Articles Posted in Business Law

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macbook-336704__340-300x200The Benefits and Responsibilities of Ownership

Becoming the owner of a business has tremendous advantages:  Owners can rise or fall based on their own merits, and when expenses are paid the remaining profits belong to the owners.  However, there are also disadvantages, such as the risk that the business will lose money, and responsibility for the business’s payroll and debt.  In addition to this stands business owners’ duties to their co-owners, be they partners in a partnership, shareholders in a corporation, or members in a limited liability company.

Under New Jersey business law, owners are placed in a special position of trust vis a vis their fellow owners, and the law thus imposes special responsibilities on them.  These responsibilities are known as “fiduciary duties.”

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DunceEarlier this year the Enquirer published an embarrassing story with text messages and photos of Jeff Bezos, the owner of Amazon and the richest man in the world, with his mistress.  Bezos also owns the Washington Post, which has investigated the Enquirer’s relationship with President Trump, and published critical stories about the Enquirer.  The same day the story was published, Bezos and his wife, the author MacKenzie Bezos, announced their divorce.  Bezos tasked his security chief, Gavin de Becker, with investigating how the Enquirer obtained the text messages and photos.

Then, on February 7, Bezos posted a blog post accusing the Enquirer of threatening to post more embarrassing photos and text messages if Bezos did not drop the investigation.  Bezos claimed that the threats were made by a lawyer for the Enquirer through email.

And thus, if true, the National Enquirer has taught us all a great lesson about what not to do in negotiations.

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New Jersey solid waste transportation is highly regulated by the New Jersey Department of Environmental Protection (“DEP”). While most businesses in New Jersey require some level of truck-3503831__340-300x200regulation, licensing, and/or registration, garbage hauling is a particularly scrutinized industry.

Part of the authorization process (and ongoing regulation) of solid waste transporters includes obtaining a Certificate of Public Convenience and Necessity (“CPCN”). A CPCN provides the State with specific information regarding a hauler’s operations including hours of operations, owner information, exact fees and rates charged by that hauler to customers, territories (counties) served, and the financial condition of the company. Once a CPCN is obtained, the transporter must file annual reports (also known as utility reports) to update all of that information.

The requirement’s for a CPCN are set forth in the Solid Waste Utility Regulations.  These rules and regulations are quite specific and far-reaching into many of the operations of the transportation company.

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the-dollar-3125419__340-300x200Some of the areas in which businesses make their largest investments of time and expense are trade secrets (including customer lists) customer relations and client development, and employee development.  However, these interests may conflict, especially when highly placed employees leave a firm.  This is an area of potentially bitter dispute in New Jersey business law and employment law.

Businesses have many trade secrets, but the most important of these is often information regarding its customers.  Because of intense competition, and the time, effort and expense which businesses invest in cultivating their clients, customer lists, especially customer lists in service industries, are protected by the common law and New Jerseys Trade Secrets Act.

Businesses also invest significant expense in training and developing their employees, even aside from salary and benefits.  Thus, New Jersey business law and employment law imposed a duty of loyalty on employees, even those who do not have a restrictive covenant.  This duty of loyalty prohibits employees from competing with their employers while they are employed.  An employee may not induce her employer’s employees or customers to leave her employer, nor may she appropriate her employer’s trade secrets.  The employee may plan to leave, and if the employee does not have a restrictive covenant she can even seek employment with competitors or even set up a business entity which will compete with the employer after she leaves. However, the employee cannot go beyond the planning stage while still employed.

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New Jersey’s Consumer Fraud Act provides some of the strongest consumer protections in the United States.  These protections have long been extended to consumers which tow-truck-309953__340-300x176are business entities.  It is one of the strongest of New Jersey’s business law.  However, the parameters of when a business, as opposed to a person, was acting as a “consumer,”have yielded conflicting decisions.  The Supreme Court of New Jersey has recently issued an important decision affirming business to business consumer fraud, and establishing a test to clarify when a business should be considered to be a “consumer,” and when goods are considered “merchandise” invoking the protection under the Consumer Fraud Act.

The All The Way Towing Case: Background

On January 24, 2019, the New Jersey Supreme Court issued its opinion in the case of All the Way Towing, LLC v. Bucks County International, Inc.  In that case All the Way Towing (ATW) , a limited liability company in the towing business, ordered an “International” brand all wheel drive truck from Bucks County International, Inc. (BCI), with an autoloader tow body manufactured by another company, Dynamic Towing Equipment and Manufacturing, Inc. (Dynamic).  ATW spent several months negotiating the price and specifications with BCI’s salesperson, and then placed a $10,000 deposit.

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rules-1339917__340-300x231Very often, a person or business will want to confer a benefit on a third party but will not be able to do so itself, for a variety of reasons.  So then, to make sure the benefit will be conferred, it will enter into a contract with a person or business which has the ability to confer the benefit.  The question, then, is what rights does the third-party beneficiary have?

Let’s say Sam wants to build a deck for his friend Joe’s house, but Sam is an incompetent carpenter. So Sam signs a contract with Acme Building Contractors, Inc., in which Acme agrees to build a deck on Joe’s house, and Sam agrees to pay Acme $5000.  Sam pays Acme in full but it never builds the deck, and then Sam dies.  Now Acme has $5000 and Joe doesn’t have a deck.  Does Joe have any remedies to enforce Sam’s contract with Acme?  That all depends on whether Joe can be considered a third-party beneficiary under New Jersey law.  The basic answer is yes, if Sam and Acme intended Joe to be a third-party beneficiary.

New Jersey Law Expressly Allows Third-Party Beneficiaries to Enforce Contracts

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tax-739107__340-300x200New Jersey’s Supreme Court adopted new rules which became effective September 1, 2018. These rules amend New Jersey’s Rules of Court to make the litigation of complex business law matters more efficient. This article discusses some of the major changes the new rules have brought about.

Background

In 2000, the Supreme Court revised the discovery procedures in New Jersey’s Court Rules for civil cases. These amendments were adopted because the courts in various counties had developed different discovery procedures. The Supreme Court’s aim was to standardize these rules so that litigants would get the same level playing field in every county throughout the state. However, in adopting three basic case tracks, the Court may have gone too far in limiting judges’ ability to manage complex business law cases. The Supreme Court therefore explored establishing a separate track for complex commercial cases.

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italian-food-2361054__340-300x200Before you enter into an agreement to purchase a franchise, it is vital to review and understand the documents you are being required to sign. You will be required to execute the following documents:

1) The Franchise Disclosure Document, previously known as the Uniform Franchise Offering Circular, provides information regarding the franchise’s history, the nature of the business and the products or services it provides, as well as the costs and fees imposed the franchisor, the operational requirements, and historical financial information.

It will, of course, state that past success does not guarantee future success, but it should give you details of the business up to the present date. It must include mandatory disclosures pursuant to the Code of Federal Regulations, Volume 16, Part 436, see The Franchise Rule Compliance Guide.

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confidential-1726367__340-300x300Businesses entering into negotiations with other businesses or persons often need to give the other party confidential information.  For example, a business will need to give a potential buyer information regarding its revenue, expenses, customers, formulas, payroll, vendors, and pricing so that the potential buyer can formulate an offer during the due diligence period.  If the deal falls through the seller will rightly want to ensure that the buyer which backed can’t use this information to compete with it or disclose it to competitors or customers.

Fortunately, New Jersey business law gives such companies two important tools to protect their information: The New Jersey Trade Secrets Act and enforceable confidentiality agreements (also known as non-disclosure agreements, or “NDA’s”).

The New Jersey Trade Secrets Act

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baltimore-city-hall-1482793__340-300x205Montclair State University has spent the last decade or so trying to obtain approval from the County of Passaic and the City of Clifton to construct a roadway which would intersect with a county road. Both the County and the City raised concerns about the proposed development and Montclair State made significant efforts in an attempt to address those concerns. In 2014, Montclair State submitted an application to Passaic County for a permit to install traffic controls at the intersection.

Montclair State did not seek permission from Clifton or Clifton’s Land Use Board based upon belief that, as a state organization, it was not subject to local regulations. Montclair State asserted this position largely based upon the 1972 New Jersey Supreme Court case of Rutgers v. Piluso.

The question in the Rutgers case was whether Rutgers University was subject to zoning ordinances of the town where it was located, Piscataway. Piscataway had an ordinance which restricted the number of matriculating students’ “family dwellings” Rutgers could have. When Rutgers sought to build more, the town denied the request, citing the ordinance. Rutgers then brought a suit seeking a determination from the court that Rutgers was not subject to local zoning ordinances because it was an instrumentality of the State of New Jersey.