A single market - sort of
Since I’m on the subject of doing business in the US, one of the things non-US businesspeople (particularly Europeans) don’t understand is the US federal system. After all, the US has a single huge market with one language and one currency, what’s not to like?
Well, from a legal perspective, each of the 50 states retain some semblance of their former sovereignty. What that translates to for the business person is 50 different sets of laws, at least in those areas not already co-opted by the federal government. Unfortunately for businesses, many of the most important legal areas for corporations are among those preserved for the state (rather than federal) government. Corporate law, consumer protection, employment law, law of contracts, and product liability law are all areas in which the states have their own legal schemes, either in addition to or instead of the federal government.
For example, there is no such thing as a US corporation - there are Delaware corporations, Pennsylvania corporations, etc., but there is no single “corporation” which can act across all fifty states, at least not without some further action. Indeed, a Delaware corporation doing business in New York is considered a “foreign corporation,” and must register separately with the state once a certain level of business is reached. That measure, too, varies from state to state.
This means the non-US businesses must consider the location of any physical offices as well as those states in which there is the most economic activity when incorporating and drafting contracts, and must periodically review business activities to adjust contracts and authorizations accordingly. On the plus side, it is possible to incorporate in one state (often Delaware) and have headquarters in another if it makes sense to do so, just as it is possible to pick the law and jurisdiction of a particular state when drafting contracts.
image from US DOL
Tags: business, corporation, Delaware, jurisdiction, law, legal, state, United StatesRelated Stories
POSTED IN: Doing biz in the US
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