Question:
Ken,
We submitted one of our sales contracts (your form) to acustomer. The customer is not happy with several of the clauses on theback of the contract (surprise). I informed them it was a standard alarmcontract, and further stated that it was sent in as our standard form whenwe obtained insurance (insurance company approved)? This being said thecustomer wanted to speak to our insurance company to see if it was OK tochange. I told them I hadn't a clue who they could call to do that, andthat any changes would need to be run past our attorney (you). They alsosaw the indemnification clause and wanted to be indemnified themselves. We left off with the customer sending the contract to theirattorneys for approval to sign it, I told them that their attorney willprobably tell them not to. Should this go further, can you give me some kind of idea of howmuch it would cost our customer for you to negotiate a custom contract forthis job?
Thank you,
Jeff
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Answer:
Jeff didn't send this inquiry to me for circulation, but I get askedthis question often enough to circulate around. It's not uncommon for asubscriber to question one or more of the contract provisions, and there isno need to take the position that the contract is completely nonnegotiable. There are several provisions that can be changed. So the first issue is, am I available to assist you, talk to thesubscriber or subscriber's attorney? I do those assignments and calls. Ifthey run more than a quick question I charge for my time, which isgenerally half an hour. That means that if you have a subscriber with lotsof issues with a proposed contract for monitoring for $16 a month, it won'tbe economical to get me involved. If you have a valuable contract then myinvolvement may retain the contract language and save the deal. Of course any business type provisions are really up to you. You don'tneed lawyers to decide if you should change the length of the term of thecontract, agree to be responsible for false alarm fines, agree to pay forinstallation of electrical and phone outlets as part of your job, or paintthe house when you're done. Another consideration is that you may have a Contract Endorsement toyour errors and omissions policy which prohibits you from making changes toyour contract without the carrier's approval. [this is rare, but youshould be sure]. So what will I typically agree to change? If you don't have E&Oinsurance, I would recommend you make no changes. If you do have theinsurance then I would, if a deal breaker, waive the indemnity provision,the insurance procurement clause, waiver of counterclaim, legal fees.Depending on what state you are in I may agree to add that the exculpatoryand limitation of liability clauses will not be enforced if there is grossnegligence, and that you will be responsible for property damage caused byyour employees while on the premises. The above items seem to be the ones that come up if the subscriberraises issues. There are lots of articles on my web page that address these issues andjustify, in a rational way, why the provisions are in an alarm contract andwhy they are fair. Once explained to the subscriber or lawyer they areusually satisfied.