The Use of Foreign Forms to Circumvent Local Liability Rules

Abstract

Liability assignments for wrongs committed within a jurisdiction are generally intended to apply equally to all local and foreign persons. Local liability policy, however, can be circumvented through the use of foreign legal forms. Both local and foreign persons may reduce their liability exposure by conducting their  activities in the local jurisdiction through a foreign  form that has been endowed by its jurisdiction of origin with a wider limitation of liability. The differences in liability exposure are often significant. They appear to be tolerated or embraced because they se rve local commercial, professional, and  governmental interests. Ultimately, the costs of the resultant elevated risk of loss are borne by local  residents.