QUESTION:

Ken:

We have an issue that your contract does not seem to address.

We are an alarm monitoring only company.  Our commercial customers are primarily small businesses.  When a small business closes down or stops paying its monitoring fee, our agreement offers us no recourse against the person who signed it, even if they were the owner of the company.  Do you have any suggestions as to how we can rectify this?  How do we go about protecting our rights to collect against the individual if the company is no longer there?

Thank you.

Lynne V. Loyola

New Orleans, Louisiana

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ANSWER:

    All of my standard contracts that are used with commercial subscribers contain a provision calling for a personal guarantee by an individual. 

   Without a personal guarantee you will have no recourse against a corporate subscriber that goes out of business.

    In order to get a proper guarantee make sure your contract calls for two signatures, one by an officer of the corporate subscriber entity, and one by the guarantor.

    If your contract has a provision that the person signing on behalf of the corporate entity is also personally liability, the provision won't hold up in most [probably all] jurisdictions.  Guarantor must sign separately, though it can be on the same document.

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