Also known as: engage in the business · engages in the business · engaged in business · doing business
Written by attorneys · grounded in primary & secondary sources — see below
A commercial activity undertaken regularly and for profit rather than casually or occasionally. The phrase identifies participants in a trade or profession who place goods or services into the stream of commerce as part of their ordinary operations.
MegaMart, a national big-box retailer, prominently advertised and sold a line of KidGlide scooters. Dana purchased one for her son Leo. When the scooter accelerated uncontrollably in the parking lot and injured Leo, Leo sued MegaMart under strict products liability. MegaMart's regular marketing and sales of scooters placed it within the class of sellers subject to liability for the defective product.
Evergreen Bank accepted a check for automated collection processing. The check contained a visible alteration that the bank's automated system did not catch because its procedures did not require manual examination. When the payee later sued the bank for failing to exercise ordinary care, the bank's status as an entity engaged in the business of banking meant its automated procedures were measured against prevailing commercial standards rather than a duty to inspect every instrument.
Select any source to read its text and confirm it supports the definition.
LumoHeat mass-produced electric space heaters and advertised them as safe for ordinary home use. Carla purchased one through a retailer. The heater overheated and caused a fire that burned her. Carla sued LumoHeat for misrepresentation. Because LumoHeat regularly sold heaters to the public, its public statements about product quality exposed it to liability for physical harm caused by justifiable reliance on those statements.
Edward Everett repeatedly purchased firearms at gun shows and resold them to acquaintances for profit over several months. He did not hold a federal firearms license. Federal agents charged him with dealing in firearms without a license. Everett's pattern of acquiring and reselling guns for gain established that he was engaged in the business, triggering the licensing requirement.
Basic Inc., a publicly traded manufacturer of chemical refractories, engaged in ongoing talks with Combustion Engineering about a possible acquisition. While those discussions were active, Basic issued statements to shareholders that downplayed the likelihood of a deal. Shareholders who sold during that period sued under Rule 10b-5. Basic's status as a company engaged in the business of manufacturing and its ongoing acquisition activity made its public statements material to investors.
E. L. Aaron & Co., a registered broker-dealer, employed registered representatives who conducted a sustained sales campaign promoting Lawn-A-Mat stock using false statements. The SEC brought an enforcement action against the firm's supervisory employee. The firm's regular participation in securities transactions as part of its business operations subjected it and its supervisors to liability for the misleading statements made to investors.
Courts look for regularity, repetition, and a profit motive in the activity. A national retailer that advertises and sells a line of products qualifies, while a homeowner selling a single used item at a yard sale does not. The distinction determines whether strict products liability or other commercial rules apply.
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No. Any commercial participant in the chain of distribution who regularly sells the type of product can qualify, including retailers and wholesalers. The rule focuses on placement into the stream of commerce rather than creation of the defect.
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For a person engaged in business, ordinary care means observance of reasonable commercial standards prevailing in the area with respect to that business. Banks using automated processing are held to their own prescribed procedures provided those procedures do not vary unreasonably from general banking usage.
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Yes. The 1934 Act definitions turn on whether a person is engaged in the business of effecting securities transactions or buying and selling securities for its own account. Merely providing information that facilitates transactions does not trigger the definitions.
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…of the price set by the market. I Prior to December 20, 1978, Basic Incorporated was a publicly traded company primarily engaged in the business of manufacturing chemical refractories for the steel industry. As early as 1965 or 1966, Combustion Engineering, Inc., a company producing mostly alumina-based refractories, expressed some…