February 14, 2012

 

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Question

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Ken,

First off let me say thank you for the informative emails that you have sent out over the years. I have said to my partner many times that we need to get these contracts. Well of course we haven't yet and now I am ready. For years we have used a contract that seems to have been around the industry for years. We have modified it and changed things to fit certain applications, etc. ...I know...not a good idea!

Well recently we provided a bid in conjunction with another company to help protect a 30 story building with 120 units. The other company is supplying a system called WaterCop (watercop.com) and we are providing a wireless Inovonics system to send a wireless signal downstairs to the front desk to notify the concierge on duty. At this time we will not be monitoring the system at our central station.

They liked our proposal and requested our Insurance and Workmans Comp plus a w-9. I sent those items and then later sent "our contract" to the condo manager. They never replied about our contract but instead sent what they called their "standard" contract that they have used lots of times.

I then took their contract after consulting briefly with my brother (a personal injury attorney) and lined-out certain items in their contract and added items from my contact and sent it back unsigned.

The manager called today and we are stuck on several small things but mostly on the hold harmless and indemnity clause. He now wants my attorney to talk with their attorney.

So here are my questions to you...

#1 Which contract would apply in this particular case? Would I use your installation contract?

#2 I am concerned about continued liability after the installation is complete. What happens if it doesn't work when there is a water leak in the future?

#3 I am concerned about separation of liability... Is it the WaterCop installers fault or the Plumber or the Electrician? How to establish a demarcation point?

#4 Who is supposed to indemnify who? It seems like everyone wants everybody else to indemnify them...who wins?

#5 If I did have your contracts...would this be something you would give advice on...as to what can be stricken and what cannot?

#6 How do we find a local lawyer that can review the contract... you recommend that a local attorney even review your contacts...do you have a referral list?

Again...many, many thanks for your continued supply of informative and educational emails !!!

Sincerely,

G

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Answer

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First let me say that I am flattered that you seek my counsel when you have a brother who is a personal injury lawyer. He probably can be of some assistance if you decide to jump from that 30 story building. Only kidding.

Let me try and respond to your various questions. Before I do however I want to quote from watercop's web site so that everyone knows what that product is for.

"A WaterCop automatic water shut-off valve system will provide your home with round-the-clock indoor flood protection and works with wired and wireless flood sensors, wall switches, and most home security and home automation systems."

I didn't study the web site and I'm not sure how the watercop system integrates with an alarm system you would install, or whether you are installing the watercop system. [#1] In either event, since you are doing an installation and no monitoring, the appropriate contract would be the Sales Contract. You would also need the Service Contract if you intend to provide service after installation.

[#2 and 3] You need to be concerned with liability because your subscriber is going to think that your contribution to the system is intended to prevent any loss, and you know that's not the case. You are going to be blamed or at least dragged in no matter who caused the damage. The Sales and Service contracts will provide the best protection you can get from a contract. Be sure to describe your equipment, system, it's intended purpose and use, and it's limitations. Using the Disclaimer Notice to point out other protection is a great way to emphasize the limitations of the system and encourage additional equipment and services.

[#4] It's not a question of who is supposed to indemnify whom. Actually it's the insurance companies that are supposed to be providing the indemnity protection; they charge enough for it. You don't. The battle of the forms usually starts with the indemnity issue. Often the best way to resolve the issue is by the parties agreeing to look to their own insurance, which means neither seeks indemnity from the other. Also, having the same insurance company solves a lot of haggling because both you and your subscriber look to the same carrier for coverage.

[#5] My office and I support our contracts and we are available to discuss the contracts, usually without charge. I also get involved in negotiations with subscribers regarding the contract terms, again usually at no or nominal charge if the matter can be quickly resolved. Sometimes more time is required and if the subscriber is worth the investment I will assist with negotiations and charge for my professional services accordingly. I've got a great success rate with these negotiations.

[#6] It's not easy keeping up with 50 states, countless cities and even more municipalities and AHJs, so yep, I send out the contracts with a disclaimer that you should ask your local attorney to check them out. Practically however, we do keep the contracts updated and customized for each jurisdiction, and we get lots of feedback from alarm companies recommending changes and pointing out necessary legal changes [and sometimes they are correct]. Bottom line is that you're not going to get a better standard contract, anywhere, for the price we charge or any other price,and you're not going to be able to get a completely customized contract for what we charge, and finally, I don't believe you're going to get the follow up support for free or nominal charge. If you can, I think I'll switch to personal injury law