Author Archives: Gary Nissenbaum

If One Sells a Sole Proprietorship, What is Being Sold?

If one sells a corporation, the shares of stock are what is being sold. If one sells a limited liability company, the membership interest is what is being sold. However, when one sells a sole proprietorship – a business which is not an entity– what exactly is being sold?

Generally speaking, the answer is that the assets are what is being sold. Some of these assets are easy to spot. For example, if the business has inventory; if it has vehicles or real estate, those can be the principal asset being transferred. Other times, especially in regard to a personal services sole proprietorship business (such as a doctor or lawyer’s practice), what is being sold is general intangibles. This can be everything from a copyright or a trademark to a right to collect money. These general intangibles are essentially the beginning and end of the value that of personal services sole proprietorships.

One of the more interesting dillemas is how to set a value on such general intangibles. Normally, this will be the central issue in determining the price for a sole proprietorship that does not have tangible assets.

© 2014 Nissenbaum Law Group, LLC

Improving Privacy Protections on the Internet

Congress is currently poised to create a number of restrictions on the ability of the government to search email and other digital content. While it is unclear what form such legislation would take, there is a bipartisan consensus that something needs to be done for two reasons: (a) United States citizens need to have more definable privacy protections in their electronic communications and (b) American companies are finding it difficult to compete globally because foreign companies are reluctant to buy American software and other applications that may provide a means for the government to spy on them.

Much of this debate was spurred by a 2010 case brought down by the Sixth Circuit Court of Appeals. That case U.S. v. Warshak, 631 F.3d 266 (6th Cir. 2010). That case dealt with the issue of whether the government’s review of private email could constitute an unconstitutional search and seizure. The Sixth Circuit found that it did. As the court wrote,

Warshak argues that the government’s warrantless, ex parte seizure of approximately 27,000 of his private emails constituted a violation of the Fourth Amendment’s prohibition on unreasonable searches and seizures.12 The government counters that, even if government agents violated the Fourth Amendment in obtaining the emails, they relied in good faith on the Stored Communications Act (“SCA”), 18 U.S.C. §§ 2701 et seq., a statute that allows the government to obtain certain electronic communications without procuring a warrant. The government also argues that any hypothetical Fourth Amendment violation was harmless. We find that the government did violate Warshak’s Fourth Amendment rights by compelling his Internet Service Provider (“ISP”) to turn over the contents of his emails. However, we agree that agents relied on the SCA in good faith, and therefore hold that reversal is unwarranted.

This case is notable because after it was decided, a number of internet service providers began to require search warrants for email.  It is entirely possible that the standard for obtaining emails may be further refined once the current legislation reaches the president’s desk.

© 2014 Nissenbaum Law Group, LLC

If the Seller of a Business Does Not Comply with Legal Requirements for the Sale, May that Seller Use That Fact to its Advantage by Voiding the Sale Altogether?

May a Seller seek to void a contract for sale of his business by taking the position that the sale contract was violated and therefore unenforceable, when the seller itself is the one that did not comply? That issue was raised in Meadowbrook Industries, LLC v. Walker Management Systems, Superior Court of New Jersey, Appellate Division, Docket No. A-3568-11T4 (March 5, 2013).

In that case, the seller violated a contract for sale of a waste disposal business by failing to obtain the approval of the New Jersey Department of Environmental Protection before entering the agreement. NJSA 48:3-7(c).  As it turned out, the seller was the one who wanted to scuttle the deal.  It tried to argue that because the requirement had not been complied with, the contract was unenforceable.

The Appellate Division of the Superior Court of New Jersey rejected that argument.  It held that the seller’s legal theory was barred by the doctrine of unclean hands. What this meant was that the party asserting the breach could not have caused that breach. The law protects those who did not cause their own harm.

© 2014 Nissenbaum Law Group, LLC