Legal Definitions - doing business

The legal term "doing business" refers to the extent of activity an individual or company from one state (or country) conducts within another state (or country) that is significant enough for the latter state's courts to have legal authority, or "jurisdiction," over them. Essentially, if an entity engages in enough regular or impactful activities within a state, that state's laws and courts can apply to them, even if they don't have a physical office there.

This concept is crucial for determining where a lawsuit can be filed, where a business must comply with local regulations, or where it might be subject to state taxes. States often define what constitutes "doing business" in their "long-arm statutes," which allow their courts to reach beyond state borders to assert jurisdiction over out-of-state entities that have established a sufficient connection.

Here are some examples illustrating the concept of "doing business":

• Online Retailer with Targeted Sales:

  Imagine a custom jewelry designer based in Colorado who sells unique pieces exclusively through their website. While they have no physical stores outside Colorado, a significant portion of their sales, customer service interactions, and digital marketing efforts are consistently directed towards customers in Florida. They regularly ship products to Florida addresses, process payments from Florida residents, and run advertising campaigns specifically targeting the Florida market.

  How it illustrates "doing business": By consistently marketing to, selling products to, and fulfilling orders for Florida residents, the Colorado designer is likely "doing business" in Florida. If a Florida customer experiences a problem with a purchase (e.g., a defective product, a breach of contract), a Florida court might assert jurisdiction over the Colorado company because of its continuous and purposeful engagement with the Florida market.

• Out-of-State Construction Firm on a Major Project:

  Consider a large construction company headquartered in California that wins a contract to build a new university campus in Arizona. For three years, the California firm establishes a temporary project office in Arizona, moves a significant portion of its management and construction crews there, hires numerous local Arizona subcontractors and employees, and regularly interacts with Arizona state regulatory bodies and local suppliers.

  How it illustrates "doing business": Even though its main corporate base is in California, the construction company's extensive physical presence, long-term project engagement, and deep contractual relationships within Arizona demonstrate that it is "doing business" in Arizona. This level of activity would almost certainly subject the firm to Arizona's jurisdiction for any legal issues arising from the campus project, such as disputes with subcontractors, employee claims, or compliance with local building codes.

• Financial Advisor Regularly Soliciting Clients:

  Suppose a financial advisory firm based in New York does not have a branch office in Connecticut. However, its advisors regularly travel to Connecticut to meet with prospective clients, host investment seminars for Connecticut residents in rented venues, and maintain a dedicated Connecticut-specific section on its website, including testimonials from Connecticut clients. They also advertise heavily in Connecticut business journals and online forums targeting Connecticut investors.

  How it illustrates "doing business": The financial advisory firm's consistent and targeted efforts to solicit clients, conduct meetings, and market its services within Connecticut, even without a permanent physical office, could be considered "doing business" in Connecticut. This sustained engagement creates a sufficient connection for Connecticut courts to exercise jurisdiction over the New York firm if, for instance, a Connecticut client alleges financial misconduct or a breach of fiduciary duty.