KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Comment on price increases after contract signed 
 
October 16, 2021
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Comment on price increases after contract signed from article on September 28, 2021 
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Ken
          Regarding the comment about shortages of equipment and runaway inflation, reminds me of the history of the Weimar Republic in 1920’s Germany.  We all know how that played out. 
My quote of the day:  “You can vote yourself into Socialism/Communism, but you have to shoot yourself out of either”. 
JH
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Response
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          I actually don’t think we’ve given this issue enough attention.  How much of a problem is this?  I can understand shortage of Chinese cameras, but what else is in short supply [besides techs, which is an old story]? 
          If this is an issue to be reckoned with what contract changes are sufficient and acceptable?  I don’t believe customers will accept an unrestricted or unrestrained increase over an unlimited time, especially if the delay is on your end.  I can tell you that a provisions that simply says that the “parties will agree to reach a fair [or even unfair] resolution sometime in the future” is not going to be enforceable.  The generally accepted legal theory is that “an agreement to agree is unenforceable”.   This is because to have an agreement you have to have all material terms agreed to and preserving a material provision for the future renders the agreement unenforceable.
          But you’ve seen such agreements before.  Well, not really.  What you have seen is an agreement that has a firm formula for calculating a future price, a formula that is subject to an uncontestable method of reaching the calculation, which is probably the last material component of the agreement which will make it binding.  For example, you may run across an agreement that requires engaging two brokers to fix a price and if they can’t agree they have to select a third [and the agreement should also have a mechanism to select the third if the two can’t agree on the third].  Or you may see a formula that provides for an increased based on a specific consumer index, Treasury bill or some other acceptable and reliably published economic or financial index. 
          All this seems pretty elaborate for a price increase of alarm equipment or labor for delay in installation.  Keep in mind that the All in One agreements already have an increase of 5% if the installation is delayed for one year, if it’s not your fault.  The one year can be reduced but it’s doubtful that it can have no time frame.
          What I need to know is how much of a problem is this and what suggestions do you have for a solution.
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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301
ken@kirschenbaumesq.com
www.KirschenbaumEsq.com