Minimum Contacts

By: Martin M. Shenkman, CPA, MBA, JD

For a court in a particular state to hear a case, that parties in the case must have sufficient involvement with that state. For example, if a corporation in State Z ships a product to a customer in State A, but has no other involvement in State A -- no employees, no direct advertising, nothing but the single shipment to the customer. Does that one transaction constitute sufficient contacts that it would be reasonable and fair for the courts in State A to hear a suit by the customer against the corporation? If your business, trust or other entity has (or may have) multiple state contacts you should consult with an attorney to determine if you should limit or otherwise control those contacts to avoid suit in a state. Similarly, if you conduct business in a state, you should consult with your attorney to determine if your contacts with that state have risen to the level where your entity should file to become authorized to conduct business in that state.

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