Long-arm statutes are legal tools used to extend the jurisdiction of a court beyond the usual boundaries of its territorial limits. In practice, these statutes are designed to allow a court to exert power over a specific party without them needing to reside within the geographic boundary of the court’s area of jurisdiction.
By definition, a long-arm statute is a law that has the power to make a defendant who is not residing in the state where the court is located, answer the court’s jurisdiction if that non-resident defendant has done something that would make it reasonably foreseeable that he or she would be made to respond. For a court to assert jurisdiction over an out-of-state defendant, long-arm statutes must be fulfilled.
How Long-Arm Statutes Are Used
Long-arm statutes can be used in a number of circumstances, including the situation where a business has breached a contract with another company outside of its jurisdiction, or when a person has been harmed by a product from a company located outside the state they are filing a lawsuit in. In some cases, the out-of-state company can be sued by their customers, no matter where they are located. This is particularly effective for victims of online fraud, who may find it difficult to track down and bring the fraudster to justice.
Business Impact of Long-Arm Statutes
For businesses, long-arm statutes can have far-reaching implications. For companies that do business with customers in multiple states, this extended jurisdictional authority can increase their legal liability and require them to know and comply with regulations in each state. Depending on the state’s long-arm statute, a business could be vulnerable to lawsuits filed by customers in other states, or even from other countries, for any number of reasons.
In addition, for companies that are preparing to launch a product in, or expand into, new markets, understanding and adapting to the relevant long-arm statutes can be essential to protect their interests and avoid any interaction with the law.
Conclusion
Long-arm statutes are an important part of the legal system and they can have a significant impact on businesses. Knowing when and how they come into play, and understanding the impact that they can have on businesses, is essential to protecting both the customer and the business.