international business law - common enterprise liability
DESCRIPTION
International Business Law MNEs Case StudyTRANSCRIPT
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Common Enterprise Liability
Mostafa Younis
Sunday, January 9, 2011
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1-Facts:Good, Better & Best (GBB) is the name used by several
firms of business consultants located in many
different countries.
The firms are organized either as partnerships or
limited liability stock companies depending on
the local laws.
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The senior partners or presidents of the several firms
meet on a regular basis to coordinate worldwide advertising
and standardize the policies of the several firms.
The firms exchange information and they share employees as the
need may arise.
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The multinational clients are assured that they will be
served by the local GBB firm in any country where the
client does business.
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2-Key Problem:One of the GBB firms in Country X (GBB-X) provided marketing information to local company, the information had been negligently
prepared by (GBB-X) and it contained gross errors.
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Relying on that information, Local made several
disastrous investments and lost most of its net worth.
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local wants to sue (GBB-X), but it knows that GBB-Xhas few assets, SO:
Will Local company be successful if it asks the courtin which it is suing the GBB-X firm to join others of
the GBB firms as codefendants?
Would the choice of the court in which GBB brings its suit be important in deciding this?
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Common Enterpr ise
3-Legal Applied Rule:
Each member of a common enterprise will have liability for the conduct of the entire enterprise.
Which means:When individuals or companies including subsidiaries function as part of a common enterprise, Courts will treat them as if they were members of a joint venture or partnership with each of
them having joint or joint and several liability for the obligations of the entire enterprise.
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Common Enterpr ise
How to determine whether person or firm are members of a common enterprise?
A-Courts look at the of the of the parties.Intent
B-If there are no formal agreements creating a partnership or a joint venture, the courts will consider these factors in determining the intent:
3-Joint ownership of the business.
2-Sharing the Management.
1-Sharing of Profits or Losses.
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4-Application:The Court determined the intent through:
Sharing In The Management
So:GBB-X firm is a member in the GBB common enterprise
which will be considered as codefendant.
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Thank You
Sunday, January 9, 2011