Jurisdiction

Jurisdiction

Internet Law is a developing new area in the field of business law. One issue that has caused a significant amount of litigation is jurisdiction - where can a party be sued on a claim involving business on the Internet? The answers are not simple.

Under established law, a party can be sued in the state and district where it is incorporated, where its principal place of business is located or where the cause of action accrued. The first two locations remain fairly easy to determine. The location where the cause of action accrued can be difficult to determine if the transaction took place over the Internet. For example, paper contracts frequently recite the location where the contract was executed, where performance is required or where payment must be made. Those recitals give courts a basis for determining jurisdiction. Transactions over the Internet often take place without the parties knowing the location of the other, and performance is contemplated online. Jurisdiction may be limited in such an instance to the defendant's state of residence.

The United States Supreme Court has ruled that a business cannot be sued in a particular state unless the business has some relationship to that state and "purposely availed itself of the benefits of doing business in that state". This is usually determined by the business's 'minimum contacts' with the state, such as maintaining sales agents in the state or advertising targeted to the state. These issues also are more difficult to determine when business is conducted on the Internet. The plaintiff typically argues that doing business on the Internet necessarily involves doing business in every state. However, typical ecommerce does not target a particular location, and sales may come from anywhere in the world. It may be unfair to subject a company to suit anywhere in the world simply because it maintains a web site.

These issues are still developing and continue to lag behind the developments in technology. If you have any legal issues or questions you can contact us at dave@flalawyer.com or by phone at 954-356-0450.