Bill Text: NJ A5164 | 2018-2019 | Regular Session | Introduced
Bill Title: Requires business financing contracts that contain confession by judgment provisions to include certain notifications.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2019-03-11 - Introduced, Referred to Assembly Financial Institutions and Insurance Committee [A5164 Detail]
Download: New_Jersey-2018-A5164-Introduced.html
Sponsored by:
Assemblyman CLINTON CALABRESE
District 36 (Bergen and Passaic)
SYNOPSIS
Requires business financing contracts that contain confession by judgment provisions to include certain notifications.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning business financing and confession by judgment and supplementing chapter 16 of Title 2A of the New Jersey Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. A provider that extends business financing containing a judgment by confession to a concern in this State shall provide the concern with the following notification at the time the contract is offered:
"Please note that by agreeing to a judgment by confession you may be relinquishing or waiving your right to: (1) notice of an action for judgment; (2) the opportunity to be heard prior to judgment; and (3) have the creditor bear the burden of proving your default under the terms of the agreement. This may result in your property being exposed to execution of judgment and to your bank accounts being frozen and garnished without any prior notice to you or opportunity to defend against the action. This may also result in your exposure to attorney's fees and costs should you decide to make any attempts to challenge a judgment by confession."
b. A provision of any contract for business financing that provides for a judgment by confession that does not contain the notification required pursuant to subsection a. of this section shall be invalid and unenforceable against any concern.
c. As used in this section:
"Business financing" means a loan, line of credit, cash advance, factoring, or asset-based transaction made for a business purpose.
"Concern" means any trade, business, or professional entity conducted for profit, and includes, but is not limited to, individuals, partnerships, corporations, joint ventures, associations, and cooperatives.
"Judgment by confession" means a written agreement that accepts liability and specifies damages in cases where a concern is in violation of a business financing agreement.
2. This act shall take effect on the 90th day next following the date of enactment.
STATEMENT
This bill requires business financing contracts that contain confession by judgment provisions to include certain notifications.
Specifically, the bill provides that a provider that extends business financing containing a judgment by confession to a concern in this State must provide the concern with the following notification at the time the contract is offered:
"Please note that by agreeing to a judgment by confession you may be relinquishing or waiving your right to: (1) notice of an action for judgment; (2) the opportunity to be heard prior to judgment; and (3) have the creditor bear the burden of proving your default under the terms of the agreement. This may result in your property being exposed to execution of judgment and to your bank accounts being frozen and garnished without any prior notice to you or opportunity to defend against the action. This may also result in your exposure to attorney's fees and costs should you decide to make any attempts to challenge a judgment by confession."
Under the bill, a provision of any contract for business financing that provides for a judgment by confession that does not contain the notification is invalid and unenforceable against any concern.
The bill provides that "judgment by confession" means a written agreement that accepts liability and specifies damages in cases where a concern is in violation of a business financing agreement.
