The alarm business is built on recurring revenue, supported by written contracts.  The longer the contract the more valuable the contract is to the alarm company.  By that we mean not how many pages the contract is, but for what period of time does the subscriber obligate itself to pay the alarm company and concomitantly the alarm company agrees to provide its service - generally monitoring, service, lease of the systems, etc.  My standard contracts have term of contract preprinted in them.  www.alarmcontracts.com  The residential contracts - monitoring, service - are 5 year terms.  Fire Inspection is 7 years.  Commercial lease is 10 years.

    I get telephone calls and emails regularly asking me if the term of the contract can be changed.  Nine out of 10 of these calls want to shorten the term, sometimes to 3 and sometimes to 1 year term.  The alarm company seeking to provide for the shortened term always expresses the rationale that its subscribers want a shorter term and competition is to fierce blah blah blah.

    My response is always the same.  You can shorten the term to anything you want, but why would you?  Keep it as is and if a particular subscriber wants a shorter term then cross out the number and insert whatever number you want for the term.  Most subscribers are going to sign the contract with the preprinted term, and that term is going to be longer and more valuable to you than a shorter term contract.

    How do we pick these terms?  Custom and practice in the industry.

    Are there statutes that limit the length of contracts?  Not many if there are, and I don't know of any.

    Will Consumer Affairs Offices or Attorney General Offices complain about terms in contracts?  Yes, and you need to be careful not to offend common sense, which is another way, in less legal technical terms, of being certain your contract is not unconscionable.

    Will courts enforce long term contracts?  Not if they are unconscionable, which means shocking to the judge.  An unconscionable contract is one that someone of right mind would not sign and someone of right mind would not offer to be signed.  Something like that.  I recently read a lower court case in New York where a waste removal company who supplied a 7 yard dumpster and picked up weekly had a 7 year term in its contract, and the contract renewed after that with some language not relevant here.  There were all kinds of provisions permitting the waste company to raise rates and cancel if it wanted.  Upon breach by the home owner the waste company sued for the balance on the 7 years.  The judge refused to enforce the contract, found it unconscionable and tossed it out.  The judge found no justification for a 7 year lock in contract.  I think he is right - for the waste removal industry.  The waste company did nothing other than place a dumpster at the premises and pick up weekly; no other investment was made.

     The alarm industry is different.  Usually an investment is made at the premises in the form of below cost installation or commitment to service the equipment over the term of the contract.  In order to recoup its investment and spread the performance cost over the life of the contract a longer term contract is justified.  Also, unlike the waste removal industry, longer term contracts are customary in the alarm industry.  Waste removal contracts are more likely to be for one or two years, tops.  So don't take this issue for granted; be reasonable and keep your eye on the pulse of the industry.