Legal Definitions - stream-of-commerce theory

The stream-of-commerce theory is a legal principle that allows a state to have jurisdiction over a defendant if the defendant sells a product in the general marketplace and that product causes harm or injury in the state. This is true as long as the defendant also takes other actions to establish a connection with the state, such as advertising or hiring a sales agent there.

For example, if a company based in California sells a defective product that causes harm to a consumer in New York, the state of New York can use the stream-of-commerce theory to establish jurisdiction over the California company. This is because the company placed the product in the general marketplace and took actions to establish a connection with New York, such as advertising or hiring a sales agent there.

Another example could be a company based in Texas that sells a product online and ships it to customers all over the country. If a customer in Florida is injured by the product, Florida can use the stream-of-commerce theory to establish jurisdiction over the Texas company. This is because the company placed the product in the general marketplace and took actions to establish a connection with Florida by shipping the product there.