February 21, 2011
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Question
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Ken:
Do you offer a duly appointed agent authorization form ? Will a stock letter of assignment work ?
It appears that a high end client desires their architect – design firm to execute all contracts on the homeowners behalf. In addition this firm will be responsible to cut deposit and progress checks . In essence I suppose we contract with the design firm to install a local system- but they do not want their name on the form as the purchaser as they claim they do not want to sign a multi-year monitoring agreement.
Although the Penthouse is a sprinkler and Fire alarmed new hi-rise, we will also be adding some residential monitored smoke sensors.
We have explained to the architect design firm that they should want to be 20-1000 miles from signing any security agreement- and their response was “Can we not sign for the client for the installation and then you find the client later to sign a monitoring agreement ?” We responded they are all in one agreements and we require clients direct engagement.
Any comments ? Suggestions ?
One more thing we are seeing. The high end City of Chicago builders and or design firms are forcing (we do not sign) their hold harmless language disguised as a “Terms of Payment and engagement letter”
Keith Fisher
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Answer
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I don't have a form and a stock transfer form will not suffice. First, a little primer on agency law.
Few things to remember. An agent cannot establish its own agency. That means that the agent telling you that it is an agent will not bind the principal without some action by the principal. An agent is not responsible for the obligation of the principal, as long as the agency is disclosed, which means identifying the principal. A principal will be bound by contract signed by the principal's agent acting within the agent's authority. That authority must be established by the principal, not the agent. Seems like I'm going in circles.
The homeowner, who is to be your subscriber, wants his architect to sign the contract, approve the work and cut the checks. Well, no problem, as long as the homeowner gives you a letter, anything in writing, that acknowledges the architect as the agent, and spelling out what the agent is going to do.
In your question the architect is willing to sign your Sales Contract, but not a long term Monitoring Contract [or Service Contract]. Your dilemma seems to be that you use the All in One. So you have two choices. Get separate Sales, Monitoring and Service contracts; Or, using the All in One, cross out the Monitoring and Service parts and use only the Sales part of the contract. That will cover the sale and installation.
The subscriber should sign the Monitoring and Service contracts, or those parts of the All in One. Of course the agent would be permitted to bind the subscriber, but since this agent doesn't want to do that, have the principal sign the contracts.
Regarding the form contracts that Chicago builders are asking for, seems fairly common in all places. Be careful when signing anyone else's form contracts. Your contracts are [or should be - and they are since you have my Standard Forms] protect you, and the builder's contracts protect the builder. They are antithetical and you should avoid signing these contracts. When you do, make sure your insurance is paid up and don't let it lapse.