The High-touch Legal Services® Blog…for Startups!

© 2009-2019 Dana H. Shultz, Attorney at Law

What are Repeated and Successive Transactions?

Seal of the California Secretary of State, with which a foreign entity must register once it enters into repeated and successive transactions within the stateIn Doing Business in CA? Be Sure to Register, I discussed when a foreign entity must register to do business in California. The test is whether the entity has transacted intrastate business, i.e., has engaged in repeated and successive transactions of business within the state. This post explores the meaning of “repeated and successive transactions“.

Repeated and Successive Transactions” Not Defined

The term “repeated and successive transactions” appears in Corporations Code Subsection 191(a). Unfortunately, that term is not defined. However, another portion of Section 191 provides a bit of help.

Subsections 191(b)-(d) describe activities that do not constitute the transaction of intrastate business. Subsection 191(c)(8) is of particular interest. That subsection excludes “[c]onducting an isolated transaction completed within a period of 180 days and not in the course of a number of repeated transactions of like nature” from the transaction of intrastate business.

From this provision, we get a clue that determining whether there are repeated and successive transactions might depend the following.

  • The number of transactions that take place during a given time period. (This suggests that frequency of transactions might be relevant.)
  • Whether transaction are of like nature. (This suggests that related transactions might be required.)
Relevant Cases

Case law provides some  help.

In “Doing Business” Requires More than an Employee and an Office, I discussed Jarzab v. KM Enterprises. In that case, the court held that merely leasing an office and hiring an employee did not constitute repeated and successive transactions.

Consider, in contrast, BCX International v. Merv York (an unreported case). In that case, the Court of Appeal for the Second Appellate District concluded that BCX had engaged in repeated and successive transactions based on the following.

  • At least two addresses in San Bernardino, California, as well as a fax number in the Inland Empire.
  • Numerous contracts between BCX and another entity used one or the other of these addresses and the fax number.
  • Intrastate faxes to and from the fax number for sales contracts.
  • Maintaining control over goods from their arrival in California until delivery to their final destination in California.

In summary, we still don’t have a precise definition of “repeated and successive transactions“, but we might have a framework for considering this term with respect to a given business entity.

  • The greater the number of transactions and the more frequently they occur, the more likely they are to be considered repeated and successive.
  • The more closely transactions are related, the more likely they are to be considered repeated and successive.

Dana H. Shultz, Attorney at Law  +1 510-547-0545  dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.

Categories
Business Entities