Be Careful When You Personally Guarantee a Contract
A contractual guarantee agreement means if a contract is breached and payment not made, the person who guaranteed the contract can be held personally …
Your Reason for Signing a Contract Can’t Be Used Against You
“Every contract in New Jersey contains an implied covenant of good faith and fair dealing.” “The party claiming a breach of the covenant of …
Shareholder Agreements Protect Minority Shareholders From Oppressive Conduct – Price/Book Value
Most commonly, Buy-Sell agreements provide for a purchase of shares based on book value. Book value is the difference in value between the assets …
Shareholder Agreements Protect Minority Shareholders From Oppressive Conduct – Buy-Out Mechanisms and Their Limitations
The most useful mechanism in a shareholder agreement for dealing with shareholder oppression is a well-written Buy-Sell provision. Because shareholders in closely-held corporations have …
Shareholder Agreements Protect Minority Shareholders From Oppressive Conduct – Required Dividends
The most straight-forward way of protecting a minority shareholder’s economic stake in a closely-held corporation is to require the payment of dividends. In most …
Shareholder Agreements Protect Minority Shareholders From Oppressive Conduct – Employment Agreements
A primary claim for shareholder oppression is termination of employment. “A minority shareholder’s loss of employment within a closely held corporation can be particularly …
Shareholder Agreements Protect Minority Shareholders From Oppressive Conduct – Adopting the Supermajority Voting Requirement
A strategy for providing some minority shareholder control is to alter the voting requirements for specific decisions to require supermajorities — either on the …
Shareholder Agreements Protect Minority Shareholders From Oppressive Conduct – Establishing Classes of Shares to Protecting Minority Shareholders
A tool for maintaining a minority shareholder’s ability to have some control over the corporation is to issue different classes or series of shares …
Shareholder Agreements Protect Minority Shareholders From Oppressive Conduct – Voting Agreements
Shareholders may bind themselves in a shareholder agreement to vote in a specified manner regarding specific matters. Examples might include places on the board …
Shareholder Agreements Protect Minority Shareholders From Oppressive Conduct – Cumulative Voting
Cumulative voting is a mechanism for granting minority shareholders rights of participation to corporate decisions. However, this protection is quite limited and may, at …
Shareholder Agreements Protect Minority Shareholders From Oppressive Conduct – Guaranteed Directorships to a Minority Member
Minority shareholders usually do not have the voting power to guaranty a spot on the board of directors. A shareholder who is not a …
Shareholder Agreements Can Address Specific Oppressive Conduct and Their Limitations
Minority shareholders in a closely-held corporation may (should) try to protect themselves against the actions of the majority by including protective provisions in their …
Once You Agree to Settle a Lawsuit, New Jersey Law Will Not Let You Back Out of the Settlement
In many (most cases/lawsuits) the parties settle their dispute. There is strong public policy favoring settlement of litigation. Once a case is settled, New …
Recent NJ Cases Involving Shareholder Agreements Offer Much Guidance to Counsel and Clients – Part 2 of 2
Facts of the Case This case involved a closely-held corporation with four equal shareholders, in which three of the shareholders ceased paying salary to …
Recent NJ Cases Involving Shareholder Agreements Offer Much Guidance to Counsel and Clients – Part 1 of 2
Case 1 I’ve written often about the importance of having legal disputes resolved by the courts in NJ. Our law states that “Subject to …
Knowing Your Options for Getting Out of a Business with a Member You Are Not Getting Along With
The first, and in my opinion, best option is for you to formally withdraw from the LLC. If you do not have a written …
Corporations Located Outside NJ Can Still Be Sued in New Jersey, Sometimes
In order to exercise jurisdiction over an out-of-state corporation, “a defendant’s “conduct” must create a substantial connection with New Jersey. When analyzing a defendant’s …
Suspect Infringement of Your Business Trade Name? Take Action Now!
If you have gone through the effort of undertaking a United States Patent Trade Office (USPTO) filing, confirmed your company holds the registration to …
New Jersey’s Business Courts: Litigation Program
The New Jersey Supreme Court implemented a statewide Complex Business Litigation Program, the purpose of which was to address the specific needs of parties …
The Enforcement of Restrictive Covenants in Commercial Leases
Restrictive covenants prohibiting competition by tenants in a shopping center can be enforced in New Jersey. This article discusses when and when not a …
You Don’t Lose Your Status as a Partner if You Assign Your Partnership Interest to Your Revocable Trust
Four dentists formed a partnership to acquire and maintain a dental office building. The then-partners amended their agreement to allow one of the partners …
Qualifying for the “Business Court”
Did you know New Jersey has a business court dedicated exclusively to commercial, construction, business and corporation cases? To qualify, your attorney must designate …
Another Case of Alleged Wrongful Disclosure of Confidential Information and Breach of Contract Goes to Trial
Breaching a Confidentiality Agreement Can Lead to Serious Legal Liability Plaintiff is the former employer of Defendant. Plaintiff and Defendant entered into a confidentiality …
Dealing With Customers Who May Be on the Verge of Bankruptcy
The bankruptcy code provides business creditors with defenses to stop the return of money received by a debtor during …
Some Things Just Can’t Be Changed. Understanding What Provisions of an Operating Agreement Under the New Jersey Revised Uniform Limited Liability Company Act (RULLCA) Cannot Be Waived
The New Jersey Limited Liability Company (LLC) Act is flexible in many ways giving members of an LLC freedom to negotiate and create a …
What is the Buy-Out Formula of a LLC Member Under the Revised New Jersey Limited Liability Act (RULLA)
The New Jersey version of the Revised Uniform Limited Liability Act authorizes a member a buy-out in lieu of company dissolution when there is …
New Jersey Charges Members of an LLC an Annual Fee for the Privilege of Being Located in New Jersey
Here is a question I was recently asked by a client interested in starting up a small business in New Jersey. Does the State …
Shareholder Disputes and Family Companies; NJ Business Laws Provide Remedies (Part 2)
Part 2 of a 2 Part Series In my first post, I explained in detail the facts leading up to a family shareholder dispute …
Shareholder Disputes and Family Companies. New Jersey Business Laws Provide Remedies (Part 1)
Part 1 of a 2 Part Series Small family companies often break apart and family shareholders sue each other. To successfully obtain an injunction …
Protecting New Jersey Franchisees Under the New Jersey Franchise Practices Act
If you are a franchisee being threatened with a termination of your franchise in NJ, you must act immediately before your franchisor goes to …