Legal Question in Business Law in California

Re: Companies & Free Gifts

I suppose you mean "to give" or "to offer" free gifts, instead of "to get." Otherwise, your question makes no sense.

There can be a fine line between a "free gift" and a bribe. Bribes are illegal. Truly no-strings-attached gifts probably aren't illegal. Whether something offered by Company X to Company Y is a bribe or not is often easy to see, but not always; the distinction can be a source of litigation.

Take, for example, my bank's practice of giving out free ball-point pens with their advertising imprinted on them - worth maybe 5c wholesale. Is the bank "bribing" me with pens to remain their depositor? Probably not; and no one could argue sensibly that it was illegal.

On the other hand, if I am a major building contractor, and the lumber yard buys me a new Cadillac every year, that's probably a bribe. One of the distinguishing factors is whether the gift is likely to be discontinued if I divert my patronage.

Now, a final word about the "illegality" of bribes. Bribes given to public officials, and bribes made to influence the outcome of sporting events, are illegal under special provisions of the Penal Code, and get heavy penalties. Ordinary commercial transactions are covered by Penal Code section 641.3, which sets a $100 value threshold on the "bribe" before it becomes criminal. If the bribe is $100 to $1,000, it is punished as a misdemeanor; over $1,000, it is a felony.

Re: Companies & Free Gifts

I should add the following:

(1) Penal Code section 641.3 makes the person who gives or offers to give the bribe, and the person who accepts it, equally guilty.

(2) Section 641.3 does not appear to make an entity (employer) receiving a bribe guilty; it only applies to an employee who receives a gift to influence his decisions, possibly contrary to the employer's interests.