Question:
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Ken, we have a well respected large client who really wants to switch their monitoring service of nine locations to us after a bad experience with their old alarm company where their attorney & the old alarm provider’s attorneys had to fight each other just to terminate the relationship. Then this client wanted my contract so their attorney could review it. My office faxed over our old contract of 15 years by mistake and their attorney stated this contract is almost not legal and refused to sign it. Then I had my office send over the correct contracts which your firm created, and now their attorney states this contract removes all liability and essentially makes our firm not responsible for anything. I agree, which is why we purchased your contracts.
Our dilemma is that while the attorneys were reviewing your contract the client called me and stated the old alarm company showed up unannounced on a Friday @ 4:30 pm and terminated their monitoring service. We were immediately needed and we went and converted all of their systems to our monitoring station so as to have them protected over the weekend. Now the client is still refusing to sign the contract as it is written. I am a company who is not wanting to lock them into a contract they cannot terminate, but reasonable liability needs to be placed on both of us. The client is stating that their insurance company is asking that we both take a fair amount of shared liability such as 80% on the client & 20% on us. Is there any contract or document we can get them to sign that basically states no party is at fault or both parties take reasonable shared liability and the monitoring service can be terminated within 30 days by either party. In this economy I hate to let a client with nine locations go over a contract. I realize no other company out there will monitor without a contract, but I think someone will.
We really feel that this clients does not want to hurt us as much as they had such a sour experience with their old alarm company. What can we do besides walking away to salvage this good client?
Rich R.
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Answer:
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Well for starters you can do what I suggested as one option just yesterday,
do the job, close your eyes, cross your fingers and hope for the best.
The subscriber's insurance company's suggestion that you take on 80% of the liability and they take on 20% is laughable. Maybe you should suggest that you and the insurance company pool its charges and your charges and you take 80% of that. You can use your share to go out and buy more insurance. The problem of course is, just what liability is the subscriber and its insurance company expecting your to cover 80% of. The answer is obvious, and unacceptable. They want your alarm system to prevent and guarantee no loss. Whatever that alarm system is designed to detect, if there is a loss, no matter what, you pay 80%. Sounds like you are the primary insurer. Well you're not getting paid like a primary insurer and you certainly don't intent to assume that obligation and risk.
One way to salvage the subscriber is to explain to its attorney what role you play in the security of the subscriber's business. If you can't articulate that argument then hire me to talk to them; I do it all the time. Takes between a half hour and hour to work things out usually; rarely is a deal lost. Educating the subscriber and its attorney goes a long way to work out the contract issues. The attorney was quite right that your contract relieved you of liability - very good that he saw that - especially since the contract is written so a fourth grader could understand it just that way. The contract screams that you have no liability - it conveys exactly what you intend it to say.
If a contract is written in such as way that its hard to read, and believe me most are, then you are going to have a hard time enforcing it. Here is how the court thinks of your subscriber - "the least sophisticated consumer." Maybe that's a third grader. It sure isn't a lawyer - most anyway - and it isn't a sophisticated business man.