Articles Posted in Business Law

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block-chain-2853046__340-300x134Our attorneys represent people and businesses in all aspects of contract law, including contract negotiations, drafting, review and contract litigation.  One of the more complex areas of contract law if the interplay of contract and tort law when fraud and contracts intersect.  While this issue is complex, there are several basic rules and principles.

The Economic Loss Doctrine – Fraud in the Performance of a Contract

New Jersey contract law adheres, if somewhat loosely, to the “economic loss doctrine.”  What this rule says is that after two parties enter into a contract governing their relationship, their remedies for economic loss are limited to breach of contract.  They cannot sue for torts (civil wrongs) such as fraud.  Thus, as a hypothetical example, after a contract is signed for ABC Company to pay XYZ, LLC $10,000 for the manufacture and delivery of ten motors, if XYZ takes the money and then keeps telling ABC that the motors are coming “soon” knowing full well it is never going to deliver, ABC is limited to suing XYZ for breach of contract when the motors aren’t delivered.  ABC cannot sue for fraud in the performance of the contract.  This is the heart of the economic loss doctrine.  The practical difference is that punitive damages are available if a party is found guilty of fraud, but punitive damages are not available for breach of contract.

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signature-3113182__340-300x200What is a Restrictive Covenant?

A restrictive covenant is a contractual agreement in which one party receives something of value in exchange for a promise not to engage in a particular type of behavior.  Restrictive covenants can bind people or businesses.

What Types of Restrictive Covenants Are There?

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bar-2832543__340-259x300When you purchase a liquor license in New Jersey, as a Buyer you must be approved by the State of New Jersey Alcoholic Beverage Commission and the Municipality where the business operates.  This process is detailed and time consuming.  it must be started as soon as possible by the Buyer.  You will need to obtain a Person to Person Transfer of the liquor license.  Unless and until the municipality issues a resolution approving of the transfer of the liquor license, the current license holder must operate the business.

In order to be approved, the applicant must meet the following requirements:

a)      18 years of age or older;

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building-2603161__340-300x200The New Jersey Supreme Court recently issued an important decision in the case of Palisades At Fort Lee Condominium Association, Inc. v. 100 Old Palisade, LLC, defining when the statute of limitation will begin to run  in construction defect litigation.  This decision is now the defining law on the timeliness of construction lawsuits.

Background

The devil is in the details, especially in construction law.  These are the facts in this one.

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Wage and Hour Laws Governing New Jersey Workplacesjustice-2756939__340-275x300

The Fair Labor Standards Act is the federal law which, along with the Wage and Hour Division of the United States Department of Labor’s regulations found in the Code of Federal Regulations, governs overtime and minimum wage requirements.  The Fair Labor Standards Act (known as the “FLSA”) requires that most employees (known as “non-exempt” employees, or those who are not exempt from overtime requirements) be paid “time and a half” for all hours they work over forty in any particular week.

In an action for violating the F

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toy-2883494__340-300x200There is a large and complex body of laws which restrict and regulate the of waste transportation businesses in New Jersey.  Indeed, New Jersey has arguably the most stringent requirements and restrictions on the solid waste industry in the country.

The New Jersey Department of Environmental Protection (“NJDEP”) has broad authority and power to control and supervise waste transportation and disposal through multiple statutes.  Indeed, the NJDEP has authority under New Jersey’s Solid Waste Management Act as well as the Solid Waste Utility Control Act (“SWUCA”).  The SWUCA took effect in 1970 as a result of a 1969 report published by the New Jersey Commission of Investigation which found that the solid waste business was heavily influenced and effected by organized crime.  As a result, initially the Board of Public Utilities, and later the NJDEP, was empowered to monitor rates being charged and services being provided by waste transportation companies.

There are also a number of regulations which have been created to effectuate the intent and goals of the Acts.   As a result, New Jersey solid waste collectors and haulers are subject to close regulation.  However, this regulation has actually lessened somewhat over time.  Indeed, while initially the Board of Public Utilities was actually permitted to set rates for waste transporters to charge, whereas, currently, now they only evaluate and monitor the rates being charged to ensure effective competition in the marketplace.

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business-meeting-and-teamwork-large-team-at-the-table-300x160New Jersey has followed the national trend in creating the “limited liability company,” (known as “LLC”),  as an allowable form of business entity under New Jersey business law.  The LLC combines the best elements of both a corporation and a partnership.

The Limited Liability Company

A (Limited liability company combines the best qualities of both corporations and partnerships (or sole proprietorships).  Like corporations, but unlike partnerships and sole proprietorships, owners (known as “members” in an LLC) are shielded from personal liability for most corporate debts.  However, like partnerships and sole proprietorships (but unlike many corporations, especially larger corporations), LLCs are “flow through” entities.  This means that the business itself pays no income taxes.  The profits “flow through” to the owners, who are then taxed on the profits as their income.  This avoids the “double taxation” of corporations, where the company pays taxes on the profits before they are distributed to the owners, and then the owners pay income tax on the remaining after tax profits when they receive them.  So essentially members in an LLC only pay tax once, while shareholders in a corporation pay tax twice, which can result in significantly higher after tax earnings for the owners on the same business revenue.

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New Jersey business law allows people and businesses to manage their relationships by entering contracts which define the terms of that relationship.  Contracts are enforceable by the full force of the law.  For instance, if one party owes another money under a contract but doesn’t pay, the wronged party can go to court; if it can prove its case the court will enter a judgment in its favor and it can then have the county sheriff go seize the breaching party’s property to pay the debt.

In some cases, all or part of a contract may not be enforceable.  This area of New Jersey business law contains three distinct and important concepts: void contracts, voidable contracts, and severability.

Void Contracts or Contract Provisions

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signature-962355__340-300x225Contracts Under New Jersey Business Law

Under New Jersey business law, when two or more parties enter into a contract they are essentially writing their own law which will govern their relationship.  A valid contract – one where each of the parties exchange value (“consideration”) and agree to the terms which will govern their relationship or transaction – will be enforced by courts.  If there is a dispute, a court will make a decision which can be fully enforced.

The Covenant of Good Faith and Fair Dealing

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handshake-2056023__340-300x200As a general rule, oral contacts in New Jersey are enforceable – not that they are recommended; indeed.  Our attorneys, we always recommend that contracts be in writing because they are easier to prove and leave less room for misunderstandings.  However, if you can prove the terms of an oral contract New Jersey courts will generally enforce it.

A big exception applies to this, however, in the Statute of Frauds.  Under the New Jersey Statute of Frauds, courts will refuse to enforce certain oral contracts even if you can prove them.  This law is based on the premise that oral contracts are inherently less reliable, and writings in certain situations are necessary to prevent perjury or unfounded claims.  The Statute of Frauds has its roots in the old Statute for the Prevention of Frauds and Perjuries which was adopted by the English Parliament in 1677, and was thus the law in England’s American Colonies when they became independent.  The main elements of the Statute of Frauds are found in one section of New Jersey Statutes, but other elements are spread in different sections of Chapter 25 of Title 2A of New Jersey Statutes.

The main types of contracts which the Statute of Frauds requires to be in writing are:

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