Landlord-Tenant Laws in New Jersey

Landlord-tenant issues in the state of New Jersey are established by the State of New Jersey’s Department of Community Affairs. Within the landlord-tenant relationship, many issues may arise related to the rental of a property. These can include but are not limited to the below items:

• Security deposit and return concerns
• Rent increases
• Cable television issues
• Pet concerns
• Lease termination
• Right of entry for the landlord
• Eviction process and procedures
• Rights of tenants

Landlord legal responsibilities in New Jersey are often covered under specific laws that a landlord must comply with when renting out a dwelling. For example, landlord-tenant relations specifically are covered under the New Jersey Administrative Code NJAC 5:29. This form is required to be given to tenants by landlords in one or two-unit dwellings that are not owner-occupied.

Top 10 Landlord Legal Responsibilities

There are many things that landlords must do related when renting out a property. You may have additional questions or require further clarity on these items, and The Law Office of Jonathan Fleischer, Esq. is prepared to ensure your legal and financial rights remain protected as a landlord in New Jersey.

1.    Habitability

Tenants have the right to safe and clean housing. As a landlord, you must maintain your rental unit and keep it fit for residential living throughout the term of the lease. This also means that you are responsible for repairing damage to things that impact livability.

2.    Lead-Based Paint Disclosures

If you are renting a property that was built before 1978 it may contain lead-based paint. The federal government requires disclosure of any potential lead-based paint as well as the hazards associated with it to prospective tenants.

3.    Anti-Discriminatory in Renting

As a landlord, you will have a say in who rents your property. In certain situations, you can reject a potential applicant without it amounting to discrimination. For example, you can reject an applicant for bad credit history, negative referrals from past landlords, or an inability to be able to pay the rent on a month-to-month basis.

Under the Fair Housing Act of 1968, you may not discriminate against a potential applicant based on their race, national origin, sex, or other protected categories such as having a physical or mental disability.

4.    Obligation To Provide a Written Lease

A written lease provides a document that shows everything you and the tenant agree to related to the rental property, tenancy, and throughout the lease term. Leases typically include:

• Term of the lease
• Rental amount
• How often rent is expected to be paid
• What can be done to the premises while the tenant lives in the rental property
• How much notice must be given to terminate the lease
• Pet allowances

It is not advisable to let someone rent out a property you own without a written lease. Even if you trust and know the individual to whom you are renting, things may change over time. If something significant changes concerning the tenancy, you want to ensure that both you and your property are legally protected.

Having a written lease also protects a landlord if the tenant makes a legal claim against them. Writing down what was agreed to prevents a tenant from pursuing a claim made based on something that was allegedly promised or agreed to that may not be in the landlord’s favor.

5.    Provide Appropriate Disclosures

As a landlord, you will have certain information that you are legally obligated to disclose as part of the rental process. These disclosures can include but are not limited to:

• Existing damages to the rental property
• Rent control rules
• Shared utility arrangements
• Presence in a flood zone or any recent flooding

Landlords are encouraged to disclose anything that might affect the habitability of a rental property or the safety of a tenant.

6.    Adhere to Security Deposit Rules

Landlords may want to consider asking for a security deposit as part of the normal renting process. Usually, security deposits are returned at the termination of the lease provided that the rental property has not been damaged in any significant way. In New Jersey, landlords are not permitted to request more than one and a half times the monthly rental payment as a security deposit. In addition, if a landlord requests any additional security deposits in future renewal years it may not exceed 10% of any current security deposit.

7.    Follow Entry Rules

There are certain parameters around a landlord’s right of entry to a property that they own but have rented. Generally, landlords will want to obtain consent from the tenant before entering the premises. In addition, it is recommended that landlords disclose any need or desire to have a key as a landlord before the rental agreement is signed. This is because if there is no mention in the agreement of the landlord having a key then there is no obligation on the part of the tenant to legally provide one.

8.    Observe Eviction Guidelines

Even if a landlord feels strongly that a tenant needs to be evicted, they cannot simply remove someone from the property without adhering to the New Jersey guidelines on grounds for evictions. Before evicting a tenant, you must provide them with a Notice to Quit, which ends the tenancy and informs the tenant that they must leave. After providing a Notice to Quit a landlord may sue for eviction. Once a Judgment for Possession is granted a landlord may evict a tenant.

9.    No Retaliation Against Tenant

If a landlord ends up in a situation involving legal issues with a tenant, they are not allowed to retaliate against a tenant who may be exercising their legal rights. For example, if the tenant questions whether there is lead-based paint and a landlord has already disclosed that there is no lead-based paint, then a landlord cannot make it more difficult for them to live in the property by either increasing their rent or otherwise.

10.         Follow New Jersey State Rental Rules

If a landlord is in a situation where they would like to increase or change the rental amount, charge late fees, or are pursuing the removal of a tenant based on failure to pay, then they must adhere to all New Jersey rent rules to be in legal compliance and prevent a tenant from having a legal claim against them.

Contact an Experienced Landlord Tenant Attorney Today

As a landlord, you will be held to certain standards, most of which are clearly defined by New Jersey state laws or federal laws. If you have specific questions on what legal obligations you may have, The Law Office of Jonathan Fleisher, Esq. can help. Contact our office experienced team today at (732) 360-6409 for a free consultation.

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Do You Need an Attorney to Buy a Business in New Jersey?

Although it is possible to purchase a business without an attorney, working alongside an attorney that is knowledgeable regarding buying a business in New Jersey could help in a variety of ways. Typically, a buyer of a business will meet with an attorney at the very beginning of the purchase process. At this time, a buyer can discuss their overall financial objectives and timelines. By meeting early and defining objectives, a buyer may save considerable time and expense over the long run throughout the purchase process. While it is not a legal necessity to have an attorney to buy a business in New Jersey, our experienced business attorneys at The Law Office of Jonathan Fleisher, Esq. can help clarify any potential red flags in the sale and also recommend solutions to potential problems that might arise in each particular situation.

Experienced business attorneys can help in several other ways as a buyer makes decisions regarding purchasing a business, including:

• Representing a buyer in discussions with the seller or seller’s representative
• Preparing any confidentiality agreements that may be required between a buyer and the seller
• Ensuring that a buyer does not agree to a purchase deal structure before it has been vetted thoroughly for legal and financial reasons
• Fighting for your legal rights throughout the purchase process

Depending on your unique situation, a business attorney may suggest other forms of documentation that might be needed throughout the process. It is recommended that if you do decide to use an attorney that you consult with them early and as often as is needed throughout the purchasing process.

How Important Is Due Diligence?

When you are buying a business in New Jersey, it is recommended that you participate in a thorough and rigorous due diligence process prior to the purchase being finalized. Due diligence is the process of reviewing the sale and many other items in advance related to the transaction. Due diligence can include examining the following business records:

• Seller’s financial books
• Tax returns
• Employee structure and employee contracts
• Outstanding litigation or legal claims
• Employee benefit plans
• Vendor relationships and contracts
• Insurance coverage
• Real property or other assets owned by the seller

There may be other items as well that you might want to request and review in the due diligence process. Having an attorney throughout this time can help a business buyer understand all of their legal options and rights.

Additional Considerations for Buying a Business in New Jersey

Many experts recommend that sellers approach purchasing a business as you would starting one: consider how you would form each part of the company and think through whether anything appears to be legally or financially concerning. Below are a few areas of the business that you may want to pay special attention to throughout the buying process.

Financing

A key question that buyers will likely ask early in the process is how the financing for the transaction will occur when buying a business in New Jersey. There are many ways to structure a purchase agreement and working closely with a business attorney or financial advisor can help you understand all of your financial options.

Employees

Often, when purchasing a business it is very common for the company to have employees that will become part of the sale. This is important for continuity once the ownership has changed and ensures the new owner that the business will continue to operate without ceasing.

However, employees as part of a business sale are not always considered carefully. Buyers should discuss their desire for employees to be guaranteed as part of the business transaction, if that is their preference. The continuation of these employees once a property is purchased is not guaranteed and often requires conversations and commitment from these individuals specifically. Because of this, it is recommended to have these discussions as early as possible and to guarantee continuity once a sale is finalized.

Insurance

As part of the due diligence process, a buyer will want to ensure that they understand the types of insurance policies that the seller already holds. Insurance can impact the sale of a business and may potentially cause issues with financing so getting an understanding earlier rather than later of what gaps may exist is beneficial and will save a buyer time and money over the course of the deal and throughout subsequent ownership.

New Jersey Specific Laws

The State of New Jersey’s Division of Taxation has specific laws regarding how a business may be taxed based on how they are structured. The experienced business attorneys at The Law Office of Jonathan Fleisher, Esq. can work with buyers of New Jersey businesses to ensure that the purchase is legal and protects future assets while also complying with local taxation laws.

Regulatory Approvals

In addition to local laws, depending on the business that is being purchased in the state of New Jersey, there may be additional governmental or regulatory approvals needed. Each situation and sale is different and our experienced attorneys can guide buyers on what may be needed throughout your negotiation and purchase agreement.

Contact Our Experienced Business Attorneys Today

There are many steps to buying a business in New Jersey. Our experienced team at The Law Office of Jonathan Fleisher, Esq. can discuss how to approach a purchase in your specific situation. Contact our office today at (732) 360-6409 for more information.

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However, making the decision to purchase a home is a serious and expensive one. In fact, for the majority of Americans, a home purchase is the most valuable asset in a portfolio. Many Americans buy homes and ascertain that the purchase is the best, longstanding investment they have. Indeed, homes are a high-value asset.

According to the Pew Research Center, having a home is by far the most prominent factor when it comes to total net worth. Before buying a home, though, it is incredibly important that the purchase is done after thorough inspection and examination of potential issues. For this reason, pre-closing home inspections are a must. If a home is bought that has serious problems, the purchase could be a money pit for the new owners. To avoid the hurdles that come with real estate closings, consider calling The Law Office of Jonathan Fleisher, Esq. today at 732.360.6409.

Why are Pre-Closing Home Inspections So Important?

The New Jersey Housing and Mortgage Finance Agency has a tremendous number of resources for soon-to-be home buyers. The agency offers resources, fact sheets, videos, FAQs, and other crucial information. This information is particularly helpful for understanding the full process of home buying and what to expect in the state of New Jersey.

One stage of the home buying process involves inspecting a home before signing off on its purchase. The purpose of a pre-closing home inspection is to protect a buyer before they commit to purchasing a home. Circumstances can change from the time a buyer initially does an inspection up until they are ready to close on a home. If there are issues with a home before closing, the inspection process will identify these issues so that buyers can make an informed decision about acquiring the property.

Unfortunately, in some cases, the pre-closing inspection is neglected. This puts a buyer in a position where the home they purchase may not be in the same shape that it was after the initial inspection took place. Pre-closing is an essential exercise in order to protect a buyer’s investment and interests.

Pre-closing Protects a Buyer’s Investment

When a buyer is ready to close on a home, there is a final walk-through to make sure everything is in order. If any issues arise, they can be addressed before a purchase is made. If the issues are not resolved to a buyer’s satisfaction, they are not legally bound to go through with the home purchase.

After closing, the obligations a seller has towards a buyer will be finished. If problems are noticed after the closing is complete, it is the buyer’s responsibility. It is in the best interest of a buyer to do a comprehensive initial inspection and do a follow-up walk-through before closing on the property.

It is critical to focus in detail on every stage of the real estate buying process. The New Jersey real-estate closing attorneys at The Law Office of Jonathan Fleisher, Esq. will provide the highest-level legal counsel so that your real estate transactions are successful.

Understanding the Process of Pre-Closing Inspections

Taking the time to look over the house is recommended prior to an official pre-closing inspection. It could be helpful to make a final list of action items to cross off so that nothing is forgotten. A quick list of such items that a buyer must inspect shall include:

• Check doors and windows to ensure they work, are sturdy, and in good condition or not broken. Look at the locks to see that they work and also verify that screens are still in place if they were there when the home was first shown.
• Look for water damage or areas where potential flooding or leaking could have happened.
• Turn appliances on and off. This includes a washing machine, dryer, dishwasher, oven, microwave, and refrigerator. Check to ensure heat is emanating from cooking appliances and that the refrigerator is cold.
• Check all the switches to lights to ensure they work.
• Bring an electrical tool with you to plug into outlets to test if they are operational.
• Look at walls for scratches, paint chips, dents, damages, or issues with the wall.
• If a property has amenities like decks, pools, hot tubs, also check that these too, are in good working order and in the right condition.

If there is any question about the state of anything that was noticed during the pre-closing walk-through, make a note of exactly what the problem is and where it is. These are important issues that need to be resolved prior to officially closing on the home.

Handling Repairs Before Closing

When a buyer requests that work be done to the prospective property they are wanting to buy, it should be done in a timely manner and finished properly. After it has been confirmed that the work was completed, buyers should go back and inspect the changes that were made. It is also a good idea to ask for warranties or work orders that may have been involved in the repairs.

Repairs that have not been done correctly or at all should be brought to the buyer’s agent’s attention. In fact, having your agent go back with you for the final walk-through can be even more helpful to have everything addressed. If necessary, adjustments to the purchase agreement can be negotiated and changed.

Speak to an Experienced New Jersey Real Estate Attorney Today

When closing is near, emotions can be high. It is natural for a buyer to feel exuberant at the thought of owning the property they have been waiting for. The important thing for buyers to remember is that taking the time to be detailed with the entire process will set them up to safeguard their investment. Inspections are a necessary part of the home buying process. The pre-closing home inspection process should not be overlooked.

The Law Office of Jonathan Fleisher, Esq. takes a hands-on approach to business transactions like home buying. To obtain seamless client care while you enjoy a streamlined experience when you are ready to buy your next home, consider contacting the New Jersey real estate closing attorneys at 732.360.6409.

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Consider speaking with a New Jersey contracts attorney to talk about the enforceability of choice of court clauses in contractual agreements. Obtain a free case review with an attorney at The Law Office of Jonathan Fleisher, Esq. by calling 732.360.6409 today.

What Are Forum Selection Clauses?

A forum selection clause is a provision in a contract that allows the parties to designate a specific forum where any legal disputes relating to the contract will be resolved. These dispute resolution clauses seek to provide a particular court with personal jurisdiction while also establishing a “venue.”

• Personal jurisdiction refers to the power of a specific court to make decisions regarding a party.
• A venue is a physical location where the court can exercise its authority or power.

In other words, forum selection clauses seek to provide a court located in a specific location with authority to decide issues relating to the contract that contains the clause.

Forum Selection vs. Choice of Law: Understanding the Difference

Many people do not understand the difference between forum selection and choice of law clauses. A choice of law clause refers to the parties’ ability to agree that any legal disputes relating to the performance of a contract will be governed by a particular state’s law.

Many contracts that contain the choice of law clause also include the forum selection clause, but these provisions are not the same:

1. A forum selection clause identifies the physical location where the dispute will be litigated; and
2. A choice of law clause identifies which state law will apply to interpret the agreement.

In international agreements, the choice of law identifies which country’s laws will apply to govern the legal disputes between the parties.

Are Forum Selection Clauses Enforceable in New Jersey?

Generally, New Jersey courts enforce forum selection clauses in contractual agreements unless the clause fails to give proper notice, contains ambiguous language, or violates the public policy of New Jersey.

These dispute resolution clauses, which specify the location where any disputes arising under the contract will be resolved, are enforceable as long as the parties to the contract agree to the clause in good faith.

In fact, a New Jersey court may enforce a forum selection clause even if the contractual agreement itself is deemed to be void. However, there are circumstances in which courts in New Jersey will decline to enforce the clause.

When Are Forum Selection Clauses Not Enforceable in New Jersey?

New Jersey courts recognize five exceptions to the enforceability of choice of forum clauses:

1. The clause does not give proper notice (Copelco Capital, Inc. v. Shapiro);
2. The clause was induced by fraud, duress, or undue influence;
3. The enforcement of the clause would violate a public policy;
4. The provision contains inconsistent or ambiguous language (SAL Electric Company, Inc. v. The Pike Company, Inc.); or
5. The enforcement of the clause would cause inconvenience (Wilfred MacDonald, Inc. v. Cushman, Inc.)

The burden to prove that a forum selection clause is not enforceable is on the party objecting to the enforcement of the clause.

Permissive vs. Mandatory Choice of Forum Clauses

When reviewing the enforceability of choice of forum clauses, courts will determine whether the clause is permissive or mandatory:

• Permissive clauses permit jurisdiction in a specific venue but, at the same time, do not prohibit the parties from having the dispute resolved elsewhere.
• Mandatory clauses require the parties to litigate their disputes only in the designated venue.

If the party drafting the agreement intends the forum selection clause to be mandatory, the provision should state that legal disputes arising under the contract “shall be litigated” in a particular court. Alternatively, the clause could state that a specific venue “shall have exclusive jurisdiction” to hear and litigate any disputes.

Since most contracts are entered into between two or more parties voluntarily, New Jersey courts consider forum selection clauses presumptively valid and enforceable unless there is evidence of fraud, violation of a public policy, or unambiguous language.

Things to Consider When Including a Forum Selection Clause in a Contract

When choosing a particular venue for a forum selection clause, the parties should consider the following:

1. The geographical convenience of litigating legal disputes in a specific venue;
2. Giving preference to the “home court” because parties benefit from litigating in a venue that is well known to the parties and their counsel; and
3. Whether there is a particular court – state or federal – that would handle the dispute in the most efficient and favorable matter possible.

Parties that include choice of forum clauses in their contracts can seek the legal counsel of an attorney to help them draft the contract properly. If you are considering including a forum selection clause in your contract, or wonder how your forum selection clause operates in an existing contract, contact the experienced business attorneys at The Law Office of Jonathan Fleisher, Esq. to ensure your legal rights are protected.

What Happens if a Party Breaches a Forum Selection Clause?

Breaching a forum selection clause can result in repercussions for the breaching party. It is not uncommon for the party that creates a contract to designate a location that is favorable to them but not to the other party.

For this reason, the party that did not draft the agreement may attempt to breach the clause when legal disputes arise.

When a party files a legal action in another venue in violation of the forum selection clause, the court will dismiss the action, forcing the party to file the claim in the appropriate forum. Alternatively, the court may transfer the breaching party’s claim to the designated venue.

In some cases, the party that breaches the forum selection clause may be ordered to pay attorney’s fees and other legal costs associated with remedying the breach of contract.

Schedule a Free Consultation with a Lawyer

Whether you are considering including a forum selection clause in your contract, seeking to enforce the clause, or gathering evidence to prove that the clause is not enforceable, consider contacting a skilled attorney.

At The Law Office of Jonathan Fleisher, Esq., our experienced business attorneys can help you understand the enforceability of forum selection clauses in New Jersey. Schedule a free case review with our lawyer by calling 732.360.6409.

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Whether or not the accusations are false, consider speaking with a lawyer to understand your rights and options. You can get a free case evaluation from our experienced civil litigation and business lawyer at The Law Office of Jonathan Fleisher, Esq. Call our legal team today at 732.360.6409.

Types of Corporate Fraud

There are many types of corporate fraud, all of which encompass the loss of assets or funds by a business or acts perpetrated by individuals or businesses to take funds from others. Common types of corporate fraud include:

• Misappropriation of assets
• Skimming
• Customer fraud
• Vendor fraud
• Employee fraud
• Financial fraud
• Investment scams
• Cashing/writing bad checks
• Payroll fraud
• Invoice fraud
• Financial statement fraud
• Tax fraud
• Return fraud
• Identity theft
• Misuse of accounts
• False accounting
• Fraudulent expense claims
• Forgery
• Bribery
• Corruption

According to the 2020 Global Study on Occupational Fraud and Abuse, organizations lose an estimated 5% of revenue to fraud each year.

Criminal charges for corporate fraud may be the result of mistakes or misunderstandings. If you are accused of corporate fraud, consider contacting a knowledgeable attorney to discuss your defense options.

10 Steps to Take if You Are Accused of Corporate Fraud

Facing accusations of corporate fraud can be both confusing and scary. Many people panic and end up making mistakes when they become aware of such accusations against them or an ongoing investigation.

That is why it is important to know what steps to take when facing accusations of corporate fraud to protect your rights, reputation, and future.

1. Take the Accusations Seriously

The first thing you should do if you or your company has been accused of corporate fraud is realize the seriousness of the matter. Even if you know that the accusations are false, there is no guarantee that the investigators, judge, or jury will side with you. In New Jersey, you could be facing three to five years in prison and up to $15,000 in fines, depending on the severity of the alleged fraud.

2. Do Not Talk to Investigators Without Considering Legal Counsel First

While it may be tempting to talk to investigators to tell them that you are innocent, doing so could potentially make things even worse. Investigators could use your words against you. For this reason, consider consulting with a lawyer before you talk to anybody about the corporate fraud accusations.

3. Do Not Admit Fault

Some people facing allegations of fraud unintentionally admit fault or say something that is construed as admitting guilt. It is vital to choose your words carefully when trying to tell your side of the story, whether you are talking to police, investigators, or even colleagues. The things you say could come back to haunt you and reduce your chance of a favorable outcome.

4. Know Your Rights

You have a right to speak with an attorney when facing accusations of corporate fraud. Our experienced business attorneys at The Law Office of Jonathan Fleisher, Esq. will work tirelessly to protect your rights and make sure that you understand your options. Anything you say to your attorney will be protected by the attorney-client privilege, which is why you should provide your attorney with as much information as possible so that they can develop a strong defense for you.

5. Gather Evidence

Building a strong case will increase the likelihood of a favorable outcome, which is why it is critical to gather evidence and documentation proving that the accusations against you are false or exaggerated. If you are accused of corporate fraud, a skilled attorney could help you identify the types of evidence and documentation that you need to build a defense. Evidence may include emails, letters, receipts, bank account statements, and many more.

6. Talk to Witnesses

Obtaining witness statements is an important element of building a defense when facing accusations of corporate fraud. Witnesses play a critical role in any fraud cases, which is why you should identify all potential witnesses and obtain their statements to strengthen your defense.

7. Write Down Anything That Could Be Relevant to Your Case

If you are charged with corporate fraud or become aware of an ongoing investigation, it could be helpful to write down anything that might pertain to your case. Legal proceedings can take years, and memories fade over time, which is why your written notes will help you remember all important details throughout the duration of your case.

8. Build Your Defense

If someone accused you of corporate fraud, consider contacting an attorney to start building your defense. An attorney can build a strong defense by conducting an independent investigation, interviewing witnesses, gathering evidence, negotiating with prosecutors, and taking other steps to protect their client.

9. Find Weaknesses in the Opposing Side’s Case

When defending clients in corporate fraud cases, attorneys will comb through the evidence brought against their clients to find weaknesses in the opposing side’s case. Weaknesses can include factual errors, inconsistencies, contradicting data, and others.

10. Demonstrate the Lack of Intent to Commit Fraud

Under NJ Rev Stat § 2C:21-1, one of the elements that the prosecution must prove to convict a person of fraud is proving that the defendant had the intent to commit fraud. If you can demonstrate the lack of intent and can prove that you were behaving in good faith, you could convince the judge and jury that you are innocent.

Learn More About Your Legal Rights When You Are Accused of Corporate Fraud Today

Facing fraud or any finance-related criminal offenses is a serious matter. The consequences of a fraud conviction in New Jersey are severe. Accusations of corporate fraud can ruin your reputation, career, and future, which is why you need to act immediately.

If you or your company is accused of corporate fraud in New Jersey, consider contacting a skilled lawyer to gather evidence and prepare a strong defense on your behalf. Schedule a free consultation with our results-driven and dedicated business attorney at The Law Office of Jonathan Fleisher, Esq. to discuss your legal options. Call 732.360.6409 to speak to our legal team today.

The post What To Do If You Are Accused Of Corporate Fraud? appeared first on Fleisher Law NJ.

The coronavirus crisis upended the operations of countless businesses in New Jersey and across the country. Many individuals and companies unable to meet their contractual obligations due to the pandemic, shutdowns, cancellation of events, and other government-mandated restrictions wonder if they can use the frustration of purpose doctrine to excuse or delay performance.

If your business has been impacted by the pandemic and the resulting restrictions mandated by the government, consider speaking with a lawyer to discuss the applicability of the frustration of purpose doctrine in your specific case. Contact our attorney at The Law Offices of Jonathan Fleisher, Esq. to receive a free case evaluation. Call 732.360.6409 today to ensure your legal and financial rights remain protected.

What Is Frustration of Purpose?

Legally speaking, “frustration of purpose” is used as a defense to enforcement of a contractual agreement. The frustration of purpose refers to a situation in which an unforeseen event undermines a contractual party’s principal purpose for entering into the agreement with the other party.

The frustration of purpose arises when an unforeseen event makes one party’s performance worthless, frustrating the primary purpose in making the contract. Thus, even though a party’s performance of contractual obligations is still possible, an unforeseen change in circumstances must frustrate the main purpose of the contract for the doctrine to apply.

In order for the legal doctrine to be applicable, the frustration of the contract’s primary purpose must not be the fault of the party seeking an excuse or delay of performance.

Examples of a Contractual Frustration of Purpose

The frustration of purpose is a situation in which one party’s performance of contractual obligations is worthless to the other party due to an unexpected event, such as COVID. An example of such a situation is a company that rents a concert venue for an upcoming concert, but the concert is canceled due to government-mandated restrictions. As a result, the renter refuses to pay rent because the purpose of using the concert venue was frustrated.

Elements of the Frustration of Purpose

Under the Restatement Second of Contracts § 265, the frustration of purpose doctrine contains three elements as indicated in Facto v. Pantagis, 390 N.J. Super. 227, 232, 915 A.2d 59, 62 (App. Div. 2007) (quoting Marchak v. Claridge Commons, Inc., 134 N.J. 275, 282, 633 A.2d 531 (1993)).

1. The purpose frustrated by an unexpected event was a principal purpose of making the contract;
2. The frustration of the purpose is substantial; and
3. The event that frustrated the purpose of the contract was not reasonably foreseeable at the time of making the contract.

The party invoking the frustration of purpose has the burden of proof and must provide clear and convincing evidence.

COVID and Frustration of Purpose

The spread of the coronavirus disease and the accompanying restrictions imposed by governments left many businesses unable to meet their contractual obligations. As a result, many contracts have been breached during the COVID-19 pandemic.

In most cases, the breaching party does not wish to breach their contractual obligations, but the financial burdens caused by their performance leave no other option. In terms of COVID and frustration of purpose, government-mandated restrictions, business closures, and other disruptions may frustrate the purpose of contractual agreements.

In most cases, the frustration of purpose doctrine is not applicable if:

• The unexpected event merely renders the performance more difficult or expensive, rather than frustrates the main purpose of the contract;
• There are alternative methods of performance available to the parties; or
• The frustrating event was the fault of one of the parties to the contract.

The unprecedented nature of the COVID crisis and the accompanying restrictions may support the application of the frustration of purpose doctrine in certain cases.

Do New Jersey Courts Recognize the Frustration of Purpose Doctrine?

New Jersey courts recognize the frustration of purpose doctrine and use the definition under the Restatement Second of Contracts § 265. However, courts in New Jersey have previously ruled that relief from the performance of contractual obligations due to the frustration of purpose “will not be lightly granted,” which means the party seeking relief faces a high burden of proof (JB Pool Mgmt., LLC v. Four Seasons, Inc.).

New Jersey courts recognize the doctrine under common law. In 2019, the Superior Court of New Jersey Appellate Division ruled that the frustration of purpose doctrine is applicable when the party’s performance of contractual obligations can still be carried out, but the frustrating event “fundamentally” changed the nature of the “overall bargain” (Capparelli v. Lopatin).

Review the Frustration of Purpose Provision in Your Contract

Parties that consider invoking the frustration of purpose doctrine to excuse or delay performance of their contractual obligations under a contract should review their existing contract to check the precise language of any provisions related to force majeure, frustration of purpose, impossibility, impracticability, and other clauses.

In the wake of the COVID-19 pandemic, parties entering into new contracts may want to consider adding force majeure, frustration of purpose, and other provisions to protect themselves in the event of unforeseen events such as a pandemic.

Parties may also be able to modify their existing contracts to add frustration of purpose and other provisions to protect them in the event of unexpected events. If you wish to add the frustration of purpose provision to your contract, consider contacting an attorney to assist you in drafting an enforceable and valid contract.

Schedule a Free Consultation with a New Jersey Lawyer

The outbreak of the coronavirus disease and ensuing government-mandated restrictions caused major disruption to businesses in New Jersey, the United States, and around the world. As parties were unable to meet their contractual obligations due to the COVID-19 pandemic, many wondered if they could use force majeure, frustration of purpose, and other clauses to seek relief from performance.

The applicability of the frustration of purpose doctrine in the COVID era depends on the specific language of the contract and the parties’ circumstances. Consider speaking with a lawyer to discuss COVID and frustration of purpose in your specific case. At The Law Offices of Jonathan Fleisher, Esq., we assist clients in New Jersey with drafting enforceable contracts and understanding their legal remedies for non-performance. Contact us today for a free case review by calling 732.360.6409.

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When a Contract is Breached Under NJ Law

There are unfortunate circumstances in which contracts are broken. Some causes of breach of contract include miscommunication, disagreements, or misunderstandings of responsibilities and obligations. The law considers a breach of contract a civil matter, and some of the most common areas where contracts are breached include:

NJ Business Contracts

When it comes to business, there are a myriad of areas where contractual agreements start to unravel. For example, an account may fail to pay on time or a merchant may fail to complete an order or provide goods significantly different from what the contract outlined. Any area where business parties connect, or partnerships occur, can be the foundation upon which a breach of contract under NJ law could potentially occur.

NJ Employment Contracts

Employment law is another area where breach of contract could possibly occur, especially for short-term employees. For example, a worker does not finish the job, or an employer does not honor the agreed-upon time frame for a job. In other instances, there are miscommunications or misunderstandings regarding the terms and conditions of the employment contract between parties.

NJ Housing Contracts

Renters and landlords often experience breaches of contracts. Even seemingly mundane situations, such as failure to pay rent or a landlord’s neglect at making repairs, fall under violation of contract law.

Types of Contract Breaches

Not all contracts have the same type of contract breach under NJ law. Some violations are minor, and some are more significant. The law distinguishes between “minor” breaches and infringements that violate the heart of the agreement.

Minor Breaches

New Jersey law does not consider minor breaches substantial violations of contract terms. Minor infringements, also known as “partial” or “immaterial” breaches of contract, generally do not warrant legal intervention. An example of a minor violation might be an employee’s slightly substandard performance or quality of work. Minor breaches tend to be not just partial but also more subjective in nature. Visitin with an attorney from The Law Offices of Jonathan Fleisher, Esq. can help you determine if your contract breach is considered a minor one under the law.

Material Breaches

Material breaches are substantial violations of an agreement to the point of compromising the heart of the contract. According to New Jersey law, “a material breach defeats the purpose of the contract and is inconsistent with the intention of the parties to be bound by the contract terms.”

It is important to note that whether a breach was material or by accident does not affect that a breach occurred.

A material breach means that one party no longer has to abide by the contract terms. For example, a landlord does not have to continue to provide housing for a tenant who has not paid rent – the landlord has the right to evict the tenant. Likewise, when a merchant delivers the wrong item to a customer, they have the right to demand their money back. In either case, a material breach may have effectively ended the relationship.

Breaches of contract can be legally complicated, and it is critical to have legal guidance that considers New Jersey law. If you are in the state of New Jersey and have experienced a breach of contract, whether from a business arrangement or some other circumstance, contact the business lawyers at The Law Offices of Jonathan Fleisher, Esq. to understand your rights.

Proving a Breach Has Occurred

While the above examples may seem straightforward, it is not always clear when the terms of an agreement have been violated. Generally speaking, a plaintiff must prove four critical points for a valid breach of contract.

The Existence of a Contract

First and foremost, a defendant must prove that a contract existed. Not always so easy, primarily if the agreement was not written down. Employment law can involve breaches of contracts due to the oral agreements made through the proverbial “handshake.” As common as these situations are, the lack of a written agreement may make its breach challenging to prove.

Violation of the Terms of Contract

A plaintiff must prove that the other party violated the contract’s terms. Again, this is not always straightforward if the terms came with some gray area, were written vaguely, or were otherwise non-existent.

The Plaintiff Followed Terms

For a breach to occur, the accusing party must be acting in good faith of the contract.

The plaintiff cannot violate the terms of the agreement and expect to accuse another of breaching the contract successfully.

Monetary Loss

Breaches of contracts can be costly for businesses and individuals alike. Chronically late wholesale shipments can translate to unsatisfied customers for a retailer, leading to lost revenue. By definition, a breach of contract leads to financial damages. A plaintiff’s ability to prove economic loss is a critical piece of their breach of contract case.

The Defendant’s Argument

Someone accused of breach of contract does have recourse. However, there are times when accusations of breach of contract are not legally sound. For example, as audacious as it may sound, one party may be using a violation of contract filing to willfully defraud or place “undue influence” on the other party, taking advantage of their mental capacity or lack of experience. Other times, both parties may be mistaken about the actual terms of the agreement. In all cases of a breach of contract, there must be a legally sound basis for any kind of restitution or legal resolution.

Contact the Experienced Business Attorneys at The Law Office of Jonathan Fleisher, Esq. Today

In the state of New Jersey, the statute of limitations for a breach of contract case is six years. While that may sound like a lot of time, it can take months or years for an agreement violation to appear. Therefore, it is critical to attempt to make determinations regarding a breach of contract under New Jersey law as soon as possible. Consider contacting the experienced attorneys at The Law Office of Jonathan Fleisher, Esq. at (732) 360-6409 to schedule your consultation today.

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Step 1: Understand the Difference Between Tax Avoidance Vs. Tax Evasion

One of the first critical steps to take in a tax evasion case is understanding what constitutes tax evasion. Specifically, it is essential to know the difference between tax avoidance and tax evasion.

It makes sense for a business to avoid paying more taxes to the Internal Revenue Service (IRS) than is necessary. Overpaying taxes because of overlooked expenses can lead to costly bills that provide much-needed funds a company could put to better use elsewhere. So, it comes as no surprise when businesses make the decision to work closely with an accountant or attorney to find every expense imaginable. Many deductible costs linger in plain sight, from vehicle mileage to office rent to coffee for the lounge.

Counting off every legitimate business expense, otherwise known as tax avoidance, is legal. Tax evasion, however, is not legal at all. The IRS distinguishes between the two. One is a reasonable business practice, and the other is a crime punishable under the law.

Step 2: Know The Common Forms of Tax Evasion

The problem for many business owners is drawing the line between the fiscally savvy practice of tax avoidance and the crime of tax evasion. Some of the most common ways a business can commit tax evasion include:

Overreporting Expenses

Overreporting of expenses is perhaps the most commonplace way business owners may find themselves evading taxes. While it is considered a good practice to seek an accountant or lawyer’s professional advice, the Internal Revenue Service (IRS) defines deductions that are “both ordinary and necessary” to include the following

• Inventory/Cost of Goods Sold
• Supplies
• Office Rent
• Business Use of a Personal Vehicle
• Travel
• Meals/Entertainment

The grey area that constitutes legitimate business expenses can widen when they overlap with personal expenses. A business owner might think they are innocently writing off that lunch with a friend or that trip to the cabin, but they just might be committing tax evasion.

Hiding Interest

This area of fraud most likely applies to more giant corporations with lots of capital to hide. A business might conceal the interest in the form of stashing cash in anonymous overseas accounts where Uncle Sam can’t see it. A company must pay taxes on interest, so hiding it is one highly illegal way to avoid paying taxes on this interest. Evading tax interest is so common that the IRS created the Foreign Account Tax Compliance Act (FATCA), which requires foreign banks to report on the identities of their account holders from the United States.

Underreporting Business Income

Another common method of evading taxes is by underreporting income. While underreporting income is a more egregious violation of tax law, many businesses – both side hustlers and corporate bigwigs alike – may tempt fate by misrepresenting tax income.

While tax evasion is a crime, many business owners may not realize that their practices constitute this serious legal transgression. However, there are times when business owners can make ethical missteps and commit willful fraud. Whether you knowingly or unknowingly committed tax evasion, getting legal help from the attorneys at The Law Offices of Jonathan Fleisher, Esq. is an option if your business is facing tax evasion.

Other Forms of Tax Evasion

Other ways a business might evade taxes include:

• Hiding assets or holding assets in another person’s name
• Falsifying or destroying relevant tax records
• Concealing or misleading actions during a tax investigation
• Refusing to cooperate with the IRS

Step 3: Prepare for the Repercussions

The consequences of tax evasion can be severe. Therefore, it is critical to understand how a conviction might affect the personal lives of business owners and the future of their operation. Punishment for tax evasion can include the following:

Restitution Payments

As one might expect, one of the first orders of business when it comes to tax evasion punishment is to pay the taxes owed to the government. This compensation is also known as restitution and usually includes back taxes, penalties, and fees.

Loss of Assets

If there is not enough cash to pay the restitution, the government has every right to start seizing business, as well as personal assets. The government can take possession of cars, valuables, even a home. They can foreclose on all assets, including bank accounts if it means collecting what’s owed to them in unpaid taxes.

Prison Time

Finally, since the law considers tax evasion a federal crime, an offender can face prison time. By most estimates, the average jail time served for tax evasion is three to five years. But longer sentences are possible depending on the severity of the crime.

Step 4: Consider Visiting With Our Experienced Business Attorneys Today

You do not have to have a criminal mastermind plan in order to commit tax fraud. Most tax avoiders that commit tax fraud have no criminal history, and in other cases do so inadvertently. According to the United States Sentencing Commission, over 80% of those that were charged with tax fraud had no criminal record. If your business is facing tax evasion, or if you would like to learn more about how to avoid tax fraud, consider visiting with the experienced and knowledgeable business attorneys at The Law Offices of Jonathan Fleisher, Esq. at (732) 360-6409 to learn more about your legal rights and which steps to take if your business if facing tax evasion.

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Why You Should Consider Hiring Outside Business Counsel

Many legal concerns may arise in a business, and in some cases these business matters must be addressed properly by skilled business counsel. Hiring an outside business counsel might be a wise move for a company. Understanding how an outside business counsel can be invaluable to a business owner may be beneficial when making this important decision.

1.    A Cost-Effective Solution

Hiring an outside business counsel can reduce expenses while allowing the management team to focus on operating and expanding the company rather than on legal concerns. Since an outside legal counsel is not an employee, but rather an independent adviser for the company, it is a cost-effective alternative. Employee benefits, interest in the company, overhead, and other liabilities associated with employees are not present with hiring ouside legal counsel, as they would be if an in-house legal team model were used. A performance-based remuneration or fixed-fee model is commonly used to help the company allocate money, assure better results, and enhance financial predictability. These competitive rates are offered to make the lives of business owners simpler and stress-free.

2.    Independent Contractor and Team Member

The advantages of hiring independent business counsel are substantial. Hiring an independent contractor rather than an employee saves money while also ensuring that the company has no long-term obligations. Companies can hire outside business counsel for as long as they want as long as they are satisfied with the results.

In contrast to an in-house counsel arrangement, where the employee becomes an essential part of the business, such choices are not as flexible. The best thing about employing an independent attorney is that the company can potentially receive the best of both worlds. The business counsel is a crucial team member and also contributes by providing strategic legal guidance for the company. Security, longevity, and trust can also be present when engaging an outside business counsel that develops into a long-lasting business relationship.

3.    A Great Third-Party Perspective

An independent business counsel may provide a valuable third-party viewpoint on any significant legal issue that affects the company. This impartial and unbiased viewpoint will aid a business owner in making more financially and legally appropriate decisions. When serious matters are present for a company, the emotional and psychological involvement is significant, and having outside counsel is one way that the business can obtain an impartial and experienced perspective. A distinctive and honest response regarding legal matters is something that every business owner will appreciate.

The United States National Library of Medicine research indicates that groupthink produces poor decisions due to two key reasons. The first is that people in a group, and in our instance, the workforce, may have similar approaches. Second, via continuous social engagement, this group or people of the firm adapt to each other’s cognitive styles. An outside experienced business counsel can fill this void of independence. For innovative and reliable business legal counsel, contact our attorneys at The Law Offices of Jonathan Fleisher, Esq. to learn more about your legal options for your specific circumstance.

4.    Adopting the Diversity Approach for Better Results

The American Bar Association discusses how engaging diverse outside business counsel improves decision-making, innovation, and brings prosperity. This means that all options are considered, and better anticipation leads to better planning. Due to the obvious introduction of virtual forums to communicate, hiring outside business counsel allows a company to also cultivate diversity. Companies can also leverage purchasing power to advance the goal of diversity resulting in increased efficiency and faster decisions for the company.

This increased diversity can accomplish the following:

• Enhances business outcomes
• Promotes thought leadership through various alliances and initiatives
• Addresses the company’s needs across jurisdictions
• Creates a cycle of outstanding talent, with more and more law firms adopting a diverse approach, resulting in a more global perspective.

5.    Set Your Company Up For Growth

While an outside counsel will start from scratch, they will ultimately lay strong legal foundations that will pave the path for the company’s growth. There is a critical foundational choice that a company must make to ensure that the business succeeds. Businesses frequently seek legal advice when they are involved in a dispute, but if the firm starts on a proper legal footing, this growth can be established with accurate and solid legal foundations. Early legaly guidance is usually beneficial in the long term, and this preparation can save costs in the future.

6.    Strategic and Specific Business-Related Legal Advice

Hiring outside legal counsel allows a strategy that includes a focus on specialized legal advice, as the attorney can provide ongoing strategic and business-focused guidance. Making the decision to hire outside business counsel allows a business to receive exactly the advice they need, exactly when they need it. Many businesses will not need to hire an in-house legal counsel, as they will not have ongoing legal matters. Hiring an outside business counsel affords businesses the opportunity to ensure they receive the legal advice they need exactly when andh ow they need it.

Contact an Experienced Outside Business Counsel Attorney Today

An outside attorney is a valuable asset to any company since all legal matters can be handled, including start-up documents, compliance, commercial litigation, and all other legal matters.  When a business owner makes the decision to hire outside business counsel, they can ultimately  build a strong attorney-client relationship as the company’s specific needs continue to be handled by an attorney familiar with their company and their specific business needs. Consider visiting with our experienced business attorneys at the Law Offices of Jonathan Fleisher, Esq. to learn how we can help your business. Call our legal team at 732.360.6409 for a free consultation.

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• Real Estate Investment Groups
• Law Firms
• Physician Groups
• Accounting Groups

What happens when the time comes for one of these collaborative efforts to end? One of the critical components of any partnership dissolution involves a proper valuation of the business. Valuing a business when a partner wants out requires the support of business attorneys. The team at The Law Offices of Jonathan Fleisher, Esq. in New Jersey can help you with the process of dissolving a partnership so that all parties involved emerge with a sense of fairness and equity. Consider contacting our experienced business attorneys today at 732.360.6409 to schedule a business consultation for ending a partnership.

Business Partnerships

The Small Business Administration outlines two general types of business partnerships, depending on how liability gets distributed among the members. The two main forms of partnerships are:

Limited Liability Partnerships

Limited liability partnerships allow for a more even distribution of liability. This type of partnership protects each partner from the actions of other partners. Limited liability partnerships also provide personal protection for each member from debts that the business might assume throughout its lifetime.

Limited Partnerships

Limited partnerships designate a more significant level of liability to a single member, while all the other partners take on limited liability. The higher degree of liability comes with more tax burdens as well as more power and influence within the company. Startups often use limited partnerships. A single founder might agree to take on more of the liability while their team can work free of risk.

The Importance of The Business Valuation

The business valuation is the single most significant component of a partnership split. For example, one partner might bring an excessive amount of value to the company in knowledge, network, or invested capital.

Therefore, a fair valuation must take place. Most often, an independent third party can offer a more objective valuation of the company. However, a common practice is for each member to assess the company’s value on their own, then the average of these values becomes the final number.

Legal guidance can prove invaluable when undergoing the valuation process. If you are a member seeking a fair and amicable exit from a business partnership, the attorneys at

The Law Offices of Jonathan Fleisher, Esq. can steer you in the right direction.

The Anatomy of a Business Valuation

When it comes to the value, some vital numbers come into play. The most important metrics include:

Basic Financial Data

Actual financial numbers are where most valuations should begin. Some key data points include:

• Current Balance Sheets
• Current Profit & Loss Statements
• Bank Statements
• Tax Returns
• Current and Previous Budgets

Financial data offers critical information on the company’s health, offering a big picture of whether the state of the business is feeble or is performing robustly.

Assets

A company might have accumulated assets throughout its life. Common assets include:

• Trademarks/ Patents
• Land
• Buildings
• Accounts Receivable
• Equipment
• Inventory

Valuations should also include “soft” assets, such as the knowledge base of each employee or member, the company’s brand, or the overall intellectual capital that the company has developed.

Recent Profits and Future Earnings

Is there a pattern of recent profits within the last six months or a year? A valuation must include a proven profit trend and any sign that it may continue. Additionally, valuations consider projected future earnings and what a partner’s exit might mean for these earnings.

It is common practice to determine future earnings by multiplying projected yearly profits by the number of years. For example, if a business projects $200,000 per year for the next six years, then the projected future earnings for that period would come out to be $1.2 million.

Capital Needs

A valuation needs to take into account how much it would cost to buy out a partner.

What are the company’s capital needs? More specifically, would a partner’s departure affect the future operating capital? Such questions should figure into a valuation so that company can explore financing options so as to not fall short of the money it needs to function.

Types of Valuation

While all of the above elements must be factored into a company’s valuation, some details matter more than others. For example, when it comes to valuing a business when a partner wants out, there are two main approaches.

Asset-Based Approach

An asset-based approach focuses on the business’ assets when determining its worth. Both “hard” assets, like building, land, and equipment, and “soft” assets, like intellectual capital, weigh most heavily in an asset-based valuation.

Truly objective appraisals might not exist, but any business owner would be wise to seek out qualified appraisals to get the most accurate estimates of hard assets.

Market-Based Approach

A market-based approach sees the business in the context of the larger market. Specifically, it looks at how the company stacks up against competitors of similar size and type. An arguably more subjective approach, the market-focused valuation, can prove more accurate for businesses with few hard assets, such as software service companies, for example.

Consider Contacting an Experienced Attorney to Help Value Your Business

Valuing a business when a partner wants out takes time, diligence, and expertise. Consider contacting the experienced business attorneys at The Law Office of Jonathan Fleisher, Esq. today at (732) 360-6409 if you are considering ending a business partnership in the state of New Jersey. Our legal team can help you understand all of your legal rights and ensure that they remain protected throughout the entire process.

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