Also known as:stream-of-commerce test · stream of commerce doctrine · stream of commerce
Written by attorneys · grounded in primary & secondary sources — see below
A doctrine for assessing whether a defendant has established minimum contacts with a forum state sufficient for personal jurisdiction. The test examines whether the defendant placed a product into the stream of commerce with the expectation that it would reach the forum and whether exercising jurisdiction comports with fair play and substantial justice.
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Cases
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How it applies
Common Examples
6
Foreign Indemnity Dispute
Sapphire Technologies, a Greek component maker, sold seals only to a Japanese shipbuilder that knew vessels might dock in a Gulf Coast state. When a seal failed and led to an indemnity claim between the two foreign firms, Sapphire moved to dismiss. The court granted the motion because mere awareness that the product might reach the state through the stream of commerce did not satisfy fairness factors given the minimal forum interest and heavy burden on the foreign defendant.
Nationwide But Not Targeted
Sterling Manufacturing, an Indian firm, sold fiber connectors exclusively to a British assembler that distributed systems across the United States including State S. After outages, the assembler impleaded Sterling for indemnity. The court granted dismissal because Sterling targeted the U.S. market generally rather than purposefully directing its products at State S under the stream of commerce test.
Unilateral Resale Breaks Chain
Sterling Dynamics sold industrial presses only to a distributor contractually limited to State M. The distributor resold one press into State N where a worker was injured. Sterling moved to dismiss the product liability suit. The court granted the motion because the distributor's unilateral action did not constitute purposeful availment under the stream of commerce test.
Contractual Limits Prevent Targeting
Southland Foods manufactured hay balers and sold them only to a distributor restricted to State U. The distributor breached the contract and resold a baler into State V where a farmer was injured. Southland moved to dismiss. The court granted dismissal because the contractual territorial limits showed no intent to serve State V through the stream of commerce.
Market Exploitation Supports Jurisdiction
Sapphire Technologies advertised its presses in State N trade journals, sent sales representatives there, and stocked parts with a local distributor. A worker injured by a used press sued in State N. The court denied dismissal because the company's deliberate cultivation of the State N market satisfied the stream of commerce test even though the specific press arrived through later resales.
Foreseeability Alone Insufficient
Sterling Manufacturing sold vehicles to a regional distributor limited to three states. A buyer drove one vehicle to a distant state where an accident occurred. The injured party sued the manufacturer there. The court granted dismissal because mere foreseeability that the product might reach the forum through the stream of commerce did not establish purposeful contacts.
Common questions
Frequently Asked
4
Does mere awareness that a product may reach the forum state through an independent distributor establish personal jurisdiction under the stream of commerce test?+
No. The Supreme Court has held that placing a product into the stream of commerce with awareness it may reach the forum is not by itself a clearly sufficient basis for personal jurisdiction. Additional conduct purposefully directed at the forum or satisfaction of the fairness factors is required.
Supporting sources
Must a foreign manufacturer target the specific forum state rather than the U.S. market as a whole to satisfy the stream of commerce test?+
Yes. In stream-of-commerce cases a foreign manufacturer must target the forum state specifically. Mere placement of goods into the stream of commerce without purposeful targeting of the forum is insufficient for personal jurisdiction.
Supporting sources
When an indemnity claim between two foreign corporations is the only live dispute, how does the stream of commerce test interact with the fairness factors?+
Even if minimum contacts arguably exist, the fairness factors often weigh against jurisdiction. The forum has only a marginal interest in a foreign-to-foreign indemnity dispute while the burden on the foreign defendant is severe, making the exercise of jurisdiction unreasonable.
Supporting sources
Does a contractual restriction limiting a distributor's territory to certain states prevent a manufacturer from being subject to jurisdiction elsewhere under the stream of commerce test?+
Yes. When a manufacturer contractually limits its distributor's sales territory and forbids out-of-territory resales, a unilateral breach by the distributor does not constitute purposeful availment by the manufacturer. The stream of commerce test requires the defendant's own conduct to target the forum.
Supporting sources
constitutes “minimum contacts” between the defendant and the forum State such that the exercise of jurisdiction “does not offend ‘traditional notions of fair play and substantial justice.’”…
Civil ProcedureJurisdiction and venue · Personal jurisdictionUBEFoundational