Business Law

Published on: October 5, 2012

Transfer of a New Jersey Lottery License

There are steps which must be followed in a timely manner to obtain a New Jersey Lottery License and have a smooth transition during the purchase of a business.

At least 45 days before closing, the seller of the New Jersey business must send a letter to the New Jersey Lottery district office. The addresses of the district offices can be found here. The letter must include information regarding the pending sale including the seller’s name, address, home phone number, cell phone number, and work phone number, as well as the buyer’s name, address, home phone number, work phones and cell phone number, and the anticipated closing date.

Upon receipt of that letter, a New Jersey lottery agent will contact the buyer and the seller, and they will be required to meet with the lottery representative . The buyer must bring the following to this meeting:

The Lottery Division will conduct a background check on all people listed on the application.
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Published on: September 17, 2012

New Jersey Division of Taxation Bulk Sales Requirements

by Jennifer C. Meusel

New Jersey’s bulk sale law was enacted by the New Jersey legislature in 1995 to protect purchasers of business assets. The purchaser of business assets is required to notify the New Jersey Division of Taxation of the transaction at least ten days before the sale by completing and filing a form C-9600 along with a copy of the contract for sale. The form C-9600 must be sent by certified mail to the State of New Jersey, Division of Taxation, Attention: Bulk Sales Section, P.O. Box 245, Trenton, NJ 08695-0245, or it can be sent by overnight mail to the State of New Jersey, Division of Taxation, 50 Barrack St, Trenton, NJ 08695, Attn: Bulk Sale Section. There is no fee for filing the form.

The New Jersey Division of Taxation then has ten business days to research and determine what amount of money must be held in escrow by the purchaser’s attorney at the closing. The state tax liabilities of the seller are then paid from the escrow. A purchaser, by complying with the Bulk Sale Law, ensures that they will not become responsible for the seller’s New Jersey tax liability. After the tax payments requested by the state are paid, the Division of Taxation will issue a tax clearance letter which authorizes the release of any monies remaining in escrow. Upon receipt of the tax clearance letter, the balance of the monies held in escrow can be released to the seller. If the Division fails to respond to the C-9600 within ten business days of receipt of same, the purchaser will not be held responsible for the seller’s state tax liabilities.

If the purchaser fails to notify the New Jersey Division of Taxation of a sale which is subject to the bulk sales notification requirements, then the purchaser becomes liable for the New Jersey State tax liabilities of the seller if the seller does not pay. If the purchaser fails to notify the state, the Division of Taxation can file judgment, levy and seize the purchaser’s assets. However, if the seller refuses to cooperate with the Division of Taxation, the Division will not penalize the purchaser for the seller’s refusal. While complying with this law is an added step in the purchase of a business, it is an excellent mechanism for protecting the purchaser. Purchasers of business assets should insist on compliance with the terms of the New Jersey Bulk Sales Law. It is an essential term of any contract for sale of business assets.
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Published on: July 2, 2012

New Jersey Law That Protects Creditors’ Rights

by Boris Peyner

Creditors in New Jersey should not be dissuaded from trying to collect what is owed to them because debtors transfer their assets. New Jersey law protects creditors’ rights by imposing penalties for debtors who transfer assets to prevent collection of a valid debt.

The Fraudulent Conveyance Act of 1919 has protected creditors’ rights in New Jersey for nearly a century. However, in 1988 the New Jersey Legislature updated New Jersey’s fraudulent transfer laws by passing the Uniform Fraudulent Transfer Act (“UFTA”), which replaced the former Fraudulent Conveyance Act.

The purpose of UFTA is to protect creditors from debtors who hide assets. Debtors are therefore prohibited from transferring assets to avoid paying debts, once creditors have a “right to payment.”

Under New Jersey’s UFTA, there are two ways creditors can establish that a fraudulent transaction has occurred. Creditors can prove that a transaction was done with actual intent to defraud the creditor. However, the burden of proof is on the creditor and it is often very difficult to meet. Therefore, the UFTA also allows creditors to prove “constructive fraud.” To prove this, creditors must show that a transfer was made without exchange of reasonably equivalent value, rendering a debtor insolvent.
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Published on: March 4, 2012

Trade Secrets in the Realm of Commercial and Employee-Employer Disputes

by Pauline M.K. Young

Trying to determine what is and what is not a trade secret is often a complicated venture. A clear example, and one of the most heavily guarded of trade secrets, is the recipe for Coca Cola. However, the definition of trade secret can be interpreted as an all-encompassing category with little clarification as to what specific information is protected.

The New Jersey Trade Secrets Act, recently passed into law in January of 2012, defines trade secrets as:

Information, held by one or more people, without regard to form, including a formula, pattern, business data compilation, program, device, method, technique, design, diagram, drawing, invention, plan, procedure, prototype or process, that: (1) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

The Act codified accepted case law. Indeed, trade secrets have long been defined to include the any portion of technical information, designs, processes, procedures, and improvements which are secret and of value to the business holding them.
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Published on: March 1, 2012

New Jersey’s Different Treatment of Employee Arbitration Agreements and Insurance Policies is Difficult to Reconcile

by Maurice W. McLaughlin

New Jersey and Federal law have established a strong legal policy in favor of arbitration. New Jersey’s courts, like the federal courts, regularly uphold arbitration agreements in employment contracts. They have repeatedly enforced these agreements and do not consider them “contracts of adhesion.” This is starkly different than how New Jersey’s courts treat insurance policies, and ignores the long-established legal principles upon which its analysis of insurance policies rests.

Contracts of adhesion are agreements where the two parties have unequal bargaining power, and the party with the greater leverage forces “oppressive or unconscionable” terms on the other. They are often presented on a “take it or leave it” basis. When a New Jersey court finds a contract of adhesion, it will strain to protect the weaker party, whether by construing the agreement against the stronger party, eliminating unfair or oppressive terms, or voiding it in its entirety.

In Martindale v. Sandvik New Jersey’s Supreme Court ruled that despite forcing an employee at the company’s Fair Lawn plant to give up her constitutionally protected right to a trial by a jury of her peers, the agreement was not “oppressive or unconscionable.”

An employee and employer, especially a large, multi-national corporation such as Sandvik, simply do not have equal bargaining power. There is a large labor pool for employers to choose from, especially in these troubled times. This gives the employer the upper hand. Employers can – and do – tell employees to agree to arbitration or go look for work elsewhere; this is no choice at all for most employees. Indeed, this is all the more true when an arbitration requirement is adopted as a policy after an employee has already started work and is given the choice of either agreeing to arbitration or being out of a job, despite the years, and often decades, invested by the employee.
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Published on: February 29, 2012

Looking for a Job in New Jersey – Employees Beware!

by Boris Peyner

Employers commonly require that potential employees sign agreements waiving their right to jury trials and, instead, requiring them to arbitration all disputes arising from their employment. New Jersey and Federal law supports enforcement of arbitration agreements.

Arbitration agreements are controlled by the Federal Arbitration Act and the New Jersey Arbitration Act. In arbitration, a dispute is submitted to a neutral third-party who makes a binding decision.

Although arbitration can be cheaper and faster than litigation, it is more advantageous to the employer. First, a decision is made by a single person (usually a lawyer or a retired judge) instead of a jury, which might be more sympathetic to an employee (especially since the arbitrator will know that the employer drafted the agreement and chose arbitration). In addition, discovery of information between the parties is significantly limited, favoring the employer which has most of the evidence, especially in a suit for wrongful firing. It is also difficult to appeal an arbitration agreement.

It is important to read employment documents presented carefully. People presented with arbitration agreements should seek an attorney’s advice because courts generally enforce arbitration agreements, even though they appear to be contracts of adhesion. A contract of adhesion is an agreement that is presented on a take-it-or-leave-it basis by a party with dominant bargaining power. Normally contracts of adhesion are unenforceable. However, in 2002 the New Jersey Supreme Court in Martindale v. Sandvik, Inc., ruled that employment agreements requiring arbitration are not contracts of adhesion.
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