenever it involves a question arising under the Constitution, a treaty, or a federal law. Diversity of Citizenship A suit can be brought in a federal court whenever it involves citizens of different states. For diversity-of-citizenship purposes, a corporation is a citizen of the state in which it is incorporated and of the state in which it has its principal place of business. Congress further limits the number of suits that federal courts might otherwise hear by setting a minimum to the amount of money that must be involved before a federal district court can exercise jurisdiction.

The following is the statute in which Congress sets out the requirements for diversity jurisdiction, including the amount in controversy. For the purposes of this section, section , and section , an alien admitted to the United States for permanent residence shall be deemed a citizen of the State in which such alien is domiciled. June 25, , c. Exclusive versus Concurrent Jurisdiction When both state and federal courts have the power to hear a case, concurrent jurisdiction exists.

When a case can be heard only in federal courts or only in state courts, exclusive jurisdiction exists. Federal courts have exclusive jurisdiction in cases involving federal crimes, bankruptcy, patents, and copyrights; in suits against the United States; and in some areas of admiralty law. States have exclusive jurisdiction in certain subject matters also—for example, in divorce and in adoptions.

Fundamentals of business law : summarized cases

One approach is the sliding scale, according to which a passive ad is not enough on which to base jurisdiction while doing considerable business online is. Some of the controversy involves cases in which the contact is more than an ad but less than a lot of activity. A firm should attempt to comply with the laws of any jurisdiction in which it targets customers. To exclude customers, however, there are technical problems that need to be solved.

Generally, the courts have found that jurisdiction is proper when there is substantial business conducted over the Internet with contracts, sales, and so on.

When there is some interactivity through a Web site, courts have also sometimes held that jurisdiction is proper. Jurisdiction is not proper, however, when there is merely passive advertising. The court, however, would also consider any other interactivity.

The facts state that Wizard has done projects in other states and might have clients in Montana although Anna and Caleb cannot remember. If Wizard does have clients in Montana who purchased software via the Web site, the court will likely find jurisdiction is proper because the defendant purposefully availed itself of the privilege of acting in the forum state. Also, if Wizard Internet regularly enters contracts to sell its software or consulting services over the Web— which seems likely given the type of business in which Wizard engages—the court may hold jurisdiction If, however, Wizard simply advertises its services over the Internet and persons cannot place orders via the Web, the court will likely hold that this passive advertising does not justify asserting jurisdiction.


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  4. Over what must a court have jurisdiction? How are the courts applying traditional jurisdictional concepts to cases involving Internet transactions? To hear a case, a court must have jurisdiction over the person against whom the suit is brought or over the property involved in the suit. The court must also have jurisdiction over the subject matter.

    International Jurisdictional Issues The minimum-contact standard can apply in an international context. As in cyberspace, a firm should attempt to comply with the laws of any jurisdiction in which it targets customers. Wang Huoquing Gucci America, Inc. Gucci uses twenty-one trademarks associated with its goods. Gucci hired a private investigator in California to buy goods from the sites. Gucci then filed a suit against Huoqing in a federal district court, seeking damages and an injunction preventing further trademark infringement. The court first had to determine whether it had jurisdiction.

    The court held that it had personal jurisdiction over Wang Huoqing. The U.

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    The court granted Gucci an injunction. Notes and Questions What do the circumstances and the holding in this case suggest to a business firm that actively attempts to attract customers in a variety of jurisdictions? This situation and the ruling in this case indicate that a business firm actively attempting to solicit business in a jurisdiction should be prepared to appear in its courts. This principle likely covers any jurisdiction and reaches any business conducted in any manner. Would the court still have found that it had personal jurisdiction over Huoqing?