By Fredrick P. Niemann, Esq., a NJ Consumer Fraud Attorney
The Consumer Fraud Act (CFA) provides protection for many NJ consumers when dealing with the sales of real estate and merchandise. The Act provides broad protections for both individuals and corporations involved in these two types of sales, allowing them to bring claims against fraud perpetrators when other types of claims may fail. However, it is important to note that the Consumer Fraud Act, while covering a large number of consumer contracts, does not cover every single contract entered into by corporations.
New Jersey Courts were recently called upon to determine whether or not the Consumer Fraud Act applied to a complex installation of a computer software system. The case involved a corporation seeking to upgrade its computer system and the company it chose to do the upgrades. The defendant claimed that the case did not fall under the CFA because the installation was “not available to the public” and therefore did not qualify as the “sale of merchandise”, a requirement for the CFA to be applicable.
The NJ Court agreed with the defendant, citing numerous factors in determining that although the defendant may offer some services to the public, this particular transaction was not one that was offered to the public and therefore the CFA did not apply. The Court noted that the transaction was not a simple sale of software to the general public, but rather was an individualized installation that the plaintiff had sought through various proposals by different computer companies. After the plaintiff had received the defendant’s proposal, there were over two years of evaluations done by the defendant and the contract between the parties used such evaluations to determine a custom-built system specified specifically for the defendant. The contract for the installation of the software was also the product of lengthy negotiations between the parties. These factors all added up to show the installation was not available to the public and thus not considered the “sale of merchandise”, thereby making the Consumer Fraud Act inapplicable.
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