Question
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Ken
I don't recall you discussing any advantages or disadvantages to longer vs. shorter contracts and the pro/con for the consumer and dealer.
Would love to hear your comments
Michael Elsberry
President & CEO
A & E Security and Electronic Solutions
McMinnville, OR
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Answer:
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Here are two previous articles that deal with long term contracts
http://www.kirschenbaumesq.com/earticle264.htm
http://www.kirschenbaumesq.com/earticle19.htm
Of course long term contracts need to make sense, be reasonable, both from a commercial and consumer perspective. You need to be able to justify a contract term, long or short. In the alarm industry the justification is often found in the fact that alarm systems are installed at cost or below cost and the alarm company must therefore recoup its investment and make its profit over the life of the term of the contract. Thus a 3, 5, 10 or more year contract may be economically justified.
Even where no equipment is installed a longer term may be justified. For example, a Service Contract. An alarm company can rationalize a longer term contract by pointing out that service calls are going to be more frequent at the beginning and end of the contract terms. The beginning because system deficiencies are still being worked out and at the end of the term because the equipment is reaching end of life usefulness [not all of it of course but enough to cause service calls]. Thus a longer term contract is necessary so that the alarm company can recoup it's expense over the life of the contract.
If you can't justify a long term contract you may find enforcing it difficult. I reported on a case involving garbage pickup where the Judge refused to enforce a long term contract where the garbage company had done nothing other than sign up the customer, trying to hold that customer into a long term contract. Most likely the garbage company didn't try to justify the long term contract and merely tried to seek to have it enforced as the agreed term. Whether justification existed or exists - I don't know - I don't rep the garbage industry so let them think of it themselves.