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SHAREHOLDER DISPUTES IN NEW JERSEY

Thursday, January 26th, 2012

By Fredrick P. Niemann, Esq. a Shareholder Dispute Attorney

When you first established your Limited Liability Company (LLC) in New Jersey several years ago with your best friend you did not see a need for a shareholders’ agreement. You had been best friends since first grade; nothing could ever come between you. You felt that it was an unnecessary expense to have a lawyer draw up a contract for something that never could happen.

Only now it has….

The company has grown and prospered over the last several years and everything has gone fine. However, you have come to an impasse on what to do next. Do you stay in New Jersey? Do you expand out of state? Do you simply leave things alone? Your partner and best friend will not agree to anything, and now he wants out.

Since you will not agree to dismantle the business, he is now threatening to sue you for shareholder oppression and failure to act in the best interest of the company. Without an agreement in hand, you will have little recourse in court. Yes, an attorney will be able to represent you, and yes, you may even win, but the process will be long and grueling and it will interfere with your business.

Shareholder disputes will arise during the course of any business. It does not matter how long you have been friends, or what your intentions are, disagreements happen. The best way to protect yourself and your business is to enter into a shareholders’ agreement when the business is created. This is the only way to protect everyone that is involved.

Contact me personally today to discuss your shareholder dispute matter.  I am easy to talk to, very approachable and can offer you practical, legal ways to handle your concerns.  You can reach me toll free at (855) 376-5291 or e-mail me at fniemann@hnlawfirm.com.

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A CONTRACT DISPUTE INVOLVING INTENTIONAL BUSINESS INTERFERENCE – A GENERAL OVERVIEW

Thursday, January 26th, 2012

By Fredrick P. Niemann, Esq. a New Jersey Contract Lawyer

A business dispute lawyer experienced in New Jersey contracts usually handles claims that surround the intentional interference of an existing business relationship between business rivals or competitors. A contract that is breached involves two parties while the claim of business interference deals with situations where a third party who is not part of the contract interferes with it.
In order for an action of business interference in relation to a contract to be actionable, you must prove that there is a valid contract in place between you and a third party – and another person or (referred to as the interferer) was aware of the contract but went ahead and caused an intentional disruption of your contract. In the process of this person’s interference with your contract, you must establish that you suffered economic damages hence you are suing for compensation.
It is worth noting that in New Jersey; negligent interference attracts no cause of action even if there is a contract in place. The law requires there be an order for a case to stand up in court. The analysis is not concluded at the point where interference occurs. A court will take a close analysis on the nature of the interference. A business dispute lawyer in New Jersey is in a position to advise you on this are of the law. Further to this, intentional interference of the contract can be brought forward if the performance of the plaintiff has caused additional costs on your contract performance with additional expenses.

Since the claim of business interference is with another person’s contract, those involved in the contract cannot be sued. The reason is the law says that one cannot actually interfere with his or her own contract. This distinction is vital since an intentional interference with a legitimate enforceable contract is a business tort whose remedies can be more severe as compared to other kinds of contractual damages. A business dispute lawyer knowledgeable in New Jersey business contracts is in a position to analyze the facts of the case and provide you with the best advice.

If you are accused of business interference with a contract, it is possible to make a defense against the contract through certain kinds of jurisdictions and privileges. New Jersey courts will focus on a balancing act to determine the party’s motive, interests and conduct.

Contact me personally today to discuss your business contract matter.  You’ll find me easy to talk to, very approachable and can offer you practical, legal ways to handle your business interference and contract dispute case.  You can reach me toll free at (855) 376-5291 or e-mail me at fniemann@hnlawfirm.com.

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REAL ESTATE BREACH OF CONTRACT – DOES A FAILED CONTINGENCY EQUAL A DAMAGE CLAIM?

Friday, January 20th, 2012

By Fredrick P. Niemann, Esq. a New Jersey Contract Attorney

Contract for Sale of Real Estate in New Jersey:

Here’s a contract question I was recently asked.  The contract states the buyer is to apply for a mortgage of $600,000 deposit $11,000 into escrow upon contract signing and pay $250,000 cash down at closing.

The buyer applies for a mortgage of $685,000 and is rejected by his bank.

The buyer then claims that he cannot get mortgage so he attempts to cancel the contract.

Is the buyer in breach of this contract since he did not apply for the mortgage amount stipulated in the contract?

Does the seller have a cause of action?

If the seller now sells his house for less than the contracted amount can he sue the buyer for this difference plus other losses he has sustained?

I believe the answer is yes and the buyer’s actions are breach of contract because the buyer applied for a mortgage greater than $600,000.  The mortgage contingency provision is a material term of the contract.  That provision having been breached the seller has a cause of action and the buyer may very well have to pay damages.

If you have any questions regarding contracts, particularly real estate contracts, contact Fredrick P. Niemann, Esq. toll free at (888) 800-7442 or e-mail him at fniemann@hnlawfirm.com.

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MINORITY SHAREHOLDERS OF CORPORATIONS HAVE A RIGHT AGAINST OPPRESSION

Friday, January 20th, 2012

By Fredrick P. Niemann, a NJ Shareholder Rights Attorney

Throughout New Jersey, there are numerous corporations that are owned by a small number of shareholders. These corporations are often referred to as closely-held corporations. In a closely-held corporation, the majority shareholder is entitled to make business decisions involving the company, based on the fact that they have more ownership of the company than the minority shareholders. Unfortunately, these business decisions may conflict with the wishes of the minority shareholder. While the majority shareholder ultimately controls the direction of the business and has the final say on business decisions, minority shareholders also have rights pertaining to these decisions, mainly the right not to be “oppressed”.

An oppressed minority shareholder is one who is in the unfortunate position where they disagree with the business decisions being made, yet have their objections to the majority shareholders denied. In other words, they are forced to own shares in a company that is making decisions that affect them adversely. They are effectively trapped in the ownership of the company. Fortunately for minority shareholders, New Jersey has a law specifically relating to this situation, which states that corporations and majority shareholders may not act in a manner that oppresses minority shareholder. The statute defines oppression as “an act directed at a minority shareholder personally that frustrates their reasonable expectations of the role they play in management, operation, and other general affairs of the corporation.”

If you believe you are being oppressed as a minority shareholder, keep in mind you must be able to show two things under New Jersey Law in order to obtain relief from the courts. First, you must be able to show conduct on the part of the majority shareholders or the corporation itself that is considered oppressive. There is no specific formula for what amounts to oppression under New Jersey law. However, our New Jersey Courts will consider each case in and of itself. Second, you must be able to show economic harm suffered as a result of the oppression. This harm can be not only monetary, but can also include other interests such as having your voice in the future direction of the management business heard.

There are numerous oppressed minority shareholders throughout the state of New Jersey who are unaware of the rights they have. Don’t sit back and let someone take advantage of you simply because they own more shares in a corporation than you do. If you have any questions regarding New Jersey Oppressed Minority Shareholder laws or corporations in general, please don’t hesitate to contact Fredrick P. Niemann, Esq., an experienced NJ Corporate Shareholder attorney today. He can be reached toll-free at 855-376-5291 or by email at fniemann@hnlawfirm.com. He looks forward to hearing from you.

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MINORITY SHAREHOLDERS OF CORPORATIONS HAVE A RIGHT AGAINST OPPRESSION

Friday, January 13th, 2012

By Fredrick P. Niemann, a NJ Shareholder Rights Attorney

Throughout New Jersey, there are numerous corporations that are owned by a small number of shareholders. These corporations are often referred to as closely-held corporations. In a closely-held corporation, the majority shareholder is entitled to make business decisions involving the company, based on the fact that they have more ownership of the company than the minority shareholders. Unfortunately, these business decisions may conflict with the wishes of the minority shareholder. While the majority shareholder ultimately controls the direction of the business and has the final say on business decisions, minority shareholders also have rights pertaining to these decisions, mainly the right not to be “oppressed”.
 
An oppressed minority shareholder is one who is in the unfortunate position where they disagree with the business decisions being made, yet have their objections to the majority shareholders denied. In other words, they are forced to own shares in a company that is making decisions that affect them adversely. They are effectively trapped in the ownership of the company. Fortunately for minority shareholders, New Jersey has a law specifically relating to this situation, which states that corporations and majority shareholders may not act in a manner that oppresses minority shareholder. The statute defines oppression as “an act directed at a minority shareholder personally that frustrates their reasonable expectations of the role they play in management, operation, and other general affairs of the corporation.”
 
If you believe you are being oppressed as a minority shareholder, keep in mind you must be able to show two things under New Jersey Law in order to obtain relief from the courts. First, you must be able to show conduct on the part of the majority shareholders or the corporation itself that is considered oppressive. There is no specific formula for what amounts to oppression under New Jersey law. However, our New Jersey Courts will consider each case in and of itself. Second, you must be able to show economic harm suffered as a result of the oppression. This harm can be not only monetary, but can also include other interests such as having your voice in the future direction of the management business heard.
 
There are numerous oppressed minority shareholders throughout the state of New Jersey who are unaware of the rights they have. Don’t sit back and let someone take advantage of you simply because they own more shares in a corporation than you do. If you have any questions regarding New Jersey Oppressed Minority Shareholder laws or corporations in general, please don’t hesitate to contact Fredrick P. Niemann, Esq., an experienced NJ Corporate Shareholder attorney today. He can be reached toll-free at 855-376-5291 or by email at fniemann@hnlawfirm.com. He looks forward to hearing from you.

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The Future Success of Your Business May Hinge on a Proper Buy-Sell Agreement

Monday, November 21st, 2011

By Fredrick P. Niemann, Esq., a NJ Business Succession Attorney
Buy-sell agreements are invaluable agreements between owners of a business. In companies with multiple owners, buy-sell agreements outline the terms of departure for one of the owners, mainly the division of their interest in the business. Buy-sell agreements typically dictate who will receive the departing owners interest, how much will be paid to the departing owner for it, and provide the cash for funding the purchase. A properly written buy-sell agreement is key to business succession planning because it assures a smooth transition for the business when one owner retires or departs for other reasons.

There are two basic types of buy-sell agreements.  A Redemption buy-sell agreements is one in which the business, as an entity, purchases the interest of the departing owner. This effectively means that the remaining owners own a bigger share of the business. Cross-purchase buy-sell agreements are the other basic type of buy-sell agreements. These involve the remaining owner or owners individually acquiring the interest of the departing owner. In businesses with multiple owners remaining, it is possible for one owner to acquire all or most of the departing owner’s interest and own a bigger stake in the business, or all owners to acquire an equal portion or the interest, keeping the ownership proportions the same.
There are numerous benefits to buy-sell agreements for both your business and a departing owner. Guaranteeing a purchaser for the departing owner’s interest avoids the hassle of finding someone to purchase their interest. While this may not seem like a problem for successful businesses, remaining owners often have to approve any new owner purchasing an interest in the business. Certain owners may not want others to receive an increased ownership share in the business. These and other issues can be avoided by naming a buyer beforehand. 

Buy-sell agreements allow owners to agree to financing for the transaction before it occurs, which avoids the trouble of forcing the departing member and the buyer to go through unknown financing methods. They also guarantee the business will continue to operate as it has and will not be interrupted by any conflicts resulting from the transfer of the departing owner’s interest.

By establishing a fair market value of the interest prior to the departure, buy-sell agreements also assure heirs of a deceased business owner that they will receive a fair value for their loved one’s interest in the business. Many family members have no idea what the deceased owner’s interest in the business is worth and unfortunately this leaves them vulnerable to being taken advantage of by the remaining owners.  Setting a predetermined value for the business interest, which is updated frequently, assures that family members will receive fair value and their will be no argument over what the business interest is worth. This value can also be used for tax purposes as well, as the government will allow the buy-sell agreement to establish the value of the business as long as three strict requirements are followed:

1. The buy-sell agreement is a bonafied business agreement;
2. The buy-sell agreement is clearly not an attempt to transfer your business interest to a family member for less than adequate consideration; and
3. The terms of the buy-sell agreement are similar to other arrangements of the same general type in other businesses.

A proper buy-sell agreement between you and your co-owners can be critical to the future succession of your business in New Jersey. When correctly written, these agreements guarantee the successful transfer of your business while avoiding the tedious conflicts that tend to arise without such an agreement. If you have any questions regarding the benefits of a buy-sell agreement or would like to discuss the future of your business succession, please call Fredrick P. Niemann, Esq., a knowledgeable Business Attorney. He can be reached toll free at 732-863-9900 or by email at fniemann@hnlawfirm.com. You’ll be happy to know that he is very approachable and experienced in New Jersey business matters.

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New Jersey Courts Settle Construction Contract Disputes

Wednesday, November 2nd, 2011

By Fredrick P. Niemann, Esq. a New Jersey Contract attorney

Disputes often arise within the construction process. Sometimes contractors and subcontractors provide services that the owner either deems to be insufficient or not what they agreed upon. Other times, an owner will refuse to pay a contractor because they simply do not have the money. Whatever the reason, the construction forum provides numerous disputes between parties that need to be settled.  While negotiations and settlements between the parties are often favorable, sometimes parties simply can’t agree. In these cases, the dispute is brought to the New Jersey Courts to figure out the proper course of action. The Courts offer a solution and finality to the dispute.

One recent dispute involved construction by plaintiff, a construction company, on the hotel of the defendant to help make the hotel more adequately able to handle inclement weather. After plaintiff completed the construction, they sought payment for repairing the storm drains and weatherproofing the rooms. Defendant refused to pay, claiming that the work was improper, insufficient, and overall not what they agreed to. The trial court, citing the fact that the defendant offered no expert testimony to show that plaintiff’s methods were improper, ruled for the plaintiff and awarded them the amount agreed to in the contract. Defendant appealed, the New Jersey Appellate Division deferred to the trial court judge, stating that they found no reason to doubt the judge’s findings, stating they were supported by adequate, substantial, and credible evidence.

Construction disputes are frequent and can provide serious headaches. An experienced Construction Law attorney can help negotiate a settlement with the opposing party or defend your case when you encounter an unreasonable adversary. It is important to hire a knowledgeable attorney who is familiar with local construction laws to ensure all your rights are upheld. Please call Fredrick P. Niemann, Esq., a qualified NJ Construction Law Attorney, toll-free at 888-800-7442. He can also be emailed at fniemann@hnlawfirm.com. He would be happy to answers any questions you may have related to New Jersey construction laws.

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Shareholder Buy-Sell Agreements and Restrictive Covenants Are a Key Part of All Employment Contracts

Friday, October 28th, 2011

By Fredrick P. Niemann, Esq., a NJ Shareholder Dispute Attorney

 
Shareholder’s agreements should be an essential part of every small corporation’s structure in New Jersey. These agreements outline every aspect of  corporate government and shareholder ties to the business, including ownership and voting rights, control and management of the corporation, methods of resolving disputes, and two key provisions known as the buy-sell agreement and the restrictive covenant.

Buy-sell provisions and restrictive covenants are both integral parts of a quality shareholders agreement, particularly in smaller businesses with fewer shareholders. Smaller corporations often elect to establish ownership via shares in the business. For example, a small corporation with four co-owners elects to establish that each member owns 25 shares out of 100, thus 25% of the business. The shareholders agreement is an agreement between all of the shareholders in the corporation and will serve as the main document that Courts will look to whenever a dispute arises.

Shareholders agreements can be simple or complex and everyone is unique to the corporation it is written for. While many shareholders today are knowledgeable enough to make these agreements, they often are created without the assistance of a New Jersey Shareholders Attorney, thus lacking key components that leave many of the shareholders vulnerable. The buy-sell agreement and restrictive covenant provisions are two of these key components.

A buy-sell agreement dictates what will happen to the shares of a shareholder who wishes to leave the company. Since a shareholder who wishes to leave must sell their shares, a dispute often arises as to who they are selling their shares to and what price they are being sold for. Often the departing shareholder will want to sell shares to the highest bidder. This may be someone that the remaining shareholders do not want to be in business with. Also, if the corporation itself or the remaining shareholders are “buying out” the departing shareholder, the departing shareholder often thinks the shares are worth more than the remaining shareholders do. Fortunately, a typical buy-sell provision settles these disputes beforehand, stating who will buy the shares and the price they will be bought at when a departing member leaves the corporation. If any debate arises as a shareholder is leaving, the Courts will simply enforce the shareholders agreement and the buy-sell provision.

As for restrictive covenants, these are most useful for smaller corporations that licensed professions and professions involving particularized skills, such as doctors, attorneys, scientists, etc. A restrictive covenant lays out an area around the business where a departing member is forbidden from working, whether it is with another rival corporation or in their own practice. As long as they are reasonable in space and time, Courts will uphold restrictive covenants. These are useful to prevent a shareholder from departing and stealing clients from the remaining shareholders.

Shareholder agreements are complicated and should involve many different aspects that the normal shareholder often does not think of. Always consult a shareholders attorney before signing such an agreement. Please contact Fredrick P. Niemann, Esq., a NJ Shareholders attorney, today toll-free at 888-800-7442 or by email at fniemann@hnlawfirm.com.  For further information, go to http://www.youtube.com/user/NJBusinessLaw#p/search/0/pKIalQAdprY to learn more.

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An Employment Contracts Is Essential To Your Rights As An Employee In New Jersey

Friday, October 21st, 2011

By Fredrick P. Niemann, Esq., a NJ Employment Law Attorney

 
Many employees throughout the state of New Jersey are unaware as to what exactly their employment contracts say. When they are hired and given the contract to sign, many individuals simply glance over the document and then sign their name on the dotted line.  Some simply turn to the last page and sign. Either way, many employees today are unaware as to the implications this document can have on their future. It is important to read and understand every single part of your employment contract, since your signature effectively promises that you will abide by all of the terms included throughout it.

For those that are unaware with New Jersey law pertaining to contracts, a contract is considered a legally binding document. This means that the law binds the parties to the terms of the agreement. If there is a dispute between an employer and employee related to an issue that is addressed in the employment contract, the Courts will first look to the contract to see what the parties agreed to. By signing the document, both the employer and employee certify that they agree to the terms contained within. It does not matter if one of the parties did not read the employment contract. If you signed the document, the Courts will hold you to its terms. “I did not read the contract” is NOT a defense that will be considered by the Courts.

As mentioned earlier, employment contracts often have intended results for either an employer or employee who did not read the contract or was not familiar with it’s terms when they signed the contract. In a recent NJ Court case involving a doctor leaving her practice with other doctors, the Court upheld the terms of the employment contract over the objection of the remaining doctors in the practice. The departing doctor wished to no longer work with the other doctors in the practice and wanted to leave the business. However, a dispute arose as to the value of the shares of the departing doctor and whether the remaining doctors would be forced to buy them. The Court looked no further than the employment contract between the parties, which required the remaining partners to buy all departing doctors shares in the business for a specified price and also required the departing doctor not to practice within a certain area of the practice.

Employers know they often have the upper hand when it comes to employment contracts. They create the terms of the contract and employees usually agree to them without any objection, often failing to even read the document. As an employee in New Jersey, you have the right to negotiate parts of an employment contract. Always be sure to read and have your employment contract reviewed by a knowledgeable employment law attorney before you sign it. It can make all the difference.

If you have any questions regarding employment contracts, please contact Fredrick P. Niemann, an experienced NJ Employment Attorney today at 855-376-5291 or email him at fniemann@hnlawfirm.com. He would be happy to discuss your matter with you.

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A Buy-Sell Agreement Should Always Include a Clause Dealing With Sudden Unexpected Departures

Thursday, October 13th, 2011

By Fredrick P. Niemann, Esq., a NJ Shareholder Agreement Attorney
Every business should have some sort of buy-sell agreement, regardless of its size. However, buy-sell agreements are extremely crucial in a smaller business with few owners. While owners of small businesses often start out as friends, unexpected events occur, leading to disagreements among owners and often causing the business to suffer. Fortunately, many businesses owners are smart enough to sign buy-sell agreements when they enter the business. These agreements dictate the terms of the sale of a departing member’s ownership, often dictating who it can be sold to and what price it will be sold for. This helps avoid or resolve potential problems at a time when emotions and anxiety is high and the disagreements is likely to result as one owner seeks to leave the business.

Many owners often forget to include a key component in a shareholder agreement: a clause dealing with unexpected departures. Unexpected departures occur due to a number of reasons. Death, incapacity, disinterest, financial distress, divorce, or loss of a business license is only some of the reasons why an owner may be forced to leave a business. Whatever the reason may be, it is important that owners place a clause in their buy-sell agreement dealing with the unexpected departure of an owner.

The details of a buy-sell agreement addressing an unexpected departure are completely up to you. Owners of a business often place provisions that allow for the remaining member(s) of the business to buy the deceased or departing owner’s share of the business at a predetermined price.  This gives the remaining owner(s) the option of keeping out family members of the deceased owner from joining the business. Another provision is one that restricts the shares of an owner to a spouse through a divorce.  Similar to the provisions relating to a deceased member, this allows the remaining member(s) to restrict who owns the business with them. Finally, another common provision requires the sale of a departing owner’s shares to the remaining owners if the departing owner is convicted of a crime or loses their professional license. This ensures the remaining owners that the integrity of the business will be kept up and they will not be forced to work with someone they do not want to.

Buy-sell agreements are key to all businesses, especially small businesses. A properly crafted agreement can help ensure the success of your business even upon the departure of a co-owner. Please contact Fredrick P. Niemann, Esq., a qualified New Jersey Business Attorney today if you have any questions. He can be reached toll-free at 888-800-7442 or by email at fniemann@hnlawfirm.com.  For further information, go tohttp://www.youtube.com/user/NJBusinessLaw#p/search/0/ZWx2P0MQWwA to learn more.

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