In All The Way Towing, LLC v. Bucks County International, Inc., (A066/67-17) (Decided January 24, 2019), the New Jersey Supreme Court held that a customized tow truck fit within the NJ Consumer Fraud Act’s (CFA) expansive definition of “merchandise”. The Court agreed with the Appellate Division that the trial court’s approach in defining merchandise was too narrow under the CFA when the trial court granted summary judgment to the defendant. It also agreed with the Appellate Division that the matter should be remanded to the trial court to determine whether the defendant has other meritorious bases for seeking summary judgment.
Defendant unsuccessfully argued that the CFA did not apply to transactions involving custom-made goods designed specifically to meet a purchaser’s particular needs that were not available to the public for sale. The New Jersey Supreme Court focused on the meaning of “merchandise” under the CFA which is defined as follows:
The term “merchandise” shall include any objects, wares, goods, commodities, services or anything offered, directly or indirectly to the public for sale[.][N.J.S.A. 56:8-1(c).]
The Court noted that the CFA must be liberally construed and is applicable to commercial transactions such as here where two commercial entities negotiated the sale and purchase of a custom-built truck. This is because the definition of “person” includes business entities (N.J.S.A. 56:8-1(d)) and because the word “person” in N.J.S.A. 56:8-2 refers not only to the person who engages in the unconscionable commercial practice, fraud, or deception but also the person who is the victim of such practice. The Court further relied on several cases under the CFA that have recognized that the CFA applies to custom-made goods.
The New Jersey Supreme Court did not suggest that all business-to-business transactions are automatically offered to the public for sale. In this case, plaintiff’s purchase of a tow truck for use in their business “was not disqualifying” to remove the transaction from the reach of the CFA. However, a “more nuanced assessment” can be required to determine whether a transaction, good or service is of the type offered to the public such transaction, good or service is within the CFA.
In business-to-business transactions the Court noted that it is the “nature of the transaction” that will determine whether it can fit within the CFA’s definition of “merchandise.”The New Jersey Supreme Court adopted the following factors for use by the trial courts to promote consistency in assessing the nature of a transaction in a business-to- business setting to determine whether the CFA will apply to the merchandise: (1) the complexity of the transaction, taking into account any negotiation, bidding, or request for proposals process; (2) the identity and sophistication of the parties, which includes whether the parties received legal or expert assistance in the development or execution of the transaction; (3) the nature of the relationship between the parties and whether there was any relevant underlying understanding or prior transactions between the parties; and (4) the public availability of the subject merchandise.
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