International Business Law - Common enterprise liability

Common Enterprise Liability

Mostafa Younis

Sunday, January 9, 2011

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.


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.


The multinational clients are assured that they will be

served by the local GBB firm in any country where the

client does business.


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.


Relying on that information, Local made several

disastrous investments and lost most of its net worth.


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?


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.


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.


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.


Thank You


International Business Law - Common enterprise liability

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