4.45 MOTOR VEHICLE LEMON LAW

The purpose of the so-called New Jersey “Lemon Law” is to protect buyers or lessees when they buy or lease a motor vehicle and the manufacturer cannot correct defects in the vehicle.
The lemon law does not apply to every defect in an automobile. It is not a guarantee against every defect. It applies to a defect that substantially impairs the use, value or safety of a vehicle.
To establish his/her claim under the Lemon Law, the plaintiff must prove by a preponderance of the credible evidence each of the following five elements of the claim. The elements are:
1. The plaintiff purchased/leased a vehicle manufactured by the defendant, [insert the defendant’s name];
2. The vehicle had nonconformity or nonconformities that is/are, a defect or defects that substantially impaired the use, value or safety of the vehicle.
To substantially impair, the defect or condition must impair the use, value or safety in an important, essential or significant way. When I use the term “substantial,” I do not mean a defect, impairment or condition that is minor,
trivial or unimportant.
In determining whether a defect or condition substantially impairs the use or value of the vehicle, you can consider whether the defects or conditions have shaken the plaintiff’s confidence in the vehicle. If the defect has shaken the plaintiff’s confidence in the vehicle, this loss of confidence may be the basis for you to find that the defect has impaired the vehicle’s use or value. You must consider this from both a subjective and objective point of view.
From a subjective standpoint, the defects must be examined from the point of view of this particular plaintiff. From an objective standpoint, the defects that allegedly have shaken the plaintiff’s confidence must be consistent with what a reasonable person in the plaintiff’s position would have believed under the same or similar circumstances.
For example, in deciding whether a specific defect or condition substantially impairs the use or value of a vehicle, you may consider whether the specific defect or condition complained of, in fact caused the plaintiff to lose confidence in this vehicle. Even if you find that the plaintiff’s confidence in the vehicle was shaken, you must also consider whether or not the specific defect or condition, if any, was such that a reasonable person would have lost confidence in the vehicle.

Judge’s Note
If the manufacturer raises either or both of the affirmative defenses set forth below, the following language would be appropriate. N.J.S.A. 56:12-40.

The manufacturer, in this case, has raised as a defense to the plaintiff’s claim that the alleged nonconformity does not substantially impair the use, value or safety of the vehicle and/or that the nonconformity is the result of abuse, neglect or unauthorized modifications or alterations of the vehicle by someone other than the manufacturer or its dealer. If you find the manufacturer has proven, by a preponderance of the evidence, that the alleged nonconformity does not substantially impair the use, value or safety of the vehicle and/or that the nonconformity is the result of abuse, neglect or unauthorized modifications or alterations of the vehicle by someone other than the manufacturer or its dealer, then you must find that there is no nonconformity within the meaning of the “Lemon Law.”
Judge’s Note - Charge Continues
3. The non-conformity occurred during the first 18,000 miles of use, or within two years after the date of original delivery to plaintiff, whichever is earlier.

4. The plaintiff reported the non-conformity to the manufacturer or its dealer during the first 18,000 miles of use, or during the period of two years following the date of original delivery to the plaintiff, whichever is earlier.
5. [insert the defendant’s name], through its authorized dealers, did not repair the non-conformity or non-conformities within a reasonable time.
Judge’s Note
The following language should be charged in those cases where it is alleged the conditions for the presumption have been met. Note, the two year term and two year period specified shall be extended by any period of time during which repair services were not available to the consumer because of war, invasion or strike, or a fire, flood, or other natural disaster. N.J.S.A. 56:12-33.

It is presumed that a manufacturer or its dealer is unable to repair or correct a non-conformity within a reasonable time if, within the first 18,000 miles of operation, or during the period of 2 years following the date of original delivery of the motor vehicle to a consumer, whichever is the earlier date:
(a) substantially the same non-conformity has been subject to repair three or more times by the manufacturer, or its dealer, and the nonconformity continued to exist; or
(b) the motor vehicle was out of service by reason of repair for one or more nonconformities for a cumulative total of 20 or more calendar days.
(c) since the original delivery of the motor vehicle and nonconformity continues to exist.
This presumption, however, shall only apply against the manufacturer, if the manufacturer has received written notification, by or on behalf of the plaintiff, by certified mail, return receipt requested, of a potential claim pursuant to this law and has had one opportunity to repair or correct the defect or condition within 10 calendar days following receipt of the notification. The notification by the plaintiff shall take place any time after the motor vehicle has had substantially the same nonconformity subject to repair two or more times or has been out of service by reason of repair for a cumulative total of 20 or more calendar days.

Judge’s Note - Charge Continues
If you find by a preponderance of the evidence that the plaintiff has proven all five elements, then you must find for the plaintiff on the Lemon Law claim.
But, if you find that the plaintiff has failed to establish all five elements, then you will find for the defendant.
Judge’s Note
In the event that there are factual disputes as to any of the damage elements of a “Lemon Law” claim, the court should provide damage instructions. See, N.J.S.A. 56:12-32 and 56:12-42.



In the event the parties have stipulated the amount of damages, the language set forth below would outline for the jury the ultimate outcome. DiVigenze v. Chrysler Corp., 345 N.J. Super. 314 (App. Div. 2001).

If then a plaintiff reports a nonconformity in a motor vehicle to the manufacturer or its dealer during the first 18,000 miles of operation, or during the period of two years following the date of the original delivery of the motor vehicle to the plaintiff, whichever is earlier, the manufacturer is required to make, arrangements with its dealer to make, within a reasonable period of time, all repairs necessary to correct the nonconformity.
If the manufacturer is unable to correct nonconformity within a reasonable time, the manufacturer shall accept return of the motor vehicle from the plaintiff. The manufacturer shall also provide the plaintiff with a full refund of the purchase/lease price and any other charges, fees and costs, less a reasonable allowance for the use of the motor vehicle, which shall be calculated by the court.[1]
LEMON LAW MODEL JURY VERDICT SHEET
1. Did the plaintiff prove that he/she purchased/leased a vehicle manufactured by the defendant?

YES _____________ VOTE _____________
NO _____________ VOTE _____________

If your answer is “yes”, proceed to question 2.
If your answer is “no”, stop your deliberations and return your verdict.

2. Did the plaintiff prove that the vehicle had nonconformity or nonconformities, which substantially impaired the use, value or safety of the vehicle?

YES _____________ VOTE _____________
NO _____________ VOTE _____________

If your answer is “yes”, proceed to question 3.
If your answer is “no”, stop your deliberations and return your verdict.

3. Did the plaintiff prove the non-conformity occurred during the first 18,000 miles of use or within 2 years after the date of original delivery to plaintiff, whichever is earlier?

YES ____________ VOTE _____________NO ____________ VOTE _____________

If your answer is “yes”, proceed to question 4.
If your answer is “no”, stop your deliberations and return your verdict.

4. Did the plaintiff prove he/she reported the non-conformity to the manufacturer or its dealer during the first 18,000 miles of use or during the period of 2 years following the date of original delivery to the plaintiff, whichever is earlier?

YES ___________ VOTE ______________
NO ___________ VOTE ______________

If your answer is “yes”, proceed to question 5.
If your answer is “no”, stop your deliberations and return your verdict.

5. Did the plaintiff prove that the manufacturer, through its authorized dealers, did not repair the non-conformity or non-conformities within a reasonable time?

YES ______________ VOTE ______________
NO ______________ VOTE ______________

[Insert specific damage question, if appropriate.]
See, N.J.S.A. 56:12-32 and N.J.S.A. 56:12-42.
[1] In the event there are claims for breach of expressed warranty on the sale of goods, or breach of implied warranty of fitness for a particular purpose. See, Model Jury Charges No. 4.21 and 4.22, respectively.

4.44 DEFICIENCY - SALE OF COLLATERAL AS COMMERCIALLY REASONABLE

There are times when a person may borrow money to be able to buy (or lease) something, such as a motor vehicle. In turn, the person borrowing the money may be required to give a security interest in the item purchased, as collateral to guaranty the debt to the lender. If the money owed is not repaid to the lender as agreed, the lender may have the right to take possession of the item and sell it as may be commercially reasonable. If the money obtained from the sale is not enough to pay off the debt, the lender may sue the borrower for the amount still owed. The plaintiff says that is what happened in this case. The defendant, however, denies that the sale of the (item) was done in a commercially reasonable manner. When there is a dispute as to whether the sale of the secured collateral, in this case, the (item), took place in a commercially reasonable manner, the plaintiffSee footnote 2--the creditor--has the burden of proving by the greater weight of the believable evidence that the method, manner, time, place and terms of the sale were commercially reasonable.See footnote 3 What do I mean when I say that you must measure plaintiff's conduct in selling
the (item) against the standard of commercial reasonableness? Commercially reasonable would be a sale in the usual manner in any recognized market,See footnote 4 or a sale in conformity with reasonable commercial practices among dealers in the type of property sold.See footnote 5 If there is no recognizable public market for the item, but the plaintiff is aware of a particular buyer with a need for the item, a private sale might be commercially reasonable. However, ordinarily, the preferred method is a public sale. That would be a sale by auctionSee footnote 6 where the public, particularly including the knowledgeable trade public, is invited by earlier advertisement to appear and bid for the item to be sold. The item should be available for inspection by bidders before the sale. The notice of sale (1) . . .must be published sufficiently in advance of the sale to allow [potential] interested bidders an opportunity to participate. (2) it must be aimed at the market reasonably expected to have an interest in purchasing collateral; (3) it must set out the exact time and place of the saleSee footnote 7; (4) it must sufficiently describe the collateral to be sold so as to allow potential bidders the opportunity to
make an informed decision; and (5) it must be published in such a manner as to assure the best possible price."See footnote 8 Reasonable notice must also have been given to the defendant of the time and place of the proposed sale.See footnote 9* "Factors to be considered include the probable value of the security as determined by a reputable appraisal or reliable indicia of value consistent with the nature of the collateral; the cost of notice; the specialty or general nature of the market for the kinds of goods constituting the security; and the place of notice/place of sale."See footnote 10 The item must be offered and sold for cash to the highest responsible bidder, and bidders must know of the other bids and be permitted to raise their bids.See footnote 11 The place of the sale must be accessible to the general public. The fact that a better price could have been obtained by a sale at a different time or in a different method than that selected by the plaintiff is not of itself sufficient to establish that the sale was not made in a commercially reasonable
manner.See footnote 12 However, the plaintiff has "the obligation to make a good faith effort to obtain the highest possible price for the item."See footnote 13 A substantial difference between the price received and the (item's) fair market value is relevant in deciding whether the sale was commercially reasonable.See footnote 14 In determining the fair market value, it is the price at which the property would change hands between a willing buyer and a willing seller when the former is not under any compulsion to sell, both parties having reasonable knowledge of the relevant facts.See footnote 15 If the secured party either sells the collateral in the usual manner in any recognized market or if he/she sells at the price current in such market at the time of his/her sale or if he/she has otherwise sold in conformity with reasonable commercial practices among dealers in the type of property sold, he/she has sold in a commercially reasonable manner.See footnote 16 The number of bidders at the sale may also be meaningful. Judge the conduct in selling the (item) by considering how well plaintiff has succeeded in realizing the maximum resale price without creating a great expense for that sale in keeping with prevailing trade practices among reputable and reasonable
businesses engaged in the same or similar enterprises.See footnote 17 Decide whether plaintiff has shown by the greater weight of the evidence that it sold the (item) in a commercially reasonable manner. In calculating the amount due the plaintiff, the expenses of reparation and sale could be added to the indebtedness before crediting the fair market value of the security if there had been an appropriate sale.See footnote 18 The plaintiff has "the burden of showing that a commercially reasonable sale of the collateral would have yielded less than the balance due."See footnote 19 If you find that the sale was not conducted in a commercially reasonable manner, the next issue is whether the plaintiff is entitled to a deficiency. If plaintiff has not established that the sale was commercially reasonable, there is "a presumption that the value of the collateral is equal to the amount of debt. Unless this presumption is rebutted, no debt remains."See footnote 20 To "overcome the presumption that the value of the collateral at least equaled the debt it secured, . . . plaintiff may introduce independent proof of the fair and reasonable value of the collateral (plus or minus any payments or charges incurred in disposing of the collateral) and comparing it with the price achieved at the actual
sale."See footnote 21 The defendant may also present evidence as to the proof of value.See footnote 22 If you find that plaintiff has not rebutted the presumption that the fair and reasonable value of the collateral was equal to the amount of the debt, you must find in favor of the defendant. If, on the other hand, plaintiff has satisfied its burden of showing that the fair and reasonable value of the collateral was less than the amount of the debt, you must find in plaintiff's favor for the deficiency owed by the defendant. However, defendant may be entitled to damages for "the difference between the amount actually recovered and the amount that should have been recovered had there been a commercially reasonable sale."See footnote 23 Thus, the deficiency found to be due and owing to plaintiff may be offset by defendant's damages.
Footnote: 1 This charge does not address the notice requirement under N.J.S.A. 12A:9-504(3).
Footnote: 2 T & W Ice Cream, Inc. v. Carriage Barn, Inc., 107 N.J. Super. 328 (Law Div. 1969); and Franklin St. Bank v. Parker, 136 N.J. Super. 476 (Cty. Dist. Ct. 1975). See also White and Sumers, Uniform Commercial Code (2 ed.), Sec. 26-11.
Footnote: 3 N.J.S.A. 12A:9-504(3); Block v. Diana, 252 N.J. Super. 650, 657 (App. Div. 1992).
Footnote: 4 Some cases have held that there is no recognized market for used automobiles. Norton v. Natl. Bank of Commerce, 398 S.W. 2d 538 (Ark. 1966); Commun. Mgmt. Assn. v. Tousely, 505 P.2d 1314 (Co. 1973); Turk v. St. Petersburg Bank and T. Co., 281 So. 2d 534 (Fla. 1973); Nelson v. Monarch Invest. Plan, 452 S.W. 2d 375 (Ky. 1970); Alliance Discount Corp. v. Shaw, 171 A. 2d 548 (Pa. 1961).
Footnote: 5 N.J.S.A. 12A:9-507(2).
Footnote: 6 U.C.C. Sec. 9-504, Comment 1 refers to Sec. 2-706 as a guide for de

4.43 MODEL CHARGE UNDER CONSUMER FRAUD ACT

Introductory Comments to Trial Judge:
Right To Trial By Jury
It may be asserted that there is no right to trial by jury for a cause of action arising under the Consumer Fraud Act, N.J.S.A. 56:8-1 et seq.
The Chancery Division determined that no right to a jury exists in an action brought by the Attorney General under the Act seeking both financial penalties and equitable relief. See Kugler v. Market Dev. Corp., 124 N.J. Super. 314, 319 (Ch. Div. 1973); Kugler v. Banner Pontiac-Buick Opel, Inc., 120 N.J. Super. 572, 581-582 (Ch. Div. 1972). Although Consumer Fraud Act claims have been presented to juries, see, e.g., Ramanadhan v. N.J. Mfrs. Ins. Co., 188 N.J. Super. 30 (App. Div. 1992) and Chattin v. Cape May Greene, Inc., 243 N.J. Super. 590 (App. Div. 1992), aff'd. o.b. 124 N.J. 520 (1991), neither the Appellate Division nor the Supreme Court has directly addressed whether there is a right to a jury trial. See Chattin, supra. 124 N.J. at 522 (Stein, J., concurring); Pierzga v. Ohio Casualty Group of Ins. Cos., 208 N.J. Super. 40, 47 n.1 (App. Div. 1986) (noting without addressing issue of whether there is a right to a jury trial under the Consumer Fraud Act), certif. denied, 104 N.J. 399 (1986).
It is unclear that such a right would be sustained. A private right of action under the Consumer Fraud Act was added by amendment in 1971. The legislature did not provide for jury trials. Justice Stein has suggested that a right to a jury trial would not exist.
The 1971 amendment of the Act, however, did not provide for jury trials, and no right to a jury trial has been recognized in suits brought under the Act by the Attorney General seeking equitable relief and financial penalties. See Kugler v. Market Dev. Corp., 124 N.J. Super 314, 319, 306 A. 2d 289 (Ch. Div. 1973); Kugler v. Banner Pontiac-Buick Opel, Inc., 120 N.J. Super. 572, 581-582, 295 A. 2d 385 (Ch. Div. 1972). Although this Court in Shaner v. Horizon Bank Corp., 116 N.J. 433, 561 A. 2d 118 (1989), rejected the right to jury trial in the context of a claim for discriminatory termination on the basis of age under the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1 to - 42, its holding could be read to suggest by analogy that a statutorily created cause of action under the Consumer Fraud Act does not carry with it the right to a jury trial. Id. at 454-55, 561 A. 2d 1130. In any event, that issue is not before us and I advert to it only to emphasize my perception that the issue remanded by the Appellate Division for retrial is not particularly well-suited for resolution by a jury.
[Chattin, supra, 124 N.J. at 522 (Stein, J., concurring)]
In sum, the Committee expresses no opinion regarding whether there exists a right to jury trial for a Consumer Fraud Act claim.
Format Of The Model Charge
There are three possible bases for responsibility under the Act. Two of those exist under the language of N.J.S.A. 56:8-2, while the third comes about from either specific-situation statutes (such as prize notification under N.J.S.A. 56:8-2.3 or food misrepresentation under N.J.S.A. 56:8-2.9 through 2.13) or regulations enacted under N.J.S.A. 56:8-4. Those regulations are contained in N.J.A.C. 13:45A-1.1 et. seq. Attached to the last page of this model charge is a listing of the topics covered by the administrative regulations.
This model charge is set up by the use of three alternatives. The first relates to that part of N.J.S.A. 56:8-2 which declares that "any unconscionable commercial practice, deception, fraud, false pretense, false promise [or] misrepresentation" is an unlawful practice. The second alternative goes to a "knowing concealment, suppression or omission of any material fact" under the same statute. The third alternative uses the specific-situation statutes and the administrative regulations.
[The introductory paragraphs which follow are applicable to all three alternatives.]
A. Introductory Paragraphs to Jury
Many of us have heard the Latin phrase caveat emptor, which means "let the buyer beware." While it may state how the law was, it is not true of how the law is today. We have abandoned that old rule in favor of a more ethical attitude or approach in our dealings with one another. It is now the law that a person has the right to rely on representations made by another when dealing with that other person. New Jersey's Consumer Fraud Act sets forth provisions defining this law.
There are three possible bases for responsibility under the Consumer Fraud Act. The Act itself declares two general categories of conduct as unlawful. The first relates to that part of the Act which states that "any unconscionable commercial practice, deception, fraud, false pretense, false promise or misrepresentation" is an unlawful practice. These are considered affirmative acts. The second general category of unlawful conduct is referred to as acts of omission. Such conduct involves the "knowing concealment, suppression or omission of any material fact". The third basis for responsibility under the Act is found in either specific-situation statutes or administrative regulations enacted to interpret the Act itself. Such statutes and regulations define specific conduct that is prohibited by law.
[Insert Definitions As Applicable]:
An "affirmative act" is something done voluntarily by a person. It includes not merely physical acts, but also any steps taken voluntarily by a person to advance a plan or design, or to accomplish a purpose.
An "omission" is the act of neglecting to perform what the law requires. Liability must be imposed for such inaction, depending upon the existence of a duty to act under the circumstances.
[Return to Charge]:
The plaintiff(s) here claim(s) that defendant(s) committed what is commonly known as a consumer fraud when defendant(s) (insert description of conduct). The Consumer Fraud Act says that anyone who (insert relevant parts of N.J.S.A. 56:8-2 or other specific statute or regulation) is chargeable with a consumer fraud.(1)
B. First Alternative
Specifically, the defendant(s) allegedly used by means of an affirmative act, an (unconscionable commercial practice/deception/fraud/false pretense/false prom ise/misrepresentation) in connection with (the sale/advertisement of any merchan dise/real estate) (how defendant(s) would act or perform after an agreement to buy was made/plaintiff(s) responded to or answered the advertisement).
[Insert Definitions As Applicable]:
An "unconscionable commercial practice" is an activity in the public marketplace which is basically unfair or unjust, which materially departs from standards of good faith, honesty in fact and fair dealing.(2) To be unconscionable, there should be factual dishonesty and a lack of fair dealing.
"Deception" is conduct/advertisement misleading to an average consumer to the extent that it is capable of, and likely to, mislead an average consumer. It does not matter that at a later time it could have been explained to a more knowledgeable and inquisitive consumer, nor need the conduct/advertisement actually have misled the plaintiff(s). The fact that the defendant(s) may have acted in good faith is unimportant. It is the capacity to mislead that is important.
"Fraud"(3) is a perversion of the truth, a misstatement or a falsehood communicated to another person creating the possibility that that other person will be cheated.
"False pretense" is an untruth knowingly expressed by a wrongdoer.
"False promise" is an untrue commitment or pledge (which is communicated to another person) to create the possibility that that other person will be misled.
A "misrepresentation" is an untrue statement which is made about a fact which is important or significant to the sale/advertisement, and is communicated to another person to create the possibility that other person will be misled. A "misrepresenta tion" is a statement made to deceive or mislead.
The term "person" includes not only a human being or his/her legal representa tive but also a partnership, corporation, company, trust, business entity, association as well as his/her agent, employee, salesperson, partner, officer, director, member, stockholder, associate, trustee or beneficiary of a trust.
The term "sale" includes transfer of ownership; rental; distribution; offer to sell, rent, or distribute; and attempt to sell, rent or distribute, either directly or indirectly.
An "advertisement" is a notice designed to attract public attention. Modes of communication include the attempt, directly or indirectly, by publication, dissemina tion, solicitation, indorsement, circulation or in any way to induce any person to enter or not enter into an obligation, acquire any title or interest in any merchandise, increase the consumption of any merchandise or make any loan.
The term "merchandise" includes any objects, wares, goods, commodities, services or anything offered directly or indirectly to the public for sale.
"Real estate" is land and, if there is a building on it, that building as well.
[Return to Charge]:
It is not necessary that a person has in fact been misled or deceived by another's conduct, nor is it necessary for the plaintiff to show that the defendant intended that his/her conduct should deceive. What is important is that the affirmative act must have had the potential to mislead or deceive when it was performed. The capacity to mislead is the prime ingredient of the affirmative consumer fraud alleged [state the specific unlawful practice if desired]. Intent is not an essential element. Consumer fraud consisting of affirmative acts does not require a showing of intent.
In making your decision, you should know that the price charged is only one factor in your consideration. For example, if you find that the price is grossly excessive in relation to the seller's costs and, as well, the goods sold have little or no value to the consumer(s) for the purpose for which he/she was persuaded to buy it/them and which it appeared they would serve, the price paid by plaintiff(s) becomes one fact which is relevant in weighing the wrong which the statute seeks to prevent and which it prohibits.
In accordance with the definitions that I have just given you, you must decide whether plaintiff(s) has/have shown or proven to you that defendant(s) used (an unconscionable commercial practice or other applicable characterizing noun) in connection with (sale or how defendant(s) would act) when (summarize acts alleged). If plaintiff(s) has/have shown that those acts took place and that they were [an unconscionable commercial practice or other applicable characterizing noun], then you are next going to have to decide whether that conduct brought about damage to plaintiff(s) and, if so, how much.
[Insert Definition of Proximate Cause and Applicable Instructions on Damages.(4) (See General Statements on Damages at End of Charge.)]
C. Second Alternative
The plaintiff(s) allege(s)/further allege(s) that the defendant(s) knowingly concealed, hid/suppressed, kept something from being known/omitted, or left out or did not mention an important or significant fact purposely or with the intent that others would rely on that concealment/suppression/omission in connection with (the sale/advertisement of any merchandise/real estate) (how defendant(s) would act or perform after an agreement to buy was made/plaintiff(s) responded to or answered the advertisement).
[Insert Applicable Definitions From Below and From First Alternate as Applicable]
A person acts "knowingly" if he/she is aware that his/her conduct is of a nature that it is practically certain that his/her conduct will cause a particular result. He/She acts with knowledge, consciously, intelligently, willfully or intentionally.
To "conceal" is to hide, secrete or withhold something from the knowledge of others or to hide from observation, cover or keep from sight or prevent discovery of. A "concealment" is a withholding of something which one is bound or has a duty to reveal so that the one entitled to be informed will remain in ignorance.
To "suppress" is to put a stop to a thing actually existing, to prohibit or put down, or to prevent, subdue, or end by force. "Suppression" is the conscious effort to control or conceal unacceptable impulses, thought, feelings or acts.
A person acts "purposely" if it is his/her conscious object to engage in conduct that of a certain nature or cause a particular result and he/she is aware of hopes or believes that the attendant circumstances exist.
"Intent" is a design, resolve, or determination with which a person acts. It refers only to the state of mind existing when an act is done or omitted.
[Return to Charge]:
It is not necessary that any person has in fact been misled or deceived by another's conduct.(5) What is important is that the defendant(s) must have meant to mislead or deceive when he/she acted.
The fact that the defendant(s) acted knowingly is an essential element of consumer fraud acts of omission. Knowledge and intent must be shown. Where the alleged consumer fraud can be viewed as either an omission or an affirmative act, the defendant(s) can be held liable for the conduct as an omission only where the defen dant(s) has/have committed a kind of consumer fraud, just defined, that constitutes an omission and intent is shown.
In accordance with the definitions that I have just given you, you must decide whether plaintiff(s) has/have shown or proven to you that defendant(s) knowingly (concealed/suppressed/omitted) an important and significant fact with the intent that others would rely on the facts as communicated to him/her without having the opportunity to also consider the other facts which were (concealed/sup pressed/omitted) an important and significant fact intending that others rely on the facts as communicated to him/her without having the opportunity to also consider the other facts which were (concealed/suppressed/omitted) in connection with (the sale or how defendant(s) would act) when (summarize acts alleged). If plaintiff(s) has/have shown that those acts took place and, if so, that those acts were a knowing concealment/suppression/omission of an important fact intended to be relied on by others, then you are next going to have to decide whether that conduct brought about damage to plaintiff(s) and, if so, how much.
[Insert Definition of Proximate Cause and Applicable Instructions on Damages.(6) (See General Statements on Damages at End of Charge.)]
D. Separate Defense Applicable to Owners/Publishers/Operators of Instrumentality by Which an Advertisement Is Conveyed
There is one additional factor for you to consider. Defendant(s) say(s) that as the (owner/publisher of the newspaper/magazine/publication/printed matter in which the advertisement appeared) [or] (owner/operator of the radio/television station on which the advertisement appeared), he/she is had no knowledge of the intent, design or purpose of the advertiser. He/She is correct as long as he/she in fact had no knowl edge of the advertiser's intent, design or purpose. This is something the defendant(s) has/have to prove. He/She must prove that what the advertiser meant to do was unknown to him/her. If you find that defendant(s) has/have shown by the greater weight of the evidence that he/she was unaware of what the advertiser meant to do through the advertisement, then the owner/publisher/operator cannot be held to be responsible or liable under the statute.
E. Third Alternative
[Recite Elements of Particular Statute or Regulation as Well as any Applicable Definitions.(7)]
In accordance with the definitions that I have just given you, you must decide whether plaintiff(s) has/have shown or proven to you that defendant(s) [insert conduct]. If plaintiff(s) has/have shown that those acts took place and therefore violated the statute/regulations, then you are next going to have to decide whether that conduct brought about damage to plaintiff(s) and, if so, how much.
[Insert Definition of Proximate Cause and Applicable Instructions on Damages.(8) (See General Statements on Damages Which Follow.)]
[NOTE TO THE COURT: The above three alternate forms of jury instruction incorporate the elements of a claim under the Consumer Fraud Act as clarified by the Appellate Division decision in Chattin v. Cape May Greene, Inc. and Capital Products Corp., 243 N.J. Super. 590 (App. Div. 1990).
But note, "intent" may not be an element of omission violations, in the case of Third Alternative regulatory matters. See, e.g., Fenwick v. Kay American Jeep, 72 N.J. 372 (1977), where the omission, from a vehicle advertisement, of the odometer reading was held violative of the regulation even absent proof of intent.]
F. General Statements on Damages (revised 1/01)
Plaintiff(s) claim that he/she lost money/property as a result of defendant's conduct. If you decide from all of the evidence in this case that defendant has violated the statute, that means that defendant has committed an unlawful practice. And what that means is that plaintiff is allowed to get an award of money for his/her loss that was proximately caused by defendant.
If you find that the Consumer Fraud Act was violated and you award damages, you should understand that the law requires me to triple whatever amount of damages you award. This is because the Consumer Fraud Act is punitive in nature and the tripling of your award is meant to punish the defendant.
In addition, should you award damages to plaintiff, the law also requires me to compel the defendant to pay whatever reasonable attorney fees plaintiff incurred in bringing this case. I will determine at a later time what the reasonable amount of attorney fees should be for this case.(9)
ADMINISTRATIVE RULES OF THE
DIVISION OF CONSUMER AFFAIRS
N.J.A.C. 13:45A-1 et seq.
SUBCHAPTER 1 -DECEPTIVE MAIL ORDER PRACTICES
SUBCHAPTER 2 -MOTOR VEHICLE ADVERTISING PRACTICES
SUBCHAPTER 3 -SALE OF MEAT AT RETAIL
SUBCHAPTER 4 -BANNED HAZARDOUS PRODUCTS
SUBCHAPTER 5 -DELIVERY OF HOUSEHOLD FURNITURE & FUR NISHINGS
SUBCHAPTER 6 -DECEPTIVE PRACTICES CONCERNING AUTOMO TIVE SALES PRACTICES
SUBCHAPTER 7 -DECEPTIVE PRACTICES CONCERNING AUTOMO TIVE REPAIRS AND ADVERTISING
SUBCHAPTER 8 -TIRE DISTRIBUTORS AND DEALERS
SUBCHAPTER 9 -MERCHANDISE ADVERTISING
SUBCHAPTER 10 -SERVICING & REPAIRING OF HOME APPLIANCES
SUBCHAPTER 11 -(RESERVED)
SUBCHAPTER 12 -SALE OF ANIMALS
SUBCHAPTER 13 -POWERS TO BE EXERCISED BY COUNTY AND MUNICIPAL OFFICERS OF CONSUMER AFFAIRS
SUBCHAPTER 14 -UNIT PRICING OF CONSUMER COMMODITIES IN RETAIL ESTABLISHMENTS
SUBCHAPTER 15 -DISCLOSURE OF REFUND POLICY IN RETAIL ES TABLISHMENT
SUBCHAPTER 16 -HOME IMPROVEMENT PRACTICES
SUBCHAPTER 17 -SALE OF ADVERTISING IN JOURNALS RELATING OR PURPORTING TO RELATE TO POLICE, FIRE FIGHTING OR CHARITABLE ORGANIZATIONS
SUBCHAPTER 18 -PLAIN LANGUAGE REVIEW
SUBCHAPTER 19 -(RESERVED)
SUBCHAPTER 20 -RESALE OF TICKETS OF ADMISSION TO PLACES OF ENTERTAINMENT
SUBCHAPTER 21 -REPRESENTATIONS CONCERNING AND REQUIRE MENTS FOR THE SALE OF KOSHER FOOD
SUBCHAPTER 22 -INSPECTIONS OF KOSHER MEAT DEALERS AND KOSHER POULTRY DEALERS; RECORDS RE QUIRED TO BE MAINTAINED BY KOSHER MEAT DEALERS AND KOSHER POULTRY DEALERS
SUBCHAPTER 23 -DECEPTIVE PRACTICES CONCERNING WATER CRAFT REPAIR
LISTING OF SPECIFIC SITUATION
STATUTES UNDER THE CONSUMER FRAUD ACT
(ALTERNATIVE THREE)
56:8-2.1 Operation simulating governmental agency
56:8-2.2 Scheme not to sell as advertised
56:8-2.3 Notification of prize winner
56:8-2.4 Picturing assembled merchandise
56:8-2.5 Selling item without price label
56:8-2.7 False solicitation of contribution
56:8-2.8 Going out of business sale
56:8-2.9 Misrepresentation of food
56:8-2.14 Refund Policy Disclosure Act
56:8-2.22 Providing copy of contract to consumer
56:8-2.23 Soliciting used goods
56:8-21 Unit Price Disclosure Act
56:8-26 Resale of tickets
(1)The Consumer Fraud Act, N.J.S.A. 56:8-1 et seq., includes many specific types of conduct which are designated to be an unlawful practice. For example, see N.J.S.A. 56:8-2.3. If a particular act declared to be an unlawful practice under a specific statute is alleged, the court should note that individual statute to the jury and then refer to the Third Alternate.
(2)Reference might be made to D'Ercole Sales, Inc. v. Fruehauf Corp., 206 N.J. Super. 11, 29 (App. Div. 1985), for illustrative criteria in evaluating unconscionability.
(3)The Committee recognizes that the terms "fraud," "false pretense," "false promise" and "misrepresentation" have traditionally been defined in this State as requiring an awareness by the maker of the statement of its inaccuracy accompanied by an intent to mislead. However, in Fenwick v. Kay Amer. Jeep, Inc., 72 N.J. 372, 377 (1977), the Supreme Court noted that "the requirement that knowledge and intent be shown is limited to the concealment, suppression or omission of any material fact." See, also, D'Ercole Sales, Inc. v. Fruehauf Corp., 206 N.J. Super. 11, 22 (App. Div. 1985). Therefore, the definitions provided for these four terms do not require either intent or knowledge.
(4)In addition to damages awarded by the jury, the judge may award additional appropriate legal or equitable relief under N.J.S.A. 56:8-19.
Damages awarded by the jury are limited to an ascertainable loss of money or property under N.J.S.A. 56:8-19. This would not include damages for pain and suffering. Jones v. Sportelli, 166 N.J. Super. 383, 390-392 (Law Div. 1979).
As directed in Ramanadham v. N.J. Mfrs. Ins. Co., 188 N.J. Super. 30, 33 (App. Div. 1982), where there are two or more causes of action, one of which is under the Act, damages determined under the Act must be separated from and non-duplicative of damages under another cause of action so that only Act damages are trebled.
(5)But see, Knapp v. Potamkin Motors Corp., 253 N.J. Super. 502 (Law Div. 1991), wherein the court reconsidered its own instruction to the jury that "it is not necessary for the plaintiff to prove that he was misled" in a private action brought under the Consumer Fraud Act.
(6)See footnote 4.
(7)Specific-situation statutes are itemized following the administrative regulation references at the end of the model charge.
(8)See footnote 3.
(9)See Wanetick v. Gateway Mitsubishi, 163 N.J. 484 (2000) requiring that the jury be instructed, as set forth in this charge, of the trebling of the damage award and reasonable attorney fees upon the jury’s finding of a violation of the Consumer Fraud Act.
The Appellate Division has applied the same reasoning to require a treble damage instruction where violation of the Federal Odometer Law is alleged. Cogar v. Monmouth Toyota, 331 N.J. Super. 197 (App. Div. 2000).
In complex cases involving multiple questions and many parties, the trial court retains its discretion to withhold this instruction if it would tend to confuse or mislead the jury or produce a manifestly unjust result. Wanetick, supra 163 N.J. at 495.

5.10I AGENCY

A. Master/Servant (6/79)
A servant is a person employed to perform services for another in his/her affairs and who, with respect to his/her physical conduct in the performance of the service, is subject to the other's control or right to control. In determining whether one acting for another is a servant or an independent contractor the following elements are to be considered:
(1) the extent of control which, by agreement, the master may exercise over the details of the work;
(2) whether or not one so employed is engaged in a distinct occupation or business;
(3) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision;
(4) the skill required in the particular occupation;
(5) whether the employer or the person doing the work supplies the instrumentalities, tools and the place of work for the person doing the work;
(6) the length of time for which the person is employed;
(7) the method of payment, whether by the time or by the job;
(8) whether or not the work is part of the regular business of the employer;
(9) whether or not the parties believe they are in the relationship of master and servant;
(10)whether or not the principal is or is not in business; and
(11)such other factors as may be reasonably considered in determining whether the employer has control or right to control the person employed.
Cases:
Miklos v. Liberty Coach Co., 48 N.J. Super. 591 (App. Div. 1958); Gilborges v. Wallace, 153 N.J. Super. 121 (App. Div. 1977), rev'd. in part on other grounds 78 N.J. 342 (1978).
Ordinarily the existence of a master-servant relationship is a matter of fact for a jury rather than law for a judge. Bennett v. T. & F. Distributing Co., 117 N.J. Super. 439 (App. Div. 1971), certif. den. 60 N.J. 350 (1972); Gilborges v. Wallace, supra. However, if there are no disputed facts or disputed inferences which may be drawn from undisputed facts concerning the elements of the relationship the judge should determine whether or not there is a master-servant relationship as a matter of law. Marion v. Public Service Electric and Gas Co., 72 N.J. Super. 146 (App. Div. 1962); Cf. Miller v. United States Fidelity and Guaranty Co., 127 N.J. Super. 37 (App. Div. 1974).
B. Respondeat Superior (4/02)
1. Corporation or Other Fictitious Entity
A corporation [or, when appropriate, substitute “fictitious entity”], such as the defendant, [here insert the corporate defendant’s name], in this case, may act only through natural persons who are its officers, employees or agents. Generally, any officer, employee or other agents of a corporation may bind the corporation by acts and declarations made while acting within the scope of the authority delegated to him/her by the corporation, or by acts and declarations made within the scope of his/her duties as an officer, employee or agent of the corporation.
Thus, if you find that an officer, employee or agent of the corporation defendant, [here insert the corporate defendant’s name], acted negligently while in the scope of his/her duties or authority, that negligence is as a matter of law charged to his/her employer, the corporate defendant [here insert the corporate defendant’s name]. In that situation, the corporate defendant, [here insert the corporate defendant’s name], will be deemed negligent for the wrongdoing to the same extent as the officer, employee or agent.
2. Respondeat Superior in General (when agency is not an issue)
In this case, it is admitted that the defendant, [here insert the individual defendant’s name], was at the relevant time acting as an employee of the defendant, [here insert the corporate defendant’s name], his employer, and that he/she was acting within the scope of his/her employment. An employer is legally responsible for the negligence of an employee that occurs while an employee is acting within the scope of his/her employment.
Therefore, if you find the defendant, [here insert the individual defendant’s name], negligent, then you must find his/her employer, the defendant, [here insert the corporate defendant’s name], negligent to the same extent.

4.41 BAILMENT

Note to the court: Recovery in bailment depends on proof of failure to exercise the requisite degree of care which proximately results in loss or damage to the bailed articles. The degree of care required depends on the relationship between the parties. In addition to the proposed charges you will probably use other general charges, such as definition of negligence, proximate cause, preponderance of the evidence, etc.DEFINITION OF BAILMENT: Under the Uniform Commercial Code "bailee" is defined as "the person who by a warehouse receipt, bill of lading, or other document of title acknowledges possession of goods and contracts to deliver them." N.J.S.A. 12A:7-102(1)(a). Subsection (h) defines "warehouseman" as a person "engaged in the business of storing goods for hire."] As to duty of care of a warehouseman and carrier, see Cases and Comments under Mutual Bailment, below.]
A contract of bailment exists when a person turns over an article of property for a particular purpose or merely for safekeeping to another person who accepts the property with the understanding that it will be returned or kept until reclaimed or otherwise disposed of in accordance with the understanding of the parties. Parties to a bailment contract are called the bailor and bailee. The bailor is the party who surrenders the property and the bailee is the party who receives the property. For a bailment contract to exist the bailee must be given physical possession and control over the property. The bailee must know that the property
has been delivered to him/her and he/she must have an intention, express or implied from the circumstances, to exercise control over the property. The contract of bailment may be expressly agreed upon, in writing or verbally, or it may be implied from the circumstances of the transaction and the conduct of the parties. The standard of care for the safety of the property that must be exercised by the bailee, the person who has received the property, depends upon the purpose of the bailment, namely, whether it is for the benefit of the bailee alone, or the bailor alone, or for their mutual benefit. (For example, if a car is stored in a parking garage where the garageman will receive a fee for parking, this is a bailment for the mutual benefit of the bailor and bailee since it serves the purposes of both. If, however, a neighbor borrows a lawnmower, the neighbor is a bailee for his/her own benefit of using the lawnmower on his/her lawn and the owner of the lawnmower receives no benefit from that bailment. If a person is asked to keep his/her neighbor's canary for a few days while his/her neighbor is on vacation, the person who receives the canary is a bailee without any benefit to himself/herself but solely for the benefit of the bailor.)
A. Where Bailment Is Not Disputed In this case the parties agree that plaintiff delivered possession of (specify the
article of property) to defendant for (specify the purpose) and defendant agreed to return the property (specify time or conditions). Therefore, in this case there is no dispute as to the existence of the bailment contract. The dispute concerns plaintiff's contention that the defendant, as bailee, did not exercise that degree of care for the safety of the property as was required by law and that as a proxi mate result of defendant's conduct the property was (damaged, destroyed or lost).
B. Where Bailment Is Disputed In this case the plaintiff contends that he/she was a bailor of property and that defendant was the bailee of his/her property. (Specify plaintiff's factual contentions.) Plaintiff contends that defendant, as bailee, failed to exercise that degree of care required by law for the safety of the property. Defendant, however, denies that a bailment contract or relationship ever existed. (Specify defendant's factual contentions.) It is for you as jurors to determine from the evidence in this case whether a contract of bailment, as I have previously defined that term, arose out of the transaction in question. If you find from the circumstances and conduct of the parties that the property came into the possession and control of defendant with his/her knowledge, in accordance with an understanding whereby the defendant is to be considered a bailee and the plaintiff a bailor, in accordance with the definition of
bailment previously given, then you must conclude that a bailment relationship or contract did arise in the transaction between the parties. If, however, an element necessary to create a bailment contract or relationship, as previously defined, has not been established in this case by the preponderance of the evidence, you must conclude that a bailment contract or relationship did not exist. (If you conclude that a bailment contract or relationship did not exist, then you must bring in a verdict for defendant of no cause for action and you need not consider the question of defendant's negligence or the question of damages.)Cases: For a definition of bailment, see State v. Carr, 118 N.J.L. 233 (E. & A. 1937); McFarland v. C.A.R. Corp., 58 N.J. Super. 449, 524 (App. Div. 1959) (possession and control of the property by the bailee required); Moore's Trucking Co. v. Gulf Tire and Supply Co., 18 N.J. Super. 467 (App. Div. 1952) (a bailment existed where a trailer without the truck was left in a warehouse. The trailer would have been as difficult to move as a car without a key and the intentions of the parties were that the trailer should not be removed from the warehouse until it was unloaded); Cerreta v. Kinney Corp., 50 N.J. Super. 514 (App. Div. 1958) (where the bailee does not know that the property had been delivered to him, there cannot be a bailment of such property); Marsh v. American Locker Co., 7 N.J. Super. 81 (App. Div. 1950) (package stored in locker with key at Penn Station, Newark, where defendant exercised no control over the goods and the court held that by keeping the key plaintiff retained primary control over the package); J.L. Querner, etc. v. Safeway Truck Lines, Inc., 65 N.J. Super. 554 (App. Div. 1961), aff'd. 35 N.J. 564 (1961) (physical control of the property and also intent to exercise control are essential elements); Carter v. Allenhurst, 100 N.J.L. 138 (E. & A. 1924) (jewelry checked with a swimming pool attendant); Kittay v. Cordasco, 103 N.J.L. 156 (E. & A. 1926) (diamonds delivered to a retail jeweler "on memorandum," for sale); McBride v. DeCozen Motor Co., 5 N.J. Misc. 552 (Sup. Ct. 1927) (automobile placed in shop to be washed); Hopper's Inc. v. Red Bank Airport, Inc., 15 N.J. Super. 349 (App. Div. 1951) (airplane stored in a hanger).
No bailment was found in the following cases because of lack of exclusive control: Gilson v. Penn R.R. Co., 86 N.J.L. 446 (Sup. Ct. 1914), aff'd. 87 N.J.L. 690 (E. & A. 1915) (coat of restaurant customer hanging near lunch counter); Zucker v. Kenworthy Brothers, 130 N.J.L. 385 (Sup. Ct. 1943) (automobile stored in garage with the owner retaining key and right to come and go as he/she pleased). See also parking lot cases where the result depends upon control: Moore's Trucking Co. case, supra, 18 N.J. Super. at 470; 131 A.L.R. 1170 (1941).
C. Duty of Care Owed by Bailee 1. Mutual Bailment A "mutual bailment" is a bailment which is beneficial to both the bailor (the person who surrenders the property) and the bailee (the person who receives the property). Where there is a bailment for mutual benefit, a bailee will be liable for damage to the property or loss of the property if that damage or loss results from the bailee's negligence. Thus a bailee is liable to the bailor for loss or damage to the property if the bailee has failed to exercise reasonable care for the safety of the property which came into the bailee's possession. Reasonable care means such care for the safety of the property as a person of ordinary prudence would exercise in the same or similar circumstances.Cases and Comments: Rogers v. Reid Oldsmobile, Inc., 58 N.J. Super. 375 (App. Div. 1959); Parnell v. Rohrer Chevrolet Co., 95 N.J. Super. 471 (App. Div. 1967) (automobile stripped while kept by bailee in a large cyclone fence enclosure); Franklin v. Airport Grills, Inc., 21 N.J. Super. 409 (App. Div. 1952) (mere fact of fire in a restaurant is not sufficient to establish negligence).
Warehousemen under mutual bailment:
The duty of care of a warehouseman (N.J.S.A. 12A:7-102(1) (h)) is defined by N.J.S.A. 12A:7-204(1). The duty of care of a carrier is defined by N.J.S.A. 12A:7-309(1). Both sections also regulate limitation of damages.
N.J.S.A. 12A:7-204(1) is as follows: A warehouseman is liable for damages for loss of or injury to the goods caused by his/her failure to exercise such care in regard to them as a reasonably careful man would exercise under like circumstances but unless otherwise agreed he/she is not liable for damages which could not have been avoided by the exercise of such care.
N.J.S.A. 12A:7-309(1) is as follows: A carrier who issues a bill of lading whether negotiable or non-negotiable must exercise the degree of care in relation to the goods which a reasonably careful man would exercise under like circumstances. This subsection does not repeal or change any law or rule of law which imposes liability upon a common carrier for damages not caused by its negligence.
A warehouse receipt may be issued by one who has undertaken to store the goods at no profit or one who is unlawfully engaged in storing goods. New Jersey Study Comment, paragraph 1 under N.J.S.A. 12A:7-201. Actual possession need not be established if the warehouseman acknowledges possession. Uniform Commercial Code Comment 1, N.J.S.A. 12A:7-102; paragraph 1 under N.J.S.A. 12A:7-203.
2. Bailment for the Sole Benefit of Bailor Where the bailment is for the sole benefit of the bailor, as where property is accepted by the bailee as a favor to the bailor without compensation or other benefit to the bailee, the bailment is known as a gratuitous bailment. Where such a bailment exists, the bailee is not responsible for loss or damage to the property unless such loss or damage is caused by the gross negligence of the bailee. Gross negligence is defined as the failure to exercise a slight amount of care
or diligence for the safety of the property. It may also be described as a great degree of negligence. For bailor to recover it is not necessary for him/her to show that the bailee wilfully or intentionally caused the injury or loss of the property, but it is necessary for you to find that the bailee did not exercise even a slight degree of care for the safety of the property.Cases: Weinstein v. Scheer, 98 N.J.L. 511 (E. & A. 1922) (liability for gross neglect or bad faith); Field v. Serpico, 24 N.J. Misc. 289; 49 A.2d 21, (2 Jud. Dist. Ct. 1946); Dudley v. Camden and Philadelphia Ferry Co., 42 N.J.L. 25 (Sup. Ct. 1880); In Re National Molding Co., 230 F.2d 69, 72 (3 Cir. 1956).
3. Bailment for Sole Benefit of Bailee Where the bailment is for the sole benefit of the bailee, that is, where the bailment is solely for the benefit of the person who receives the property, that person must exercise that degree of care and vigilance for the safety of the property which persons of extraordinary care, prudence and foresight would exercise in the same or similar circumstances. Thus, if property is received by a bailee for his/her own benefit without benefit or advantage to the bailor, then the bailee is liable for loss of or damage to the property if the bailee has failed to exercise that degree of care for the safety of the property which an extraordinarily prudent and careful person would exercise in the same or similar circumstances.Note:
We can find no New Jersey cases expressing the standard of care in the case of bailment for the benefit of the bailee only. Some cases in other states have used the term "slight negligence" as the test, which in turn requires definition. See Prosser, Torts, (4 ed.) §34, p. 183, (1971). See also 8 Am. Jur. 2d 1091, Bailments, §205 (1963) where it is stated that a bailee must exercise the "greatest care and attention" or "extraordinary" care or "more than ordinary care and diligence." Slight negligence is there defined as the "want of great diligence" which in turn is defined as that care which the very prudent take of their own concerns of affairs of great importance. See also Baugh v. Rogers, 24 Cal. 2d 200, 148 P.2d 633 (Sup. Ct. 1944).
D. Burden of Proof Where it is shown that property has been damaged (lost or destroyed) while in the hands of a bailee, the law requires the bailee to present evidence explaining the circumstances of the occurrence so that you may determine whether the damage (or loss or destruction) was caused by the bailee's failure to exercise that degree of care imposed upon him/her by virtue of the bailment or whether the damage (or loss or destruction) was the result of some cause other than the bailee's lack of due care. If after hearing all the evidence you conclude that the preponderance of evidence shows that the bailee failed to exercise the required degree of care and that such failure proximately caused the damage (or loss or destruction) of the bailed property, then the bailor is entitled to recover damages against the bailee. If there is evidence which tends to prove the bailee's lack of due care as well as evidence tending to prove the exercise of care by the bailee then you must determine what the preponderance of the evidence shows. If the lack of due care has been established
by the preponderance of the evidence, the bailor is entitled to recover. However, if the preponderance of evidence fails to show the lack of due care on the part of the bailee, or if the preponderance of evidence shows that the bailee did exercise the degree of care required of him/her in the circumstances of this case, then the bailor cannot recover, and you will return a verdict of no cause for action.Cases: Bachman Choc. Mfg. Co. v. Lehigh Warehouse, 1 N.J. 239, 242 (1949); Rodgers v. Reid Oldsmobile Inc., supra; Parnell v. Rohrer Chevrolet Co., supra; Kushner v. President of Atlantic City, Inc., 105 N.J. Super. 203 (Law Div. 1969); Moore's Trucking Co. v. Gulf Tire and Supply Company, supra.
See also NOPCO Chemical Div. v. Blaw-Know Co., 59 N.J. 274, 283 (1971) (where goods were damaged while handled successively by transportation-bailees, burden is shifted to each defendant to come forward with proof of its particular part in the transaction. If any defendant fails to offer proofs, it risks a finding of liability on the evidence).
E. Defenses in General (Note to the court) Contributory negligence as a defense, see: Kandret v. Mason, 26 N.J. Super. 264 (App. Div. 1953); Parnell v. Rohrer Chevrolet Co., 95 N.J. Super. 471, 478 (App. Div. 1967). See also 8 Am. Jur.2d, Bailment, §177 (1963); 8 C.J.S., Bailment, §46 et seq. See also Motorlease Corp. v. Mulroony, 9 N.J. 82 (1952) as to the effect of the negligence of an employee of a bailee in possession of the bailed article (auto, for example). See N.J.S.A. 2A:53A-6.
Model Civil Jury Charges

4.40 REAL ESTATE BROKERS COMMISSION--STATUTE OF FRAUD

(N.J.S.A. 25:1-9) (6/79) The law of this State requires that if an agreement between a broker and the owner of real property is to be enforceable, it must be in writing. There are, however, certain exceptions allowed by this law. Even though an agreement between the parties is originally only verbal, a broker may recover his/her commission provided he/she or his/her agent has, within five (5) days of the verbal agreement, given written notice to the owner, setting forth the terms of the agreement including the rate or amount of compensation agreed on and further provided he/she actually effects a sale or exchange of real property prior to termination of the agreement. An owner may act to terminate such a verbal agreement even after he/she has received a written notice provided a sale or exchange has not yet been effected and further provided he/she gives written notice of the termination to the broker or agent. However, when notification from the owner occurs while the broker is conducting good faith negotiations with a prospective buyer, and then the owner subsequently sells to or exchanges property with that buyer, the notice of termination by the owner is ineffective and the broker may recover his/her commission notwithstanding the termination notice by the owner. An agreement must not only satisfy the requirements of the statute in order to entitle a broker to a commission, it must also either expressly or impliedly signify an engagement of the broker to sell the property on behalf of the owner. In
determining whether such an implication is warranted, it is permissible and sometimes essential to scrutinize all of the surrounding circumstances. What this means is that the agreement must do more than merely advise that if the owner should decide to sell at some future time, the terms contained therein will apply. The agreement must actually authorize the broker to secure a purchaser on the terms specified.
Model Civil Jury Charges

4.25 ANTICIPATORY BREACH OF CONTRACT

A. By Renunciation or Repudiation A total breach of contract has occurred when a person who has promised to render performance under a contract thereafter has stated or indicated to the person to whom he/she has promised the performance either that he/she will not or cannot perform that which he/she has promised. Therefore, if you find as a fact that _______ promised that he/she would perform the contract, and that he/she thereafter stated or indicated to ______ that he/she would not, or could not perform the contract then ____ has committed a total breach of contract.Cases and Comment:
This charge follows the rule set out in Restatement, Contracts (1932) Sec. 318(a). The Restatement language is similar to that in Samel v. Super, 85 N.J.L. 101 (Sup. Ct. 1913) in which the Court held that whether seller's refusal to perform a contract for the sale of a retail food business constituted an anticipatory breach was a fact question for the jury. In the course of its opinion the Court quoted from O'Neill v. Supreme Council, 70 N.J.L. 410 (Sup. Ct. 1904):
"Where a contract embodies mutual and interdependent conditions and obligations, and one party either disables himself/herself from performing, or repudiates in advance his/her obligations under the contract and refuses to be longer bound thereby, communicating such repudiation to the other party, the latter party is not only excused from further performance on his/her part, but may, at his/her option, treat the contract as terminated for all purposes of performance, and maintain an action at once for the damages occasioned by such repudiation, without awaiting the time fixed by the contract for performance by the defendant." (at p. 103)
See Parker v. Pettit, 43 N.J.L. 512 (Sup. Ct. 1881); Stopford v. Boonton Molding Company, Inc., 56 N.J. 169 (1970); Scoredisc Service Corp. v. Feldman, 10 N.J. Misc. 228 (Sup. Ct. 1932). Conduct indicating repudiation of a contract has the same effect as language. Ross Systems v. Linden Dari-Delite, Inc., 35 N.J. 329, 340 (1961); Ferber v. Cona, 89 N.J.L. 135 (Sup. Ct. 1916), aff. 91 N.J.L. 688 (E. & A. 1918); Stein v. Francis, 91 N.J.E. 205 (Ch. 1919); Storms v. Corwin, 7 N.J. Misc. 931 (Sup. Ct. 1929).
The anticipatory breach must be a "material breach" to discharge the other party. Ross Systems, supra, at p. 341; Restatement, Contracts (1932), Sec. 397.
As to the remedy for anticipatory breach, see Stopford, supra, (1970) where the anticipatory breach was discontinuance of a pension plan in which plaintiff-employee had vested rights. Discussing the question of damages, Justice Francis said:
"Here, the plaintiff was presented with a clear choice of alternative remedies, i.e., specific performance which would produce periodic payments or a lump sum recovery which he/she chose to pursue." (at p. 195)
Where defendant repudiates the contract, after plaintiff has performed, plaintiff may be entitled to restitution of what he/she gave, as an alternative remedy. Shea v. Willard, 85 N.J. Super., 446, at p. 451 (App. Div. 1964). B. Where Promisor Makes Performance Impossible Where ___________ has agreed to perform a certain thing and prior to the time for performance he/she has rendered by his/her conduct substantial performance of that thing impossible, he/she has committed a total breach of contract.Cases and Comment:
This charge is based upon Restatement, Contracts (1932), Sec. 318(b) and (c). In Parker v. Pettit, 43 N.J.L. 512 (Sup. Ct. 1881) defendant agreed to deliver straw to plaintiff. His/Her conduct in selling the straw to a third party was held evidence of an anticipatory breach. in Stopford v. Boonton Molding Company, Inc., 56 N.J. 169 (1970) the anticipatory breach was discontinuance of a pension plan. See in accord:
McCloskey v. Mineveld Steel, 22 F.2d 101 (3d Cir. 1955); Scaduto v. Orlando, 381 F.2d 587 (2d Cir. 1967).
Where the contract involves the sale of goods the rights of the parties are governed by N.J.S.A. 12A:2-610. As to anticipatory breach of installment sales contracts, the court said in Graulich Caterer, Inc. v. Hans Holterbosch, 101 N.J. Super. 61 (App. Div. 1968):
"Replacing considerations of anticipatory repudiation and the material injury with the test of substantial impairment, N.J.S. 12A:2-612 adopts a more restrictive seller-oriented approach favoring 'the continuance of the contract in the absence of an overt cancellation.' See Comment to Sec. 12A:2-612, par. 6; also New Jersey Study Comment, par. 2; Hawkland, supra, 3, c. (3), p. 116. To allow an aggrieved party to cancel an installment contract, N.J.S. 12A:2-612 (3) requires (1) the breach be of the whole contract which occurs when the nonconformity of 'one or more installments substantially impairs the value of the whole contract;' and (2) that seasonable notification of cancellation has been given if the buyer has accepted a nonconforming installment." (at p. 75)
Note that under N.J.S.A. 12A:2-508 a defective tender of goods subject to the Sales Act (N.J.S.A. 12A:2-101 et seq.) which may have been an anticipatory breach, as in Parker, supra, may be "cured" by reasonable notice of intent to render proper performance.
Model Civil Jury Charges

4.24 THIRD PARTY BENEFICIARY

Ordinarily a person may not bring an action on a contract unless the person is a party to the contract. Persons may enter into a contract for the benefit of others; however, a person not a party to a contract may not sue to enforce it merely because he/she happens to be benefitted by it. Rather it must appear that the contract was made by the parties with the intention to benefit him/her and that the parties to the contract intended that he/she receive a benefit enforceable in court.Cases:
Brooklawn v. Brooklawn Housing Corp., 124 N.J.L. 73 (E. & A. 1940); First National State Bank v. Carlyle House, Inc., 102 N.J. Super. 300 (Ch. Div. 1968), aff'd 107 N.J. Super. 389 (App. Div. 1969), certif den. 55 N.J. 316 (1970).
Model Civil Jury Charges

4.23 DURESS

A contract obtained by duress can be set aside at the option of the person against whom the duress was directed. A contract is deemed obtained by duress if the person against whom the charge of duress is asserted has used threats, moral compulsion, physical force or psychological pressure to overbear the other party to the contract and thereby deprive the other party of the exercise of free will. But the actions of the person against whom the charge of duress is asserted must be wrongful. Actions may be wrongful if unlawful or so oppressive under the circumstances as to compel one to do what his/her free will would refuse. The controlling factor is the condition of the mind of the person subjected to such kinds of coercive measures at the time the contract is entered into. The age, capacity, education and relationship of the parties are among the factors you should consider in determining if there was duress. A party entitled to set aside a contract obtained by duress is not required to do so. When and if the duress is no longer being asserted against him/her, he/she may at his/her option either set aside the contract or confirm it. But once the party makes the decision he/she cannot later change it. If the duress is no longer being asserted against him/her, he/she must act with diligence and without delay if he/she desires to set aside the contract. He/She will be deemed to have confirmed the contract if after the duress is no longer being asserted he/she (1) waits an
unreasonable time to disaffirm the contract; or (2) does any material act which assumes the transaction to be valid; or (3) deals with the subject matter of the contract as if the contract were still valid.See footnote 1Cases and Comment:
For definition of duress see McBride v. Atlantic City, 146 N.J. Super. 498 (Law Div. 1974), aff'd 146 N.J. Super. 406 (App. Div. 1975), aff'd 72 N.J. 201 (1976); Rubenstein v. Rubenstein, 20 N.J. 359 (1956); Konsuvo v. Netzke, 91 N.J. Super. 353 (Ch. Div. 1966). If a party is entitled to void a contract by reason of duress he/she may ratify it by treating it as valid when no longer under duress. Cf. Ajamian v. Schlanger, 20 N.J. Super. 246 (App. Div. 1952).
Footnote: 1 A paragraph as to ratification is included in the above charge. It may be appropriate for use in certain cases depending on the evidence.
Model Civil Jury Charges

4.22 CONTRACTS--(CONTRACT ACTION FOR BREACH OF IMPLIED WARRANTY OF FITNESS FOR PARTICULAR PURPOSE UNDER U.C.C.) (pre-1984)

Where at the time of contracting a seller has reason to know that the buyer requires the goods for a particular purpose and that the buyer is relying on the seller's skill or judgment to select or furnish suitable goods, the law implies a warranty by the seller that the goods are fit for that purpose. Therefore, the first question for you to determine is whether plaintiff in fact relied upon defendant's skill or judgment as distinguished from his/her own skill or judgment in buying [describe the goods]. In making that determination you should consider all the facts and circumstances, both what was said and what was done, at the time of the sale, (including, if you find that to be the fact, the reference to the [describe the goods] by trade or brand name, but I charge you that the use of a trade or brand name is but one of the circumstances for you to consider in determining whether plaintiff relied upon seller's skill or judgment rather than upon his/her own judgment). If you find that plaintiff did not rely on defendant's skill or judgment your verdict must be for defendant. If you find that plaintiff did in fact rely upon defendant's skill or judgement, you must next determine whether under all of the facts and circumstances existing at the time of the sale, defendant had reason to know that plaintiff required [the
goods] for a particular purpose and was relying on defendant's skill, or judgment. It is not necessary that plaintiff have stated his/her purpose in so many words; it is enough that the circumstances gave defendant reason to know of plaintiff's purpose and that plaintiff was relying upon defendant's skill or judgment. If you find that defendant did not have reason to know those facts, your verdict will be for defendant. If you find that plaintiff did in fact rely upon defendant and that defendant had reason to know that plaintiff was relying upon him/her and that plaintiff required [the goods] for a particular purpose, you must next consider whether [the goods] was/were fit for that purpose. If you find that [the goods] was/were fit for the particular purpose your verdict will be for defendant. If you find that [the goods] was/were not, you must then determine whether plaintiff gave notice of that fact to defendant within a reasonable time after he/she discovered or should have discovered that [the goods] was/were not fit for the particular purpose. When plaintiff should have discovered the defect depends upon all the facts and circumstances, including the nature of the defect, the time when [the goods] was/were put in use and whether the defect was discoverable by customary and reasonable inspections. Notice will be sufficient in form if it informed the defendant that the buyer claimed that [the goods] was/were defective. If you find that plaintiff did not give
such notice or did not give it within a reasonable timeSee footnote 1 after he/she discovered or should have discovered the defect, your verdict will be for defendant. If you find that notice was given within a reasonable time after plaintiff discovered or should have discovered the defect, your verdict will be for plaintiff and you will proceed to consider the measure of damages.Comment:

4.21 CONTRACT ACTION FOR BREACH OF EXPRESS WARRANTY ON SALE OF GOODS (pre-1984)

Plaintiff-buyer claims breach of an express warranty contending that [the goods] did not conform to an affirmation of fact [or promise] made by the defendant-seller to the plaintiff-buyer, about the goods. In that regard I charge you that any affirmation of fact [or promise] made by the defendant-seller to the plaintiff-buyer which related to [the goods] and became part of the basis of the bargain created an express warranty that the goods would conform to the affirmation [or promise]. In this case the affirmation of fact [or promise] was [state the affirmation of fact or promise]. If you find that [the goods] in fact conformed to that express warranty your verdict will be for defendant-seller. If you find that [the goods] did not conform to that express warranty you must then determine whether plaintiff-buyer gave notice of that fact to defendant-seller within a reasonable time after he/she discovered or should have discovered that [the goods] did not conform to the express warranty. When plaintiff should have discovered that [the goods] did not conform depends upon all the facts and circumstances, including the nature of the nonconformity, the time when [the goods] were put in use and whether the nonconformity was discoverable by customary and reasonable inspections. Notice will be sufficient in form if it informed the defendant-seller that plaintiff-buyer claimed that [the goods] were nonconforming. If you find that
plaintiff-buyer did not give such notice or did not give it within a reasonable time after he/she discovered the nonconformity or should have discovered the nonconformity, your verdict will be for defendant-seller. If you find that notice was given within a reasonable time after plaintiff-buyer discovered or should have discovered the nonconformity, your verdict will be for plaintiff-buyer and you will proceed to consider the measure of damages.Cases and Comment: This charge assumes that there has been a finding as a matter of law that seller has made an express warranty relating to the goods and buyer brings an action for damages. However, the language may be adapted for use where buyer counterclaims for damages or where buyer raises breach of express warranty as a defense to seller's action for the contract price.
See: Graulich Caterer Inc. v. Hans Holterbosch, 101 N.J. Super. 61 (App. Div. 1968). This charge is not intended for use in a personal injury action or other action sounding in tort. Cf. Collins v. Uniroyal, Inc., 126 N.J. Super. 401 (App. Div. 1973), affirmed 64 N.J. 260 (1974), where the court charged the jury on breach of an express warranty in a personal injury action.
This charge is based upon N.J.S.A. 12A:2-313(1)(a); however, an express warranty may also be based upon N.J.S.A. 12A:2-313(1)(b) or (c) which provide as follows:
(b) Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to that description.
(c) Any sample or model which is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample or model.
"It is not necessary to the creation of an express warranty that the seller use formal words such as 'warranty' or 'guarantee' or that he/she have a specific intention to make a warranty, but an affirmation merely of the value of the goods or a statement purporting to be merely the seller's opinion or commendation of the goods does not create a warranty." N.J.S.A. 12A:2-313(2).
Whether affirmations of fact made by seller are woven into the fabric of an agreement and whether there are facts which take such affirmations, once made, out of the agreement requires clear affirmative proof and is usually a fact issue. See N.J.S.A. 12A:2-313 Official Comment 3.
What is reasonable time for taking any action [under the U.C.C.] depends on the nature, purpose and circumstances of such action. N.J.S.A. 12A:1-204(2).
As to the notice of breach requirement, a distinction is made between notice where the goods have been accepted by the buyer N.J.S.A. 12A:2-607(3)(a) and where goods have been rejected by the buyer N.J.S.A. 12A:2-602(1).
See N.J.S.A. 12A:2-714 and 2-715 regarding damages for breach of warranty under the U.C.C. See also N.J.S.A. 12A:2-712 for definition of "cover."
See also exclusion or modification of express warranties. N.J.S.A. 12A:2-316(1).
Model Civil Jury Charges

4.30C BUILDER FAILS TO PROVE SUBSTANTIAL PERFORMANCE AND SUES IN QUASI-CONTRACT

Even if the builder in a construction contract fails to prove substantial performance, (even if his/her default under the contract is willful) he/she may recover compensation if the benefit which he/she conferred upon the owner exceeds the harm which he/she caused the owner, provided the owner accepted or retained the benefit of the partial performance. In such case the builder is entitled to recover the reasonable value of the work performed by the builder after deducting from it the loss caused by the builder's breach which can include increases in the cost of completion, losses resulting from delays, or harm caused by below-par performance. However, the reasonable value may not be greater than the proportion of the contract price which the reasonable value of the work completed bears to the reasonable value of all the work contemplated by the contract.
CASES:Kutzin v. Pirnie, 124 N.J. 500 (1991); Power-Matics, Inc. v. Ligotti, 79 N.J. Super. 294 (App. Div. 1963) & Restatement (Second) of Contracts Sec. 374 (1981).
Model Civil Jury Charges

4.30B BUILDING CONTRACTS -- EXTRAS

A. Where the Contract Is Silent As to Changes or Extras Where "extras" are claimed by the builder the first issue to be resolved is whether the items claimed as extras were included within the terms of the basic contract between the owner and the builder. If they were, the builder is not entitled to additional compensation. If they were not included within the basic contract the builder is entitled to additional compensation only if the extras were requested or authorized by the owner. If the extras were requested or authorized by the owner, and if there was an agreement between the parties as to the price to be paid for such extras, the builder is entitled to receive the agreed price. If the extras were requested or authorized by the owner, and there was no agreement as to price, the builder is entitled to be paid the reasonable value of the extras.Cases and Comment: Whether a builder is entitled to compensation for extras is determined by basic contract principles. The issue is whether there was an agreement express or implied that the builder be paid. If what the builder did was comprehended within the construction contract, there are no extras. See Terminal Construction Corp. v. Bergen County, etc., District Authority, 18 N.J. 294 (1955). Moses v. Edward H. Ellis, Inc., 4 N.J. 315 (1950) is an illustration of the rule. The controversy there was between contractor and sub-contractor. The issue was whether the sub-contractor was entitled to payment for pouring concrete into uneven rock in order to bring it to "pay" lines [lines set out in drawings]. He/She was held entitled to payment, but as specified in the contract, although this was in a sense "extra work". If the work was performed
without the owner's request or authorization, and the owner has not agreed to pay, he/she is not liable. 17A C.J.S., Contracts, Sec. 371 (1), p. 401. If the owner has requested or authorized the work, he/she is liable. 3 Corbin on Contracts, Sec. 564, p. 296 (1965).
If there has been an agreement as to price, that agreement would control. Sbaraglio v. Vicarisi, 110 N.J.L. 280 (E. & A. 1933). In the absence of agreement quantum meruit would be the only means for determining the amount of compensation. Kolmetsky v. Pellicoff, 6 N.J. Misc. 315, 141 Atl. 10 (Sup. Ct. 1928), aff'd, 105 N.J.L. 240 (E. & A. 1928); See also Shapiro v. Solomon, 42 N.J. Super. 377 (App. Div. 1956).
B. Where the Contract Prohibits Changes Without Written Authority Since this contract contains a provision that the owner shall not be liable for extra work unless he/she has authorized it in writing, the builder cannot recover for services rendered or materials supplied in addition to those specified in the contract unless the builder proves that there has been a new and subsequent contract that he/she be paid for such additional work or materials (extras). This subsequent contract may be an oral agreement or may be implied from the conduct of the parties. It must show an agreement by the parties that the extra work was to be done and an agreement by the owner to pay for it.Cases and Comment: Both cases and texts have spoken in terms of waiver of the provision requiring extras to be authorized in writing. 13 Am. Jur.2d, Building Contracts, Sec. 22 p. 24. However, the issue involved is whether there was a subsequent contract for adequate consideration covering the work. 3A Corbin on Contracts, Sec. 756, p. 505 (1963). The governing rule is that, "parties to an existing contract may, by mutual consent, modify it." Bohlinger v. Ward & Co., 34 N.J. Super. 583, 587 (App. Div. 1955), aff'd.
20 N.J. 331 (1956). The parties cannot be prevented from entering into a new contract, written or oral, by a provision that a subsequent agreement not in writing shall not be binding. Headley v. Cavileer, 82 N.J.L. 635 (E. & A. 1912); Guizzette v. Katrek, 124 N.J.L. 461 (Sup. Ct. 1940); Lord Construction Co. v. United States, 28 F.2d 340 (CA 3, 1928); In Re Fleetwood Motel Corp, 335 F.2d 863 (CA 3, 1964); Sheyer v. Pinkerton Construction Co., 59 Atl. 462 (N.J. E. & A. 1904); Denoth v. Carter, 85 N.J.L.95 (Sup. Ct. 1913); Rizzolo v. Poysher, 89 N.J.L. 618 (E. & A. 1916), Fortunato v. Cicalese, 93 N.J.L. 461 (E. & A. 1919).
In Homeowners Construction Company v. Borough of Glen Rock, 34 N.J. 305, 316-17 (1961), the Court required clear and convincing proof when a party alleges oral modification of a written agreement that expressly prohibits such oral modification. (5/98)
Model Civil Jury Charges

4.30A BUILDING CONTRACTS -- SUBSTANTIAL PERFORMANCE OF BUILDER

A builder who has fully performed a contract in all its details is entitled to recover the entire contract price. Where a builder has substantially performed the contract, although there are some defects or omissions in his/her performance, he/she is entitled to recover the contract price minus a fair allowance for the defects or omissions in performance. Substantial performance has occurred when: 1. There has been such an approximation to complete performance that the owner obtains substantially what is called for by the contract; and 2. The defects in performance are not so serious as to deprive the owner of the intended use of the property. The builder has the burden of proof as to substantial performance. The owner has the burden of proof as to the amount of fair allowance for defective work or omissions for which the owner is entitled to credit.Cases and Comment: The builder in a construction contract is entitled to recover upon proof of substantial performance. R. Krevoline & Co., Inc. v. Brown, 20 N.J. Super. 85 (App. Div. 1952); Winfield, etc., Corp. v. Middlesex, 39 N.J. Super. 92 (App. Div. 1956); Damato v. Leone Construction Co., 41 N.J. Super. 366 (App. Div. 1956); Jardine Estates v. Donna Brook Corp., 42 N.J. Super. 332 (App. Div. 1956); Power-Matics, Inc. v. Ligotti, 79 N.J. Super. 294 (App. Div. 1963).
However, the burden of proof as to substantial performance and that the defects were not so serious as to deprive the owner of the intended use of the
property is upon the builder. Power-Matics, supra, at p. 303. The burden of proving the amount of allowance for defective work is upon the owner. Winfield, supra, at p. 97; Globe Home Improvement Co. v. Michnisky, 120 N.J.L. 233 (Sup. Ct. 1938).
Model Civil Jury Charges

4.20 TIME OF PERFORMANCE WHERE CONTRACT IS SILENT

When a contract is silent as to the time within which a promise is to be performed, the law will require it to be performed within a "reasonable time". What is a "reasonable time" is a question of fact for you to determine from the evidence. The question you must decide is what reasonable time for performance the parties intended, bearing in mind the subject matter of the contract, the surrounding circumstances, and what the parties had in mind when the contract was made.Cases and Comment: This charge is intended to be used where performance promised is something other than payment of money. "Where no time for payment is expressed in a promissory note or other instrument for the payment of money, the law adjudges that the parties meant that the money should be payable immediately." City of Camden v. South Jersey Port Com'n, 2 N.J. Super. 278, 299 (Ch. Div. 1949), aff. and Mod. on other grounds 4 N.J. 357 (1950).
I. MAY NOT BE A JURY QUESTION
"While the question is to what is a reasonable time, depending as it does upon the surrounding circumstances, is ordinarily for decision by the jury or fact-finder, yet when the facts are undisputed and different inferences cannot reasonably be drawn therefrom, the question is for the court." Miller v. Zurich Gen. Accident and Liability Ins. Co., 36 N.J. Super. 288, 296 (App. Div. 1955).
For support for the principles set forth in the charge see West Caldwell v. Caldwell, 26 N.J. 9, 28 (1958); Wemple v. B.F. Goodrich Co., 126 N.J.L. 465, 469 (E. & A., 1941); Corbin on Contracts, (1965) Sec. 96, p. 416; 17 Am. Jur. 2d, Title Time, Sec. 329, p. 764; 17A C.J.S. Title Contracts, Sec. 503 (1), p. 779.
Model Civil Jury Charges

4.10 BILATERAL CONTRACTS (cont.)

N. Affirmative Defenses (11/99)
1. Legal Defenses
a. Novation
The defendant has claimed that a novation has occurred, which means that a new and different contract has been substituted for the old one. The defendant claims as follows:
Note to the Judge: State here the alleged novation.
If a new contract has been substituted for the old one, the plaintiff cannot enforce the old contract against the defendant. The plaintiff denies that a new and different contract has been substituted for the old one. You must decide whether the defendant has proved that a novation has occurred.
A novation may be broadly defined as a substitution of a new contract for an old one. When a novation occurs, the old contract is extinguished or ended.(1) Novation is, therefore, a substituted contract that includes either new agreed terms or a new party. A novation which substitutes a party involves the immediate discharge of an old debt or duty, or part of it, and the creation of a new one.(2)
Because of the broad reaching effect of a novation, it is necessary that there be a mutual agreement among the parties to the old and new obligation whereby a new agreement is substituted for the old one. One party cannot be relieved of obligations under a contract without the consent of the other party. In order for the defendant to prevail on this defense, therefore, there must be a clear and definite intention on the part of the old parties and the new party to substitute the new party for the old one(3) or there must be a clear and definite intention on the part of the defendant and the plaintiff to substitute a new term for an old one.
Although a novation need not be expressed, but may be implied, the burden of proving the parties’ intentions rests with the defendant who is alleging that a novation took place. Remember that under a novation there is either an entirely new agreement between the existing parties or there is a substitution of parties. Thus, if you find that the defendant has proved a novation, then you cannot enforce the old contract against the defendant. If you find that the defendant has not proved a novation, then you can enforce the old contract against the defendant.
b. Duress
If a defendant makes a contract because of duress by the plaintiff, then the contract is void and the plaintiff cannot enforce the contract against the defendant.(4) That means the plaintiff cannot make the defendant do what the contract required, or make the defendant pay money to the plaintiff because defendant did not do what the contract required.
The defendant claims that he/she made the contract with plaintiff only because of the duress by the plaintiff. The plaintiff denies this.
To prove that the contract was made because of plaintiff's duress, defendant must show that defendant was the victim of a wrongful or unlawful act or threat by the plaintiff which forced the defendant to do what defendant would not have done voluntarily.(5) Defendant claims that [state here the alleged wrongful or unlawful acts or threats -- which may be physical or psychological duress(6) or economic duress(7)]. As a matter of law, I will decide whether or not these acts, if proved to have occurred, are wrongful(8). It is your job to decide first, if the acts or threats were made, and second, whether they forced the defendant to do what defendant would not have done voluntarily. It does not matter whether some person other than the defendant would have been forced. You must focus on the defendant in this case; consider defendant's state of mind, age and the relationship between the defendant and the person whom the defendant claims threatened defendant.(9) Consider all the other surrounding circumstances. [Choose an appropriate example or examples, such as: did defendant have legal counsel?(10) Did defendant have time to reflect about the transaction?(11) Could the defendant have resisted the threat by getting relief from the courts?(12) Did defendant resist such threats in the past?(13)] After considering all those factors, you must decide whether defendant, in fact, was forced to do what defendant would not have done voluntarily.
1. Ratification
Note to judge: Use this if the plaintiff asserts ratification.
Plaintiff claims that even if there were threats that overcame defendant's will, those threats were removed and defendant could have then complained, but did not. As a result, defendant must do what the contract required, or pay money to the plaintiff because defendant did not do what the contract required. Plaintiff has the burden to show that the threats, if there were any, were removed, and that the defendant did not complain within a reasonable time.(14)
c. Interference by the Party Claiming Breach
The defendant claims that the plaintiff prevented or hindered the defendant’s performance of [state the performance obligation]. The defendant claims that the plaintiff prevented or hindered the defendant's performance as follows:
[State the alleged circumstances of the interference.]
The plaintiff denies this.
The defendant must prove that the plaintiff prevented or hindered the defendant's performance of obligation required by the contract and that the perfor mance would have been fulfilled (or substantially completed) but for the plaintiff's prevention or hindrance. If the defendant proves that the plaintiff prevented or hindered the defendant’s performance, the plaintiff cannot recover for a breach that resulted from those actions.(15)
d. Waiver
Defendant claims that plaintiff has waived the right to insist on performance by the defendant of the [insert stated obligation]. To excuse his or her non-performance, the defendant must prove that the plaintiff voluntarily and knowingly gave up plaintiff’s right to insist on performance of [insert the performance obligation].(16) In other words, the plaintiff must have known that plaintiff had the right to insist on the completion of [insert performance obligation] by the defendant, but nevertheless agreed to give up this right. If defendant proves that the plaintiff actually intended to give up a known right under the contract, the defendant may be excused from performing defendant's obligation and the plaintiff can no longer enforce that part of the contract.
e. Termination
The defendant claims that the parties agreed to end the contract in the following way:
[State the alleged circumstances of the termination.]
The plaintiff denies this.
If the parties agreed to end their contract, the plaintiff cannot now enforce the contract against the defendant. In order for the defendant to prove a defense based on termination, the defendant must show that both parties agreed to end their contract.(17) In deciding whether the parties reached such an agreement, you should consider the totality of the circumstances, including what the parties said or did.(18)
f. Illegality
If a contract breaks the law or violates public policy, then the plaintiff often(19) cannot enforce it. That means the plaintiff cannot make the defendant do what the contract required, or pay money for not doing what the contract required.
The defendant claims that the contract cannot be enforced because of facts that make it violate the law or public policy. The plaintiff denies this.
It is my job to decide what would make this contract illegal or against public policy so that it could not be enforced.
[State here the facts and circumstances which would render the contract unenforceable in whole or relevant part.]
If defendant has proven those facts do exist, then the contract will not be enforced.
g. Impossibility
In some cases, if a defendant's performance of the contract becomes impossible, the plaintiff may not enforce the contract against the defendant; that is, the plaintiff may not make the defendant perform what the contract required, or make the defendant pay money damages for failing to do what the contract required.(20)
The defendant claims that his/her performance of the contract became impossible because [state the alleged facts rendering contract impossible to perform]. The plaintiff denies this.
In order to prove a defense based on impossibility, the defendant must show four things.
First, the defendant must show that the event [specify] that defendant claims made performance of the contract impossible actually occurred.
Second, the defendant must show that the [event] made keeping his/her promise impossible. Keep in mind that the defendant's personal inability to perform is not enough.(21) You must find that the thing cannot be done, not simply that the defendant cannot do it,(22) or that the defendant can only do it with great difficulty or at great expense.(23)
Third, the defendant must show that neither defendant nor the plaintiff reasonably foresaw the [event] when they made the contract.(24) Put another way, the defendant must show that it was beyond plaintiff's contemplation that plaintiff would be paid or that defendant would have to perform if the [event] happened.(25)
Fourth, the defendant must show that the event that defendant claims made performance impossible was beyond the defendant's control and was not the defendant's fault.(26)
h. Frustration of Purposes
Sometimes, if the main purpose of a contract is frustrated or destroyed, the plaintiff may not enforce the contract against the defendant; that is, the plaintiff may not make the defendant perform what the contract required, or make the defendant pay money damages for failing to do what the contract required.(27)
The defendant claims that the main purpose of the contract in this case was frustrated or destroyed because [state the facts/circumstances that allegedly frustrated the defendant's purpose]. The plaintiff denies this.
In order to prove a defense based on frustration of purpose, the defendant must first show, by clear and convincing evidence,(28) that the plaintiff and defendant implicitly agreed that their contract and their promises were conditioned on [identify purpose alleged]. That is a question for me to decide, and I have found the parties did implicitly agree that [identify purpose] was a condition or foundation of the contract.(29)
But, that does not end the issue. Defendant must still persuade you, by clear and convincing evidence, that the condition was not merely one of several, but was the essence of the contract.(30) Defendant must also show that the [identify event or circumstance] occurred; that it occurred through no fault of the defendant; and that it totally destroyed the whole purpose of the contract.(31)
It is important to keep in mind that only those circumstances that the defendant could not reasonably be expected to have known will excuse the defendant's performance based on frustration of purpose. If the defendant should reasonably have been expected to be aware of the circumstances that frustrated the contract's purpose, then defendant may not be excused from defendant’s obligation to perform the contract.(32)
i. Undue Influence
If a defendant makes a contract because of undue influence by the plaintiff, then the contract is voidable and may not be enforced against the defendant.(33) That means that the plaintiff cannot make the defendant perform what the contract required, or make the defendant pay the plaintiff money damages for failing to do what the contract required.
The defendant claims that defendant made the contract because of the undue influence exerted by the plaintiff. [State the alleged acts of undue influence]. The plaintiff denies this.
When a defendant makes a contract because of undue influence, defendant does not follow defendant's own will, but instead, follows the plaintiff's will, which the plaintiff imposed on the defendant.(34)
In order to prove a defense based on undue influence, the defendant must prove that the plaintiff's influence prevented the defendant from deciding, based on defendant's own free will, to make the contract. The defendant must prove that the plaintiff's influence forced the defendant to do something that defendant would not otherwise have done.(35) It is important to keep in mind that not every type of influence can be characterized as undue. Honest persuasion, advice, suggestion, solicitation and even argument are not undue influence unless they prevent the defendant from acting based on his/her own will.(36) The defendant must prove defendant’s defense of undue influence by a preponderance of the evidence.(37)
1. Confidential Relationship
Note to Judge:Use if the defendant claims confidential relationship.
The defendant claims defendant had a confidential relationship with the plaintiff. If the defendant proves the existence of a confidential relationship with the plaintiff, you as jurors must presume that the contract was made as a result of undue influence.(38) In other words, once the defendant proves that a confidential relation existed, then the defendant no longer has the burden of proving that the contract was made as a result of undue influence. Instead, the burden shifts to the plaintiff to prove(39) that the defendant agreed to the contract based on defendant’s own free will and a clear understanding of the contract terms.(40)
By confidential relationship, I do not mean simply a relationship where people share confidences or secrets. Rather, a confidential relationship in cases of alleged undue influence is any relationship where the defendant depends on or relies on the plaintiff for any significant support, assistance or service.(41) When a person depends on another in a confidential relationship, one person holds a dominant position over the other, and the parties do not deal on equal terms.(42) As a result, the person in whom confidence is placed may take advantage of his/her dominant position to influence the other to make a contract against his or her will.
You must decide if a confidential relationship existed between the plaintiff and defendant when the contract was made. If you find that a confidential relationship existed, you must then decide whether the plaintiff has proved that the defendant nonetheless made the contract based on defendant’s own will. If you find that the
plaintiff has proved that the defendant made the contract based on defendant’s own will, then you must reject defendant's undue influence defense.
2. Fiduciary Relationship
Note to Judge:Use if the defendant claims fiduciary relationship.
The defendant claims that plaintiff had a fiduciary relationship with the defendant, and, as a result, exercised undue influence over the defendant. The defendant has the burden to prove that the fiduciary relationship existed. If the defendant meets that burden, then you, as jurors, must presume that the contract was made as a result of undue influence, unless the plaintiff convinces you otherwise. In other words, the defendant no longer has the burden of proving that the contract was made as a result of undue influence. Instead, the burden shifts to the plaintiff(43) to prove by clear and convincing evidence(44) that the defendant made the contract based on defendant’s own free will and a clear understanding of the contract terms.
A fiduciary is under a duty to act for or give advice for the benefit of another person on matters within the scope of their relationship.(45) A fiduciary holds a dominant position(46) and has a duty of absolute loyalty and good faith.(47)
It is your job to determine whether a fiduciary relationship existed between the plaintiff and defendant at the time the contract was made. If you find that the defendant has shown that a fiduciary relationship existed and the plaintiff has failed to prove, by clear and convincing evidence, that the defendant made the contract based on defendant’s own will, then defendant may void the contract. If you find that the plaintiff has proved, by clear and convincing evidence, that the defendant made the contract based on defendant’s own will, then you must reject the defendant's undue influence defense.
3. Independent Advice
Note to Judge: Use if plaintiff asserts independent advice.
If the defendant has shown that defendant had a confidential or fiduciary relationship with the plaintiff, you must also consider whether the defendant consulted with an impartial person not affiliated with the plaintiff about whether the contract was in the defendant's best interest.(48) If the defendant did have the benefit of advice from an impartial party, then the contract may be enforced.(49) When a confidential relationship is shown, the plaintiff has the burden to prove that the defendant received competent independent advice.(50)
4. Ratification
Note to Judge: Use if plaintiff asserts ratification.
Even if there had been undue influence exerted on the defendant, the contract will be enforced if the undue influence was removed and the defendant could have complained but did not. The plaintiff has the burden to show that the undue influence, if there had been any, was removed, and that the defendant did not complain within a reasonable time.(51)
j. Breach of Fiduciary Duty
If a defendant makes a contract with a fiduciary and the fiduciary fails to act with complete honesty and loyalty to the defendant, then the defendant may void the contract and the contract will not be enforced against defendant.(52) That means that the plaintiff cannot make the defendant do what the contract required or make the defendant pay money damages for failing to do what the contract required.
The defendant claims that the plaintiff was a fiduciary and that plaintiff breached plaintiff's duty by [state alleged acts of fiduciary breach]. The plaintiff denies this.
A fiduciary is under a duty to act for or give advice for the benefit of another person on matters within the scope of their relationship.(53) The person to whom a fiduciary has a duty is called a principal. A fiduciary has a duty of absolute loyalty and good faith to his or her principal,(54) and must disclose any information or circumstance that might affect the fiduciary's loyalty to the principal.(55) The defendant must prove by a preponderance of the evidence that the plaintiff was in a fiduciary relationship with the defendant when the contract was made.(56)
If you find that there was a fiduciary relationship between the plaintiff and defendant when the contract was made, then the plaintiff has the burden of proving, by clear and convincing evidence, that plaintiff made full disclosure, was honest, and acted in good faith and in the defendant's best interest.(57)
Keep in mind that if you find that a fiduciary relationship existed and that the plaintiff breached plaintiff’s fiduciary duty, it does not matter whether or not the contract itself turned out to be a bad deal or an unfair deal for the defendant.(58) Defendant may still void the contract.
Plaintiff denies that plaintiff violated plaintiff’s fiduciary duty. You must decide, has plaintiff proved that plaintiff was completely honest with defendant? Did plaintiff make full disclosure? Did plaintiff act honorably? If your answer is "no" to any of those questions, then the defendant may void the contract.
k. Mental Competency
Many times, if a defendant was incompetent when defendant made the contract, then the contract cannot be enforced. That means the plaintiff cannot make the defendant do what the contract required, or make the defendant pay money for not doing what the contract required.
The defendant claims that defendant was incompetent when the contract was made. The plaintiff denies that.
It is your job to decide if the defendant has shown that defendant was incompetent when defendant made the contract. To show that defendant was incompetent, the defendant must show that when defendant made the contract, defendant did not have the mental capacity to understand the nature and effect of what defendant was doing.(59) You may consider the testimony of medical, psychiatric or psychological experts.(60) But remember, old age or physical or mental illness is not the same as incompetence.(61)
In deciding if defendant was incompetent, you should ask: was the defendant able to understand what defendant was doing. Sometimes, a person with plenty of intelligence and mental capacity will sign a contract without thinking about the consequences. That's not incompetence. That person could understand; but simply did not bother. An incompetent person does not have the ability to understand.
[If relevant: Even if another court made a finding about a person's mental illness, for example, by committing the person to a mental hospital, that by itself does not decide that the person was incompetent to make a contract. However, you can take that into account in making your decision.(62)]
1. Defendant’s Intoxication
Note to Judge:Use if the defense of incompetence is based on the defendant's intoxication.
The defendant claims that defendant was incompetent because he was intoxicated. To prove incompetence by reason of intoxication, the defendant must show that defendant was so intoxicated that defendant’s mental powers of reasoning and understanding were so impaired that defendant could not realize and appreciate the nature and consequences of what defendant was doing.(63)
2. Necessaries
Note to Judge:Use if appropriate, add charge on con tract for necessaries.
Sometimes, even when a defendant was incompetent, the contract will be enforced. One of those times is when the contract was for necessaries; that is, a contract for the sale of something that the defendant could not live without.(64)
That kind of contract is enforceable, even if made by an incompetent person, if the plaintiff did not know that the defendant was incompetent and did not know facts that would have led a reasonable person to conclude that the defendant was incompetent and if the contract was fair.(65) By fair, I mean, the contract did not take advantage of the defendant. The plaintiff says that the contract in this case was the kind of a contract that can be enforced; the plaintiff says that it was fair, it was for necessaries, and plaintiff did not know that the defendant was incompetent and did not know facts that would have led a reasonable person to know that the defendant was incompetent. Defendant denies this. It is plaintiff's burden to show that the contract and facts were as plaintiff claims.(66)
3. Executed Contracts
Note to Judge:If appropriate, add charge on executed contracts.
Sometimes, even when a defendant was incompetent, the contract will be enforced. One of those times is when the plaintiff has completed plaintiff’s end of the bargain; and the contract was fair, in other words, the contract did not take advantage of the defendant; and the plaintiff did not know that the defendant was incompetent when he/she made the contract; and the plaintiff did not know facts that would have led a reasonable person to know that the defendant was incompetent.(67)
Plaintiff says that the contract in this case was the kind of contract that can be enforced even if the defendant was incompetent. Plaintiff claims that plaintiff has delivered what plaintiff promised; the contract was fair; and plaintiff did not know and could not reasonably have known that defendant was incompetent. Defendant denies this. It is plaintiff's burden to show that the contract and facts were as plaintiff claims.
l. Minority
Sometimes, a contract with a minor may not be fully enforced, meaning, the adult who made the contract with the minor may not be able to force the minor to do all that the minor promised, or the adult may not be able to make the minor pay all the money that the adult would otherwise be entitled to if the contract had been made with an adult.(68)
Defendant says that when defendant made the contract with plaintiff, defendant was under the age of eighteen -- which is the age of adulthood under New Jersey law.(69) Plaintiff denies this. Defendant has the burden to show that when defendant made the contract, defendant was under the age of eighteen.
1. Necessaries
Note to Judge:Use if the plaintiff claims that the con tract involved necessaries.
Even if the defendant was under eighteen when he/she made the contract, the plaintiff is entitled to the reasonable value of goods or services [sold, leased, rented, etc.] to the defendant, if the goods or services were "necessary" -- that is, if the goods or services were something that the defendant required in order to live, considering the nature of the thing sold, and the defendant's needs at the time.(70) Basic food, shelter and health care are examples of necessary things.(71)
The plaintiff says that the goods or services he [sold, leased, rented, etc.] under the contract were necessary. The defendant denies this. The plaintiff has the burden to prove that the goods or services were necessary.
And even if the plaintiff convinces you that the goods or services were necessary, the plaintiff is entitled only to the reasonable value of the goods or services, even if that is less than the amount in the contract. Plaintiff has the burden to prove to you that the amount in the contract was a reasonable amount.(72)
2. Ratification
Note to Judge:Use if the plaintiff claims that the defen dant ratified the contract.
A person who was under eighteen when he/she made the contract may not undo the contract if he/she has already ratified it after he/she reached eighteen. A person ratifies a contract when he/she acts in a way that shows that he/she wants to keep the contract.(73)
Simply waiting to disavow a contract is not enough by itself to show that the defendant ratified the contract. Plaintiff has the burden to show that the defendant ratified the contract. Plaintiff says that defendant ratified the contract. Defendant denies this. If you find that defendant has in fact ratified the contract, then plaintiff may enforce the contract, even though defendant was under eighteen when he/she first made the contract.
3. Misrepresentation of Age
Note to Judge:Use if the plaintiff claims that the defen dant misrepresented himself to be an adult.
The plaintiff says that the defendant misrepresented his/her age when he/she made the contract. Plaintiff says that the defendant misled plaintiff into thinking that defendant was over eighteen. Plaintiff has the burden to prove that defendant misrepresented defendant’s age. If you find that defendant did misrepresent defendant’s age, then defendant may not undo the contract even though defendant made the contract when defendant was under eighteen, unless defendant gives back to the plaintiff any benefits defendant received under the contract.(74)
If the defendant gives back any benefits defendant received, then defendant may undo the contract, even though defendant misrepresented defendant’s age when he or she made the contract.
4. Emancipation
Note to Judge: Use if the plaintiff claims emancipation.
A person who was under eighteen when he/she made the contract may not undo the contract on account of his/her age if the person was emancipated when he/she made the contract.(75) A minor is emancipated if he or she is living independently of his or her parents or guardian, who have given up their right to custody and have been relieved of their duty to support. This can happen when a child is married before reaching the age of majority, or it can happen when the child has simply lived on his or her own as an adult.(76) Plaintiff has the burden to prove that defendant was emancipated.
5. Value of Retained Benefits
Note to Judge:Use if the issue is the return of retained benefits.
A person who was under eighteen when he/she made the contract, may undo a contract while he/she is under eighteen, or within [reasonable time, up to statute of limitations] after reaching eighteen.(77) But, even if the minor undoes the contract, the other party has a right to the return of any benefits, goods, services that were not paid for.(78) Plaintiff has the burden of proving that the defendant has received benefits, goods, services for which there was no payment, and the amount that plaintiff is entitled to recover.(79)
2. Equitable Defenses
Prefatory Note On The Right To Jury Trial On Equitable Defenses
The following charges on affirmative defenses to contract claims cover the equitable defenses of equitable estoppel and equitable fraud. The Committee notes that a question can be raised regarding whether a party has a right to trial by jury on an equitable defense. See, e.g., Penbrook Hauling Co. v. Sovereign Constr. Co., 136 N.J. Super. 395 (App. Div. 1975) (no right to jury trial on equitable defense of equitable estoppel); M. Schnitzer & J. Wildstein, N.J. Rules Serv., AIV1270 (1982 reprint) (“The issue of equitable fraud, as distinguished from legal fraud . . . whether asserted as the basis for an equitable claim or in an answer to a legal claim, is exclusively of equitable cognizance. Hence, such issue is triable to a court alone.”) See also Weintraub v. Krobatsch, 64 N.J. 445, 455 (1974) (factual as well as legal disputes relating to plaintiff’s claim seeing recission based on equitable fraud is for the trial judge alone.)
Similarly, an affirmative defense of mistake is an equitable one. Massari v. Einsiedler, 6 N.J. 303, 311 (1951). In other words, it is a defense that would entitle a party to equitable relief from an old court of equity. Id. at 311-12. In a case of mistake, the equitable forms of relief potentially available are rescission and reformation. Id. at 311 (mutual mistake is grounds for reformation); Bonnco Petrol Inc. v. Epstein, 115 N.J. 599, 608 (1989) (contract is voidable by adversely affected party in case of mutual mistake); Asbestos Fibres, Inc. v. Martin Lab, Inc., 12 N.J. 233, 239 (1953) (in case involving claim for contract reformation based on mutual mistake, court states that reformation is “an issue peculiarly and solely equitable cognizance.”); Hamel v. Allstate Ins. Co., 233 N.J. Super. 502 (App. Div. 1989) (rescission available for unilateral mistake if specified conditions met). A claim of reformation on grounds of mistake is therefore triable by the court alone, even though the case may involve other issues triable as of right by a jury. Asbestos Fibres, Inc. v. Martin Lab., Inc., supra 12 N.J. at 239 (stating that court shall fully dispose of all equitable issues or other issues not triable as of right by a jury, leaving only purely legal issues for determination by the jury); Volker v. Connecticut Fire Ins. Co., 11 N.J. Super. 225, 231 (App. Div. 1951).
If this issue of equitable relief by way of reformation was properly before the court, the issue should have been decided by the court alone, even though other issues were involved in the case which were triable as of right by the jury. Ibid.
However, even if no jury right exists, equitable defenses may be tried by a jury with the consent of the parties and the court (R. 4:35-3). For ease of reference, the equitable affirmative defenses are presented separately from legal defenses.
a. Estoppel
Defendant claims that plaintiff should be forbidden from insisting upon performance of [insert performance obligation] due to plaintiff’s statement or conduct. Defendant must prove that defendant changed defendant’s position to defendant’s detriment by relying upon the plaintiff’s statement or conduct. The defendant must show:
a. that the plaintiff’s statement or conduct amounted to a misrepresentation or a concealment of material facts;
b. that the plaintiff knew or should have known the true facts;
c. that the defendant did not know of the facts concealed or the misrepre sentation at the time defendant acted upon the plaintiff’s statement or conduct;
d. that the statement or conduct was said (or done) by the plaintiff with the intention that it be relied upon by the defendant;
e. that the defendant actually relied on plaintiff’s conduct to defendant’s detriment or harm and that such reliance was reasonable and justified.(80)
b. Equitable Fraud(81)
When a defendant has agreed to a contract because the plaintiff made misrepresentations [or concealed or failed to disclose information to the defendant that he/she should have disclosed], then, in some cases, the contract is voidable, and may not be enforced against the defendant.(82) That means that the plaintiff cannot make the defendant perform what the contract required, or make the defendant pay the plaintiff money damages for failing to do what the contract required.
The defendant in this case claims that he/she made the contract because of plaintiff's misrepresentations [concealment or non-disclosures]. Specifically, [state the alleged acts of fraud]. The plaintiff denies this.
In order to prove a defense of misrepresentation [concealment or non- disclosure] that would relieve the defendant of defendant’s obligation to do what the contract required, the defendant must show four things by clear and convincing evidence:(83)
1. material misrepresentation;
2. misrepresentation was of a presently existing or past fact;
3. justifiable reliance by the other party; and
4. damages to the other party.
I shall now explain each of these elements in detail. First, to prove this defense, defendant must prove that the plaintiff misrepresented an existing or past fact [or concealed or failed to disclose an existing or past fact when plaintiff was duty bound to disclose such a fact].(84) A misrepresentation is any statement or conduct that is inconsistent with the facts -- in other words, a false statement. You must decide: did the plaintiff make the statement or representation as defendant alleges? Was it statement or representation of fact? And, if so, was the statement or representation false?
An opinion, or a statement of intent to do something in the future, is not a representation of fact. Just because an opinion turns out to be wrong does not make it false or a misrepresentation. And just because a person failed to do what he/she said he/she was going to do does not make a promise or statement of intent into a misrepresentation. However, it is a misrepresentation to falsely state one's opinion, or to falsely state one's intention.(85)
A misrepresentation can also be the concealment or non-disclosure of information that should be disclosed. Whether the plaintiff was required to disclose [describe information] is a decision for the court, and I charge you that [describe duty]. It is your job to decide whether that duty was violated.
Second, to succeed on defendant’s defense, the defendant must show that the misrepresentation [or concealment or non-disclosure] was of a fact or facts that were material. For a misrepresentation to be material, it must substantially affect a person's interests. In other words, it must be important to a reasonable person [and even if the information would not be important to the average person, if the plaintiff knew that the information was important to the defendant, then the misrepresentation must be viewed as material].(86)
Third, the defendant must show that defendant justifiably relied on the plaintiff's misrepresentation.(87) Even if the plaintiff misrepresented facts, the defense fails if you find that the defendant did not rely on the misrepresentation (for example, because defendant independently discovered the truth, or because the defendant did not pay attention to the misrepresentation.)(88)
Fourth, the defendant must show that as a result of the misrepresentation [concealment or non-disclosure], defendant suffered a loss. The defendant is not required to show that defendant suffered a financial loss to prove a defense of fraud; the defendant merely has to show that defendant suffered some type of loss.(89)
It is important to note that in order to be relieved from his/her contractual obligation, the defendant does not have to prove that the plaintiff knowingly misrepresented a fact or that the plaintiff intended to deceive the defendant.(90)
(1)See, e.g. Fusco v. City of Union City, 261 N.J. Super. 332 (App. Div. 1993).
(2)15 Williston on Contracts, Section 1865 at 582-85 (3d ed. 1972).
(3)Emerson N.Y. - N.J., Inc. v. Brookwood T.V. and Frederick M. Wood, 122 N.J. Super. 288, 294 (Law Div. 1973).
Note: See also Restatement (Second) of Contracts, § 280 at 377-378 (1981).
(4)It is unclear whether a contract entered into under duress is void, or merely voidable. Compare Shanley & Fisher, P.C. v. Sisselman, 215 N.J. Super. 200, 212 (App. Div. 1987) ("Our Supreme Court has recognized that when there has been moral compulsion sufficient to overcome the will of a person otherwise competent to contract, any agreement made under the circumstances is considered to be lacking in voluntary consent and therefore invalid.”) (emphasis added), with Glenfed Fin. Corp. v. Penick Corp., 276 N.J. Super. 163, 172 (App. Div. 1994) ("Our courts recognize that an otherwise enforceable contract may be invalidated on the ground that it was entered into under 'economic duress '.") (Emphasis added.)
(5)Continental Bank of Pa. v. Barclay Riding Acad., Inc., 93 N.J. 153, 176 (1983).
(6)See Zink v. Zink, 109 N.J. Eq. 155, 156 (Ch. 1931) (setting aside conveyance on grounds of duress where plaintiff was physically threatened and terrorized).
(7)See Continental Bank of Pa. v. Barclay Riding Acad., Inc., supra, 93 N.J. at 175-76:
As a starting point, we refer to the following definition of economic duress set forth in Williston:
While there is disagreement among the courts as to what degree of coercion is necessary to a finding of economic duress, there is general agreement as to its basic elements:
1. The party alleging economic duress must show that he has been the victim of a wrongful act of threat, and
2. Such act or threat must be one which deprives the victim of his unfettered will. 13 Williston, supra, § 1617 at 704 (footnotes omitted)
In his explanation of these elements, Williston notes that 'the party threatened must be compelled to make a disproportionate exchange of values or to give up something for nothing.' Ibid.
(8)Apparently, the court shall decide whether conduct is "wrongful." See Wolf v. Marlton Corp., 57 N.J. Super. 278, 285 (App. Div. 1959). In Wolf, the county court, sitting without a jury, rejected the builder/defendant's defense that its non-performance was justified by the plaintiff's threats. On appeal, the Appellate Division held that the trial court's determination was not entitled to the deference accorded a fact finding.
Moreover, even if the opinion is to be construed as containing an implied determination on the issue [of duress], we do not conceive that such would be a finding of fact, as distinguished from the determination of a legal issue. Whether duress exists in a particular transaction is generally a matter of fact, but what in given circum stances will constitute duress is a matter of law.
Wolf v. Marlton Corp., 57 N.J. Super. 278, 285 (App. Div. 1959) (Emphasis added).
See also Kehoe, Jury Instructions for Contract Cases (1995) at 580 ("Deciding whether the alleged facts are sufficiently 'wrongful' is probably a matter for the court and not the jury.")
On the other hand, the jury shall decide whether the action or threat was actually made and whether the party's will was overborne.
Was the method employed by Miller sufficient under all the facts and circumstances to disprove that his was a free and willing mind when he made the payment in order to obtain the immediate return of his securities? We think this was a jury question. Miller v. Eisele, 111 N.J.L. 268, 281 (E. & A. 1933).
However, without reference to Wolf, the Appellate Division apparently concluded in Shanley & Fisher, P.C. v. Sisselman, supra, 215 N.J. Super. at 214 that whether the conduct was wrongful and whether the conduct overbore defendant's will are both fact issues.
Thus, the matter must be remanded to the trial court for further proceedings to determine whether or not Sisselman's will was actually overborne ... and whether or not plaintiff's threatened withdrawal from representation was wrongful. It is only after these factual issues have been fully considered that a proper legal determi nation as to the validity and enforceability of the agreement may be made.
Conceivably, the Court in Shanley & Fisher, P.C. may not have considered whether the "wrongfulness determination" was a jury question; the trial court in that case was the Chancery Division, and perhaps the Appellate Division presumed that the fact of wrongfulness was to be determined by the court.
One may also find other broad statements that duress is a fact issue for the jury. For example, the Court in Miller quoted with approval an encyclopedia statement, "Thus it is for the jury to determine where the evidence is conflicting whether payment was (sic) made under duress was voluntary or involuntary.” 111 N.J.L. at 281 (citation omitted). See also Byron v. Byron, Heffernan & Co., 98 N.J.L. 127, 131 (E. & A. 1922) (“[I]t is stated above that the rule as it now exists is that the question of duress is one of fact in the particular case.”) However, statements such as these can be read to apply to the issues of whether the threat was made and whether the party’s will was overborne, and not to the issue of whether the conduct was sufficiently wrongful.
(9)The Supreme Court clearly stated "the test is essentially subjective." Rubenstein v. Rubenstein, 20 N.J. 359, 366-67 (1956). However, the Court in Continental Bank of Pa. v. Barclay Riding Acad., Inc., 93 N.J. 153, 179 n. 13, reopened the issue:
In light of our holding that Continental's conduct was not wrongful, we need not reach the delicate issue of whether Barclay's response to that conduct should be analyzed from an 'objective' or a 'subjective' standard. Compare Rubenstein v. Rubenstein, 20 N.J. 359, 367 (1956) (subjective standard) with King v. Margolis, 133 N.J. Eq. 61 (Ch.) aff’d, 133 N.J. Eq. 617 (E. & A. 1943) (objective standard). We leave that doctrinal debate to another day.
(10)See Byron v. Byron Heffernan & Co., supra, 98 N.J.L. at 132 (rejecting claim of duress, Court states: "It would be strange indeed if duress were imposed upon the 'men directing the affairs of the company' while they were in the presence and under the protection of counsel of their choice who was advising them with reference to the transaction.”)
(11)See Hemenway v. Smith, 104 N.J. Eq. 529 (E. & A. 1929) (rejecting duress claim where plaintiff "had ample time for reflection.")
(12)Whether there was a feasible, immediate remedy available to the victim of the threat is a non-decisive factor in deciding whether there was duress. See Continental Bank of Pa. v. Barclay Riding Acad., Inc., supra, 93 N.J. at 176-177.
(13)See Prudential Ins. v. Fidelity Union Trust Co., 128 N.J. Eq. 327, 328-29 (E. & A. 1940) (court concludes borrower's successful resistance to original threat of civil litigation demonstrated that his will was not overborne when the threat was repeated).
(14)Ballantine v. Stadler, 99 N.J. Eq. 404, 407-08 (E. & A. 1926):
When one seeks to avoid a contract on the ground of duress, the person seeking such avoidance should proceed within a reasonable time after removal of the duress, and if a person remains silent for an unreason able length of time, he may be held or be elected to waive the duress and ratify the contract.
(15)Atlantic City v. Farmers Supply & Products, 96 N.J.L. 504, 508-508 (E.&A. 1929); Coastal Oil v. Eastern Trailers Seaway Corp., 29 N.J. Super. 565, 577 (App. Div. 1954); Winfield v. Middlesex Contractors, 39 N.J. Super. 92, 102 (App. Div. 1950); Abeles v. Adams Engineer Co., 64 N.J. Super. 167 mod. 35 N.J. 411 (App. Div. 1960); See also Creek Ranch, Inc. v. New Jersey Turnpike Authority, 75 N.J. 421, 432 (1978); Blau v. Friedman, 26 N.J. 397 (1958); and see 5 Williston on Contracts, § 677 (3d ed. 1957); Restatement of Contracts § 295 (1932).
(16)North v. Jersey Knitting Mills, 98 N.J.L. 157, 159 (E. & A. 1922); Petrillo v. Bachenberg, 263 N.J. Super. 472, 480 (App. Div. 1993), aff’d, 139 N.J. 472 (1995). Plassmeyer v. Brenta, 24 N.J. Super. 322 (App. Div. 1953); Bertrand v. Jones, 58 N.J. Super. 273 (App. Div. 1959); West Jersey Title and Guaranty Co. v. Industrial Trust Co., 27 N.J. 144, 152 (1958).
(17)Mossberg v. Standard Oil Co. of N.J., 98 N.J. Super. 393, 406-07 (Law Div. 1967).
(18)Id.; See also Invengineering, Inc. v. Foregger Co., 293 F. 2d 201 (3d Cir. 1961).
(19)Sometimes, an illegal provision or a term contrary to public policy may be severed if it does not defeat the purpose of the whole contract. Jacob v. Norris, McLaughlin & Marcus, 128 N.J. 10, 33 (1992). Also, an illegal contract may sometimes be enforced to avoid hurting a person intended to be protected by the law, or to avoid an unjust forfeiture. Marx v. Jaffe, 92 N.J. Super. 143, 146-47 (App. Div. 1966).
(20)See Connell v. Parlavecchio, 255 N.J. Super. 45, 49-50 (App. Div. 1992) (stating, in realty seller's suit for damages against defaulting purchaser, "impossibility or impracticability of performance are complete defenses where a fact essential to performance is assumed by the parties but does not exist at the time for performance"), cert. denied 130 N.J. 16-17 (1992); Edwards v. Leopoldi, 20 N.J. Super. 43, 52-53 (App. Div. 1952) (when performance of a contract is dependent on the continued existence of a person, thing or circumstance, there is an implied condition that impossibility of performance caused by the death of the necessary person or destruction of the required object or circumstance, without the fault of the person against whom the contract is sought to be enforced, will excuse performance of the contract), cert. denied 10 N.J. 347 (1952). The doctrine is stated generally as follows:
Where, after a contract is made, a party's performance is made impracticable without his fault by the occurrence of an event the non- occurrence of which was a basic assumption on which the contract was made, his duty to render that performance is discharged, unless the language or the circumstances indicate the contrary.
Restatement (Second) of Contracts § 261 (1981).
Specific instances of impossibility include the death of a person necessary for the performance of a personal service contract, see Restatement (Second) of Contracts § 262, and destruction of, or the failure to come into being of, a specific thing essential for performance. See Restatement (Second) of Contracts § 263.
(21)The technicians have classified impossibility as objective, where it is due to the nature of the perfor mance, and subjective, where it is the result of the incapacity of the promisor. Objective impossibility is ordinarily a complete defense, unless the risk is assumed by the promisor rather than the promisee and the thing to be done is not illegal. Duff v. Trenton Beverage Co., 4 N.J. 595, 606 (1950).
See also Connell v. Parlavecchio, supra, 255 N.J. Super. at 49 (stating that impossibility is not a defense "where the difficulty is the personal inability of the promisor to perform.”)
(22)Fast v. Shaner, 183 F. 2d 504, 506 (3d Cir. 1950) ("If an elderly judge, for good consideration, promises to run 100 yards in 10 seconds and then fails to perform he can hardly be held to puff out the defense that he could not possibly run that fast. As the Restatement point out, there is a difference between 'the thing cannot be done' and 'I cannot do it.' Restatement, Contracts Sec. 455, Comment a."); Seitz v. Mark-O-Lite Sign Contractors, Inc., 210 N.J. Super. 646 (Law Div. 1986) (rejecting defense by contractor who claimed that illness of his sheet metal worker made performance by contractor itself impossible and, subcontracting out to another sheet metal worker would have been unprofitable).
(23)See 17A Am.Jur. 2d, Contracts § 673 (1991) ("... impossibility of performance, if it is to release a party from the obligation to perform his contract, must be real and not a mere inconvenience.")
(24)See Duff v. Trenton Beverage Co., supra, 4 N.J. at 605, quoting Williston on Contracts, § 1937 (1936):
The basis of the defense of impossibility is the presumed mutual assumption when the contract made that 'some fact essential to performance then exists or that it will exist when the time for performance arrives. The only evidence, however, of such mutual assumption is, generally, that the court thinks a reasonable person, that is, the court itself, would not have contemplated taking the risk of the existence of the fact in question.'
See also Model Vending, Inc. v. Stanisci, 74 N.J. Super. 12, 14 (Law Div. 1962) (holding that if an event that renders performance of a contract impossible was not reasonably within contemplation of the parties at the time the contract was made, the promisor is discharged from performance; and destruction by fire of the defendant's bowling alley made impossible the performance of a contract giving the plaintiff exclusive right to place vending machines in the defendant's bowling alley).
(25)For an event to trigger the defense, "it must be considered beyond the contemplation of the other party to the contract that he will be paid in such circumstances." Directions, Inc. v. New Prince Concrete Constr. Co., 200 N.J. Super. 639, 643 (App. Div. 1985) (reversing summary judgment on breach of contract claim of plaintiff-subcontractor, who was hired to direct traffic at construction site, and remanding for trial of defendant-contractor's defense that performance was made impossible by governmental edict barring traffic direction by civilians).
(26)See Rothman Realty Corp. v. Bereck, 73 N.J. 590, 601-02 (1977) (liability should not be imposed on a party who acts in good faith but is unable to consummate an agreement for reasons not related to any wrongful act or misconduct on his part). The Rothman Court held that a contract purchaser of realty was not liable to a real estate broker for commission lost due to defendant's failure to consummate the purchase, since an unexpected drop in the stock market beyond the defendant's control precluded the defendant from obtaining the funds necessary to complete the purchase.
(27)Simply stated, the concept is that a contract is to be considered 'subject to the implied condition that the parties shall be excused in case, before breach, the state of things constituting the fundamental basis of the contract ceases to exist without default of either of the parties.'
A-Leet Leasing Corp. v. Kingshead Corp., 150 N.J. Super.. 384, 397 (App. Div. 1977), (reversing trial court finding that purpose of contract frustrated) cert. denied 75 N.J. 528 (1977), quoting Edwards v. Leopoldi, 20 N.J. Super.. 43, 54 (App. Div. 1952), (reversing trial court on grounds that evidence did not support frustration defense) cert. denied 10 N.J. 347 (1952).
The purpose that is frustrated must be common to both parties.
To sustain a defense under the doctrine of frustration, it does not appear to be sufficient to disclose that the 'purpose' or 'desired object' of but one of the contracting parties has been frustrated. It is their common object that has to be frustrated, not merely the individual advantage which one party or the other might have achieved from the contract. Edwards v. Leopoldi, supra, 20 N.J. Super. at 55.
See Restatement (Second) of Contracts § 265 (1981):
Where, after a contract is made, a party's principal purpose is substantially frustrated without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his remaining duties to render performance are discharged, unless the language or the circumstances indicate the contrary.
(28)See A-Leet Leasing Corp. v. Kingshead Corp., supra, 150 N.J. Super. at 397 (relief from contractual obligation based on doctrine of frustration of purpose will only be granted if the evidence presented by defendant is clear, convincing and adequate); Edwards v. Leopoldi, supra, 20 N.J. Super. at 57 (affirmative proof of essential condition of contract must be "quite clear and convincing.")
(29)The Appellate Division in Edwards v. Leopoldi, supra, 20 N.J. Super. at 57 stated that the "pivotal question [in a frustration of purpose defense] is in reality a compound of law and fact." The legal issue appears to be whether the contract includes an implied term. "[C]ourts under a more modern philosophy may and do exercise the power to infer from the nature and substance of the contract and the surrounding circumstances that a critical and vital condition which is not expressed constituted a foundation on which the parties contracted." Ibid. (emphasis deleted). The fact issue pertains to whether the condition identified by the court is "essential." "Factually the inquiry relates to the degree of dependency of the attainment of the essential object and purpose of the parties upon the continued existence of the condition. Was the continued existence of the situation that constitutes the condition of the essence of the agreement?"
(30)In the evolution of an implied condition which will nullify a contract it must be evident that the state of 'the thing or things' which has been destroyed consti tuted such an essential and requisite element of the agreement that its destruction or cessation demolishes the attainment of the vital and fundamental purpose of the contracting parties, not merely one or a few of a variety of their purposes. Edwards v. Leopoldi, supra, 20 N.J. Super. at 55.
(31)See Edwards v. Leopoldi, supra, 20 N.J. Super. at 54 (when parties enter into a contract contemplating the continued existence of a "state of things as the foundation of their mutual obligations" and subsequently, those things cease to exist "without default of either of the parties" then the contract ceases to exist).
See Restatement (Second) of Contracts § 266(2):
Where, at the time a contract is made, a party's principal purpose is substantially frustrated without his fault by a fact of which he has no reason to know and the non-existence of which is a basic assumption on which the contract is made, no duty of that party to render performance arises, unless the language or circumstances indicate the contrary.
(32)City of Newark v. N. Jersey Dist. Water Supply Commission, 106 N.J. Super.. 88 (Ch. Div. 1968), aff’d, 54 N.J. 258 (1969).
(33)See Eisenberg v. Finston, 18 N.J. Super. 458, 463 (App. Div. 1952) (a contract conveying real property or a business is voidable by the transferor if he is subordinate to the transferee and there is undue influence exerted by the dominant party), cert. denied, 9 N.J. 609 (1952).
If a party's manifestation of assent to a contract is induced by undue influence by the other party, the contract is voidable by the victim. Restatement (Second) of Contracts § 177 (1981).
(34)See Haynes v. First Nat'l Bank of N.J., 87 N.J. 163, 176 (1981) (undue influence is mental, moral or physical exertion that destroys free agency and prevents a person from following his own will and instead, forces him to accept the domination and influence of another) (wills case).
See also Wolf v. Palisades Trust and Guaranty Co., 121 N.J. Eq. 385, 388 (Ch. 1937) (wills case).
(35)See Podkowicz v. Slowineski, 44 N.J. Super.. 149, 156 (App. Div. 1957) (when a dominant confidential relationship is not shown, a presumption of undue influence is not raised against the dominant party to whom a benefit inures; therefore, the burden remains on the party seeking to set aside a transfer to prove the existence of undue influence) (contract case), cert. denied, 25 N.J. 43 (1957). See also 13 Williston on Contracts § 1625 at 799-800 (Jaeger ed. 1970):
In the absence of a relationship between the parties to a transaction which tends to give one dominance over the other, undue influence must generally be proved by the party asserting it and it will not be presumed. . . . . The party alleging undue influence can, however, avoid this direct burden of proof by simply proving that he was the servient member of a confidential or fiduciary relationship.
Compare Haynes v. First Nat'l Bank of N.J., supra, 87 N.J. at 176 (the burden of proving undue influence in a will case lies upon the contestant of a will unless the contestant proves both (1) the existence of a confidential relationship and (2) suspicious circumstances surrounding the making of the will). Thus, it appears that one additional element -- suspicious circumstances -- is required to shift the burden in a will case. Compare also 5 Clapp, New Jersey Practice -- Wills and Administration §62 at 222 (1982) (confidential relationship without additional suspicious circumstances not enough to shift burden in wills case).
(36)See Gellert v. Livingston, 5 N.J. 65, 73 (1950) ("Not all influence is 'undue' influence."); 5A Clapp, New Jersey Practices -- Wills and Administration § 61 at 215 (1984) ("Influence arising from kind intentions and services is in no case undue; it is not coercion.")
(37)See Italian Fisherman, Inc. v. Commercial Union Assurance Co., 215 N.J. Super. 278, 282 (App. Div. 1986) (the preponderance of the evidence standard is the customary burden of proof in civil cases and the appropriate standard by which affirmative defenses must be proven), cert. denied, 107 N.J. 152 (1987).
(38)See Podkowicz v. Slowineski, supra, 44 N.J. Super. at 156, (the party seeking to set aside a contract has the burden of proving the existence of a dominant confidential relationship before the burden is shifted to the person in whom confidence is reposed and who has benefitted from the contract to prove that the contract was not assented to as a result of undue influence). See also Blake v. Brennan, 1 N.J. Super. 446, 453 (Ch. 1943) (contract case).
(39)See Eisenberg v. Finston, supra, 18 N.J. Super. at 463 (once the presumption of undue influence has been raised in a contract dispute, the party who benefits from the contract must overcome the presumption by a preponderance of the evidence). Cf. Haynes v. First Nat'l Bank of N.J., supra, 87 N.J. at 177-78 (under normal circumstances, the proponent of a will must overcome the presumption of undue influence by a preponderance of the evidence).
(40)See Podkowicz v. Slowineski, supra, 44 N.J. Super. at 155 (in a contract dispute between persons in a confidential relationship, the dominant party who acquired an advantage has the burden of proving that no deception or undue influence was practiced to induce formation of the contract).
(41)See Podkowicz v. Slowineski, supra, 44 N.J. Super. at 156 (describing a confidential relationship as any one between two parties where trust and confidence exist and where one of the parties is more or less dependent on the other) (contract case). Cf. Haynes v. First Nat'l Bank of N.J., supra, 87 N.J. at 176 (the court held that a confidential relationship existed between a testator, who was aged and debilitated, and her chief beneficiary, since the testator was dependent on the beneficiary).
(42)The test to determine whether a confidential relationship exists, giving rise to a presumption of undue influence, is whether the relationship between the parties to a contract is of such a character of trust and confidence as to render it reasonably certain that one party occupied a dominant position over the other and that consequently, they did not deal on terms of equality. Blake v. Brennan, supra, 1 N.J. Super. at 453 (contract case).
(43)See In re Estate of Lehner, 70 N.J. 434, 436 (1976), (existence of a fiduciary relationship between decedent and her attorney, who was the sole beneficiary of her will, was sufficient to create a presumption of undue influence). See also 13 Williston on Contracts § 1625 at 778, 805-806 (Jaeger ed. 1970) (once a party who alleges undue influence has made a case for the existence of a fiduciary relationship, any gain realized by the dominant party will be presumed to have been the result of the dominant party's abuse of such relationship and is prima facie voidable).
(44)See Haynes v. First Nat'l Bank of N.J., supra, 87 N.J. at 182 (the court found that a presumption of undue influence was created by the existence of a fiduciary relationship between a testator and her attorney because the attorney who advised the testator and drafted her will also represented the testator's daughter, who was the principal beneficiary of the will. As such, the court held that the more stringent standard of clear and convincing evidence is required to be met when there is a presumption of undue influence involving a fiduciary).
(45)See F.G. v. MacDonnell, 150 N.J. 550, 563 (1997).
(46)Ibid.
(47)Silverman v. Bresnahan, 35 N.J. Super. 390, 395 (App. Div. 1955) (contract case).
Bollinger v. Ward & Co., 34 N.J. Super. 583, 591 (App. Div. 1955), aff’d, 20 N.J. 331 (1956) (contract/breach of fiduciary duty case).
(48)See Wolf v. Palisades Trust & Guaranty Co., supra, 121 N.J. Eq. at 388-89 (the court extended the rule of independent advice beyond gifts to apply to all transactions where a dominant confidential relationship is shown and a resultant advantage accrues to the dominant party) (wills case).
Eisenberg v. Finston, supra, 18 N.J. Super. at 465-466 (citing Vanderbach v. Vollinger, 1 N.J. 481, 489 (1949) (contract case).
(49)See Bensel v. Anderson, 85 N.J. Eq. 391, 395 (Ch. 1915) (where one party to a contract is dependent on the other and makes an apparently improvident contract, depriving himself of his property in favor of the other, the contract cannot be sustained unless it is shown that the subordinate party had the benefit of independent advice), modified 87 N.J. Eq. 364 (E. & A. 1917).
(50)See Wolf v. Palisades Trust & Guaranty Co., supra, 121 N.J. Eq. at 388-89 (when a dominant confidential relationship is proven, the burden of showing that the subordinate party received competent independent advice before making a contract or a gift falls on the dominant party who has benefitted from the transaction) (wills case). See also Bensel v. Anderson, supra, 85 N.J. Eq. at 395.
(51)Cf. In re Raynolds, 132 N.J. Eq. 141, 159 (Prerog. 1942) (in will contest, the court held that ratification of a will obtained by undue influence removes "the bane of such influence." "Ratification may result if a testator allows such a will to remain uncanceled for any considerable length of time after its execution and after the removal of the influence which produced it, or after republication thereafter"), aff'd, 133 N.J. Eq. 344 (E. & A. 1943); Ballantine v. Stadler, 99 N.J. Eq. 404, 407-08 (E. & A. 1926) (duress case):
When one seeks to avoid a contract on the ground of duress, the person seeking such avoidance should proceed within a reasonable time after removal of the duress, and if a person remains silent for an unreasonable length of time, he may be held or be elected to waive the duress and ratify the contract.
(52)In Thompson v. Hoagland, 100 N.J. Super. 478, 482-83 (App. Div. 1968), the court held that a real estate broker has a fiduciary duty of good faith and full disclosure, and if that duty is breached, then the contract between the fiduciary and the principal is voidable at the principal's option.
See Silverman v. Bresnahan, 35 N.J. Super. 390, 395 (App. Div. 1955) (the court held that a broker's breach of his fiduciary duty relieved the principal (vendor) from his obligation to pay the broker's commission.)
(53)F.G. v. MacDonnell, 150 N.J. 550, 563 (1997). See also Restatement (Second) of Torts § 874 cmt. a (1979).
(54)See Bollinger v. Ward & Co., 34 N.J. Super., 583, 591 (App. Div. 1955), aff’d, 20 N.J. 331 (1956) ("No principle of law is more firmly established than that which forbids an agent to take an unfair personal advantage of the opportunities of his position in the use of things entrusted to him in the capacity of a fiduciary.")
(55)In an action by a real estate broker for commission earned in producing a buyer for defendant's realty, the Thompson court held that a fiduciary must disclose any circumstance that might reasonably be expected to influence the fiduciary's complete loyalty to the principal. Further, the court held that the broker's failure to disclose to the vendor that he was a joint investor in real estate with the prospective buyer rendered the transaction voidable at the vendor's option. Thompson v. Hoagland, supra, 100 N.J. Super. at 483. Similarly, the court in Silverman held that a broker employed by a vendor of realty had a duty to disclose that he also represented a prospective buyer and would receive a commission from that buyer. Silverman v. Bresnahan, supra, 35 N.J. Super. at 395.
Attorneys who dare enter into business agreements with clients must, to satisfy their fiduciary obligations, make full and complete disclosure of all facts and must advise the client to seek independent legal advice and the client must actually get such advice. See In re Humen, 123 N.J. 289 (1991) ("It is also well established that an attorney should refrain from engaging in a business transaction with a client who has not obtained independent legal advice on the matter."); In re Gavel, 22 N.J. 248, 262 (1956) (requiring not only full and complete disclosure but also absolute independence of action by client to overcome presumption of invalidity of contract between attorney and client.) Even in some cases involving fee agreements, an attorney must suggest that the client secure independent advice of a second attorney before signing the fee agreement with the firm. Cohen v. Radio-Electronics Officers Union,146 N.J. 140, 162 (1996).
(56)See Italian Fisherman, Inc. v. Commercial Union Assurance Co., 215 N.J. Super. 278, 282 (App. Div. 1986) (the preponderance of the evidence standard is the customary burden of proof in civil cases and the appropriate standard by which affirmative defenses must be proven).
See also State v. Cale, 19 N.J. Super. 397, 399 (App. Div. 1952).
(57)See In re Gavel, supra, 22 N.J. at 262 (clear and convincing standard). Cf. Haynes v. First Nat'l Bank of N.J., supra, 87 N.J. 163, 182 (1981) (where presumption of undue influence was raised against a fiduciary, an attorney, in a will contest, the fiduciary was required to prove by clear and convincing evidence that he did not exert undue influence on the testator when she made the will).
(58)Carluccio v. Hudson Street Holding Co., 141 N.J. Eq. 449, 455 (E. & A. 1948); Thompson v. Hoagland, supra, 100 N.J. Super. at 483 (defendant need not show that contract was unfair or caused harm.) But an attorney contracting with a client must affirmatively show that the contract was fair and equitable. See Cohen v. Radio-Electronics Officers Union, supra, 146 N.J. at 155 (1995) (fee agreement); In re Nichols, 95 N.J. 126, 131 (1984) ("It is well-settled that all transactions of an attorney with his client are subject to close scrutiny and the burden of establishing the fairness and equity of the transaction rests upon the attorney"); In re Gavel, supra, 22 N.J. at 262 (presumptive invalidity of agreement between attorney and client "can be overcome by only the clearest and most convincing evidence showing full and complete disclosure of all facts known to the attorney and absolute independence of action on the part of the client. . . .”) However, the issue of whether the contract itself is fair and equitable appears to be one for the Court, not the jury. See Gray v. Joseph J. Brunetti Constr. Co., 159 F.Supp. 417, 424 (D.N.J. 1958) (issue of alleged unfairness of agreement with attorney for court to decide), rev'd on other grounds, 266 F. 2d 809 (3d Cir. 1959), cert. denied, 361 U.S. 826 (1959). The issue of the agreement's fairness appears to be an equitable, not a legal issue. See In re Gallop, 85 N.J. 317, 322 (1981) (stating that if attorney does not meet burden of showing fairness and equity of transaction "equity has regarded such transactions tainted so as to constitute a constructive fraud.”)
(59)Wolkoff v. Villane, 288 N.J. Super. 282, 287 (App. Div. 1996).
(60)Id. at 291-92.
(61)See, e.g., Vincent v. Campbell, 140 N.J. Eq. 140, 142 (Ch. 1947) (holding that mental incapacity not proved by evidence of illness).
(62)See In re Lambert, 33 N.J. Super. 90 (Ch. Div. 1954) (stating that it was not inconsistent for jury to find person competent to manage her own affairs, where county court had previously adjudicated the person of unsound mind and committed the person to a mental hospital.) Cf. Oswald v. Seidler, 136 N.J. Eq. 443, 445 (E. & A. 1945) (holding that "inference inescapable" that party incompetent based on her commitment as insane and related facts and circumstances).
(63)Seminara v. Grisman, 137 N.J. Eq. 307, 313 (Ch. 1945) (holding that defense of incompetence by reason of intoxication should follow the general rules on the affirmative defense of mental incompetence.)
(64)Bancredit, Inc. v. Bethea, 65 N.J. Super. 538, 549 (App. Div. 1961) (in a case involving infancy defense, court defines necessaries as not only bodily or mental essentials, but occupational accessories that are a "link in the chain of physical survival.")
(65)Manufacturers Trust Co. v. Podvin, 10 N.J. 199, 210 (1952); Matthiessen & Weichers Refining Co. v. McMahon's Administrator, 38 N.J.L. 536, 543-44 (E. & A. 1876).
(66)Cf. Bancredit, Inc., supra, 65 N.J. Super. at 550 (although defendant has the burden of proving the affirmative defense of infancy, once facts of infancy are demonstrated, plaintiff has the burden of establishing an exception to the infancy defense). Query, should the plaintiff claiming an exception to the affirmative defense of incompetency bear the burden of establishing that exception?