News & Noteworthy

Authored - NJ Contract Law Update - Oppression Concept Implicitly Incorporated Into Certain Business-Formation Contracts
OCTOBER 08, 2013

An Operating Agreement or Shareholders Agreement (or even an oral understanding) to form a business is a contract of sorts. However, as noted in previous Articles in this series, specialized areas of practice such as corporate formation and shareholder/member rights should be addressed (and issues resolved) by consulting with practitioners experienced in those fields. This can help provide some predictability as to precisely what the Agreement will be held to mean, when the Court resorts not just to the wording of the agreement but also statutory mandates and well-established case-law on issues such as "corporate oppression".

In Tutunikov v. Markov, __ N.J.Super. ___, 2013 WL 3940889 (App.Div. August 1, 2013), the Court explained that such concept of oppression definitely applies to corporations; not so (the Court held) as to entities under the prior Limited Liability Company Act; but "oppression" concepts (at least to some degree) are now present in the new Limited Liability Company Act (the "RLLCA" or "RULLCA"--the Court uses both abbreviations).

Contact & Legal Disclaimer

Clark Alpert is the author of Guide to New Jersey Contract Law, published by the New Jersey Institute for Continuing Legal Education, originally published in 2007 and updated in November 2011. His updates on New Jersey contract law are based in recent issues and practical methods for addressing similar situations in your practice or business. They are not intended to serve as legal advice. Clark welcomes your questions and comments.

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