Monthly Archives: June 2013

When people hear the words “consumer fraud,” they often assume that the provisions of the New Jersey Consumer Fraud Act (CFA) protect only individuals, not business entities. Others think that the CFA applies to business entities as a matter of course because, after all, a business entity is often a consumer of goods and services. These are two extremes – the reality lies somewhere in the middle.

Many people dream of coming up with a great, novel idea which would change the world, or at least some segment of it, and make the dreamer rich. The problem is, the person who comes up with the great idea often doesn’t have the wherewithal to put it into practice. So he wants financing to make his dream a reality, or he wants to sell his brilliant idea to somebody who is in a position to develop it and use it to make money. But how is the dreamer to retain control of the idea or make sure that he shares in the benefits of exploiting it? There are pitfalls looming no matter what approach he takes.

The lease for the business premises is usually one of the more important, if not the most important, of the contracts entered into by a new business. If the tenant is a closely-held corporation or limited liability company, most landlords will require that a personal guaranty of the lease obligations by the shareholders or members be signed along with the lease. From the tenant’s principal’s point of view, this is an unwelcome requirement because it puts his personal assets at risk for satisfying the company’s obligations under the lease, including payment of rent. From the landlord’s point of view, it increases the likelihood that the rent will be paid, gives the landlord recourse if the lease is violated (beyond the resources of a thinly-capitalized or financially troubled venture), and strengthens the landlord’s hand in any negotiations concerning a buy-out or modification of the lease down the road.