In New Jersey, sale of a enterprise is ruled by the contract negotiated by the events. However what if the contract is unclear, or the events don’t agree on what the phrases of an oral contract are? Within the case of Lee v. Lee, involving the sale of a restaurant and liquor license in Bergen County, the Appellate Division examined a number of bedrock rules of New Jersey business law, together with oral contracts, the obligation of fine religion and honest dealing, and the way events are required to take care of one another. The opinion gives good steering for the conduct of the events in the sale of a business in New Jersey.
Mikyung Lee and Seoung Ju Bang orally agreed with Jung Lee to promote them a restaurant he owned in Fort Lee, along with its liquor license. The acquisition worth was $892,000, with a $50,000 preliminary deposit, after which one other $50,000 when the contract was signed, with the rest to be paid over time. The consumers paid the primary deposit, however earlier than a contact was signed, Jung Lee mentioned he wanted the second $50,000 deposit. Believing him to be performing in good religion, they gave him the second deposit. He promised to ship a written contract with the phrases they agreed on, which included having Lee’s firm, Plan J. Inc., part of the switch as a result of it held the liquor license.
Nevertheless, the contract he despatched didn’t comprise all the needed phrases, so the consumers started working the enterprise and making month-to-month funds of $5500 towards the steadiness and not using a written contract. Nevertheless, regardless of sending over many proposals, Jung Lee by no means despatched a contract with the phrases that had been agreed to. Lastly all of them met with their attorneys. Jung Lee needed to go away, however mentioned he would signal what he agreed to later, which might be drafted by his and the customer’s attorneys. Nevertheless, the very subsequent day Jung Lee fired his lawyer and refused to finish the transaction. Patrons mentioned that if he didn’t present a suitable contract inside a number of weeks they’d terminate the transaction and stroll away from the restaurant. Nothing additional occurred, and the consumers returned the keys and sued Jung Lee and Plan J. Inc. within the Legislation Division of the Superior Court of New Jersey in Bergen County.
The Lawsuit, Enchantment and the Appellate Division’s Choice
The Legislation Division decide held a two day bench trial and not using a jury and dominated in Mikung Lee’s and Seoung Ju Bang’s favor. He awarded them $116,500 in damages: $100,000 for the 2 deposits paid, and $16,500 for the three month-to-month funds that they had made whereas working the enterprise. Jung Lee and Plan J. Inc. appealed to the Appellate Division of the Superior Court docket. The Superior Court docket rejected Jung Lee’s arguments and affirmed the trial decide’s choice.
The sellers argued that as a result of the test had been paid by a 3rd occasion on the customer’s behalf they may not sue. The Appellate Division rejected this out of hand – on a sensible and equitable foundation, this argument would enable Jung Lee to obtain a windfall by protecting cash he didn’t earn whereas failing to provide both the consumers or the payor a return of their cash or what they bargained for. He additionally argued that the contact was unlawful as a result of it required the usage of his liquor license. The Court docket mentioned it didn’t must determine whether or not this association was authorized or not as a result of since Jung Lee participated on this operation, he necessitated it by his delay, and he received the cash, there was no “principled motive” why he needs to be allowed to maintain the customer’s funds and provides them nothing in return. In brief, the court docket rejected Jung Lee’s arguments. It discovered that he breached the oral settlement and ordered him to return the cash.
Though it was a brief opinion, it reminds us of some bedrock rules of New Jersey enterprise legal guidelines.
- Oral contracts are enforceable. Generally they’re troublesome to show, however the place they are often confirmed they are going to be enforced.
- Events to written and oral contracts must function in good religion so that every aspect will get what they bargained for.
- The previous chancery maxim nonetheless holds true in New Jersey enterprise regulation: “He who seeks equity should come earlier than the court docket with clear palms.” Which means that if a celebration argues it ought to win as a result of the opposite aspect acted improperly, it higher have acted correctly itself.
- Doc all the pieces.
- All the time ge the contract in writing earlier than paying the cash!
Our New Jersey enterprise lawyers characterize folks and companies in all features of New Jersey enterprise regulation, together with litigation; arbitration; mediation; negotiations; gross sales of companies and liquor licenses; and contract negotiation drafting and review. Name us at (973) 890-0004 or fill out the contact kind on this web page to schedule an appointment with one in all our New Jersey enterprise attorneys. We may help.