Question:
Hi Ken,
I have the following situation- a customer with whom I have fire alarm inspection & maintenance and monitoring contract sells the building. The new owners indicate that they wish to retain my services. The new contracts are returned (unsigned) as exhibits A1,& A2 with the company vendor contract with signature. I really have no problem with company contract, it basically sets insurance requirements and gives them a 30 day out without cause after first year. My question is am I covered here? When I questioned them I was told that they only will sign their vendor contract. This is a fairly large company who I would like to do business with, but of course not at my expense or risk.
Thank you,
Steve
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ANSWER:
Alarm contracts have evolved over the last 40 years, and with a great deal of attention since I've been representing this industry. I can't say that I've thought of every provision because the contracts are the product of my over 30 years representing this industry, writing the contracts, monitoring new legislation, litigating the contract provisions and accepting hundreds of comments from alarm company owners who suggest changes from time to time. These standardized contracts are available at www.alarmcontracts.com. Should you sign your subscriber's form contract?
First of all, I haven't seen the contract form that you received back signed. With all due respect, I doubt you are qualified to determine if the contract has necessary protection for your company. And, I doubt that it does.
That doesn't mean you shouldn't [or won't] sign it. That is a business decision you have to make, and one you have to make each time a subscriber insists on changes to the standardized contract terms. Some of these changes are really strictly business decisions, such as when you agree to perform service [weekends, 24/7, etc], but others are changes to legal provisions designed, primarily, to contract away liability for your alleged negligence. Those provisions are carefully drafted, and they are strictly construed by the judges, and even changing one word can defeat the protective provision. No point having the exculpatory clause if you remove the word negligence.
When you sign the subscriber's form you no doubt give up protection that is afforded in your standardized contracts.
In your case, you don't have a contract yet because you haven't signed it. Perhaps you missed the recent case I discussed in Connecticut. The alarm company didn't have a signed contract and a jury awarded the subscriber $800,000 for a burglary loss. That award could just as easily been for more than the alarm company's errors and omissions insurance, assuming the alarm company carriers that insurance. The point is that one loss can put most alarm companies out of business.
Protect yourself with proper contracts which you should use. Also, be sure to carry E&O insurance and get it from an alarm industry savvy insurance broker. When asked by your subscriber to change your contract or use the subscriber's form, you really need to be careful and unless you are experienced in contract terms, you should consult with knowledgeable legal counsel. I do provide that service and get calls regularly from alarm companies and from subscribers who are told to call me by the alarm company. Some issues are resolved in minutes and I usually don't charge for the consult. Sometimes more time is involved negotiating with subscribers and their lawyers, in which event I do charge for my time. More often than not the subscriber's and their lawyers accept the standardized alarm contract terms with little variation that still provides the necessary protection the alarm company needs.