October 14, 2011
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Question
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Ken,
Thank you for a great and informative forum.
I use your standard equipment sales contract along with both the service and central office monitoring contracts.
I have a potential customer that has no problem with either the service or monitoring contract but does with the installation contract.
His issue is in paragraph 12 'Right to subcontract special services'. He would like the whole paragraph struck out or the words in the second line reading 'shall not be liable for any loss or damage sustained by buyer' struck out.
Since I do not at this time use subcontractors and do not anticipate using them any time soon could this be an issue? The same clause appears in the monitoring contract but not in the service contract. If I do strike out this clause my question is does this apply only to the installation or does it apply to future services or add-ons? I don't mind striking it out if it would only be for this installation, but if it holds me liable for the future then I am not sure I should remove it.
Again thanks for your helpful information.
Bob
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Answer:
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All of the Standard Form Contracts extend the protective provisions to cover the contracting alarm company's subcontractors. This is an important feature in the contract because subcontractors will not have any contract with the subscriber and therefore no contractual protection other than what the Installer - contracting party provides for them. The use of the term "subcontractor" is also very often misunderstood because the term is too often thought to be limited to installation or service technicians.
You do in fact use subcontractors if you enter into a Monitoring Contract and then have the monitoring done by a wholesale central station. The central station is your subcontractor.
You can omit the subcontractor provision or modify that provision. It will not change your liability exposure, but it will certainly change your subcontractor's exposure. If you intend to use subcontractors, including the central station, you can identify them or their services, and limit the provision to that disclosure. The subscriber is likely to go along with it and may insist on approving any changes or additional subcontractors.
You can omit the phrase that you will not be liable for the acts of your subcontractors. In fact, you will not be liable for torts committed by your subcontractor; i.e. negligence by the subcontractor. If your subcontractor fails to perform that part of the contractual obligation you have assigned to it, then you will be in breach of contract with your subscriber.