January 3, 2011
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Question
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Ken:
I have a question about our alarm monitoring agreement. I have a client who rented a house and the house is being sold. She moved out and still has 2 years left on the agreement. The original system was in place and we reactivated it for a small fee and the client signed your agreement.
My question is this: where does the agreement reference paying for the services even though there is no way the services can be provided? If you were her attorney and I was pursuing her for the remaining term, what would you say? (aside from the fact you entered into an agreement and should take care of the obligation), but more importantly, how can the company live up to the agreement (being willing to provide the services) when there is no place for the services to be provided to?
Yes, I did offer to transfer the services to another system and to even bank the monies owed and to be credited against future services within 2 years.
Thanks for your great advice.
Robert Lintz
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Answer:
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It's not that the contract, in this case Monitoring Contract [or could be Service Contract or Lease] doesn't say that you get paid even if services can't be rendered, it's that the contract does not provide for suspension or termination in the event the subscriber's premises no longer require alarm monitoring. The legal concept is "impossibility of performance". The issue is, will impossibility of performance excuse a party from performance of the contract.
In your case you want to know if the subscriber can claim excuse - to be excused from the performance obligation of paying you - because the subscriber lost his lease and will no longer be in the alarmed premises.
The answer is that you can hold the subscriber to the contract; the subscriber's obligation is not terminated or excused, absent other facts. In order for impossibility of performance to kick in the cause of the impossibility should not have been reasonably anticipated at the time the contract was made. If the "cause" could have been reasonably considered when the contract was made, and the contract does not specifically provide for suspension or termination if the "cause" arises, then there is no excuse of performance.
A tenant subscriber is a perfect example. Tenant contracts for alarm service and signs a 5 year term contract. After one year the tenant's lease to the premises expires and the tenant moves. Tenant then claims the alarm contract should be terminated without penalty as well. Without more facts than I have provided, the tenant would continue to be responsible for the alarm contract payments. Why? The loss of the lease could of and should of been considered when the alarm contract was entered into, but wasn't. Same analysis if there is fire alarm contract and building burns down. That event certainly was possibility when alarm contract was entered into, because fire alarm was being installed, and if the tenant or owner wanted to be relieved from performing the alarm contract then that should have been included in the alarm contract.
In point of fact, the Standard Alarm Contracts specifically provide that even if police or other municipal response is terminated the subscriber still has to make the payments under the alarm contract. The contracts do not refer to all the various contingencies that could arise that would prevent the alarm company from it's performance, but those that could be anticipated will not excuse the subscriber from performance.
An analogy I like to use is a lease for a car. Lessee / driver loses his license and calls the leasing company to let them know he doesn't need the car anymore. Try getting out of the lease with that argument.