Category Archives: cfa

Does the Consumer Fraud Act Apply to the Sale of an Ongoing Business?

In 539 Absecon Boulevard, LLC., v. Shan Enterprises Ltd P’ship, 406 N.J. Super. 242 (App. Div. 2009), the Appellate Division of the Superior Court of New Jersey was presented with the question of whether the New Jersey Consumer Fraud Act applies to the sale of an ongoing business.

In that case “the defendants . . . owned a variety of commercial properties which they apparently bought and sold for investment purposes.”  Id. There were allegations of fraud and other causes of action relating to the sale by the defendants of an ongoing motel business and the real estate upon which it was situated.

The Appellate Division determined that the Consumer Fraud Act did not apply to the transaction.  The allegations of wrongful conduct pertained solely to the sale of the motel as a business, not with respect to the property on which it was located.  The court gave a number of reasons, the most notable of which was that the “false assurances did not relate to any good, service, or commodity offered to the public for sale.” Id

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