10-2 Putin On Transmash ZAO, a Russian corporation, has an agreement with an unr

Question

10-2 Putin On

Transmash ZAO, a Russian corporation, has an agreement with an unrelated domestic corporation, DC, under which DC acts as Transmash’s exclusive agent in selling Transmash’s equipment in the US and receives a commission for each sale made. The agreement forbids DC from acting as agent or principal in making a sale of competing goods. Is Transmash engaged in business in the US?

Transmash purchases the business of DC and operates it as a branch. After the purchase, Transmash’s equipment is sold in the US by employees working in and out of an office it rents in Ohio. All orders obtained by the branch are transmitted to Transmash’s home office in Yekaterinburg, Russia, for acceptance or rejection, and none of the employees in the US has the power to make contracts on Transmash’s behalf. Does Transmash have a US trade or business after the acquisition?

Explanation / Answer

Here these two companies are mergers and type of merger is conglomerate which means merger between two companies that are totally belongs to unrelated business activities, here transmash not enter into business activities in the US.

When Transmash purchased DC, it called as acquisition, after this Transmash can have trade or business in US, because people may use DC products for long periods, so it can get business in short term but long term business based on its own strategy and business style

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