Stream-of-Commerce Theory Law and Legal Definition

Stream of commerce theory refers to a principle that permits a state to exercise personal jurisdiction over a defendant if the defendant places a product in the general marketplace and the product causes injury or damage in the forum state, provided the defendant also takes other acts to establish some connection with the forum state, as by advertising there or by hiring someone to serve as a sales agent there.

As used in tort law, stream of commerce theory refers to a principle that a person who participates in placing a defective product in the general marketplace is strictly liable for harm caused by the product.

The following is an example of a case law on the stream of commerce theory:

The stream-of-commerce theory permits the exercise of personal jurisdiction over a nonresident defendant that delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum state The foreseeability required in the products liability context is not the mere likelihood that a product will find its way into the forum state. Rather, it is that the defendant's conduct and connection with the forum state are such that he should reasonably anticipate being haled into court there. Once a product has reached the end of the stream and is purchased, a consumer's unilateral decision to take a product to a distant state, without more, is insufficient to confer personal jurisdiction over the manufacturer or distributor. [Seiferth v. Helicopteros Atuneros, Inc., 472 F.3d 266, 273 (5th Cir. Miss. 2006)]