Legal Question in Business Law in New Jersey

Unfair business practices or

This is an esoteric question. I am a

dealer in musical instruments

(violins, violas, and cellos). There is a

widespread, largely secret practice

among some dealers of paying

commissions in cash to teachers who

recommend the purchase of

instruments from a particular dealer

to their students. This is done

without the knowledge of the

students or their parents. The rate

paid typically ranges between 8 and

12% of the purchase price.

My question is, does this practice

constitute collusion or some sort of

intent to defraud, and is it legal in

the state of New Jersey?


Asked on 9/09/08, 11:59 pm

1 Answer from Attorneys
John Corbett Corbett Law Firm LLC

Re: Unfair business practices or

You're probably on safe ground if the sale is entirely a private one. The teachers may be violating some internal policy, but that will not get you in trouble. On the other hand, avoid the situation where the sale is to a public body such as a puplic school. I have not checked this case specifically, but applicable public contracting law almost always prohibits offering or paying a public employee anything in connection with procurement of things bought with public funds. The teeth in such laws generally affect both the offeror and the public employee. Typically, there is a criminal penalty coupled with debarment.

If the issue of selling to public schools is important to you, I can research the specific laws for you.

See also: http://info.corbettlaw.net/lawguru.htm

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Answered on 9/10/08, 11:55 am


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