KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Will exculpatory clause shield you from your breach of contract to perform / Meetings filling up – still time to register
March 29, 2024
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Will exculpatory clause shield you from your breach of contract to perform
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Besides being the best contracts in the industry, a great reason to use K&K contracts and join the Concierge Program is that K&K knows the contract terms cold and is in best position to answer challenges and negotiate change in terms. Having reviewed thousands I have to admit to actually being stumped recently regarding a challenge to the exculpatory clause; in fact I got two challenges in same week.
The exculpatory clause exonerates, relieves you of liability, for your negligence performance, negligent failure to perform and your breach of contract. The limitation of liability clause limits your exposure to damages to a nominal amount.
Now consider a sizable contract for an installation, say $50,000 [could really be any amount]. A deposit on the contract is required; again the amount is almost irrelevant. Subscriber’s lawyer challenges the provisions with the most common argument, why shouldn’t your client be liable if it’s negligent. The response that the alarm company isn’t an insurance company, etc. is almost always accepted. However, the challenge goes, what if the alarm company simple takes the deposit and doesn’t perform at all, or otherwise breaches in connection with the installation, as in fails to complete it or render it operable and working.
Somewhat taken back by the challenge I opined that the provisions would not apply in such situations and I did agree to make that clear by adding a few exceptions to the provisions.
A recent case reminded me of the issue, though in the context of the Indemnity Provision. The K&K indemnity provision applies to both subscriber and third party claims. That terminology has actually been in the K&K contracts for decades. We have often claimed the indemnity provision acts as a Release, and we have also actually commenced actions [in New York called Third Party Action] against a subscriber to indemnify against a lawsuit filed by the subscriber’s insurance carrier trying to recoup money paid the subscriber through its subrogation rights. And yes, the K&K contracts waive subrogation rights, but that may be missing or ignored by the carrier when it brought the suit].
The recent lawsuit that inspired this article was decided in Illinois, Indeck Power Equip. Co. v. Ashley Energy, LLC, where the court was dealing with a fraud claim but addressed the issue of breach of contract claim]; the court noted:
“On a related note, Indeck also generally argues that the disclaimer language contained within the agreements defeats any claims based on supposed misrepresentations about the condition of equipment. But Ashley correctly notes that contract language cannot exculpate a party from failing to provide equipment that satisfies its core function. See Resp. at 8 (citing Horne, 987 F.3d at 723; Vigortone AG Products, Inc. PM AG Products, Inc., 316 F.3d 641 (7th Cir. 2002)). Indeck's attempt to distinguish between “exculpatory language” and “as-is” and “disclaimer” language misses the mark; the rule at issue is not limited to exculpatory language. See Horne, 987 F.3d at 718 (“under Illinois law, a party in material breach may not enforce a provision of a contract that is favorable to him, such as an exculpatory clause.”) (citing cases). Still, courts generally seem to apply that rule when addressing contract claims, not fraud. While Ashley has raised affirmative defenses to Indeck's breach of contract action, it has never brought a counterclaim for breach of contract. In other words, a “core function” argument may have bearing on Ashley's affirmative defenses, but as explained above, the disclaimer language defeats any claim of reasonable reliance based on pre-contract statements (or omissions) regarding the condition of the leased equipment.” [emphasis is mine]
I can’t really imagine that any alarm company using the K&K contract would think that you could take money and simply fail to perform and then claim no liability under the contract terms. It won’t work; not that kind of claim. Sure, subscriber suffers a loss because it’s claimed you didn’t install something or installed it and it didn’t work, the contract terms will hold up, and isn’t that what the protective provisions are really for?
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Private and Group meeting schedule now available
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Group Meetings: See schedule below. Reserve your spot by calling Stacy Spector at 516 987 8428.
Private Meetings:
Schedule a Private Meeting with Ken Kirschenbaum by calling Stacy Spector at 516 987 8428.
Register for a Group Meeting by calling Stacy Spector at 516 987 8428
Schedule Private meeting with broker Rory Russell by calling Stacy Spector at 516 987 8428.
Group Meetings: Topics and Schedule
Tuesday April 9. Group Meeting: 3:00 pm to 4:00 pm – Monetize on your monitoring accounts; new incentive program; learn how to get unheard of incentives from your central station or move to another one. Group meeting conducted by Ken Kirschenbaum.
Wednesday April 10. Group Meeting: 11:00 am to 12:00 pm - Selling and buying alarm accounts; Things to know. Group Meeting conducted by Ken Kirschenbaum.
Wednesday April 10. Group Meeting: 2:00 pm to 3:00 pm – State sales tax and complex company valuation. Group meeting conducted by Mitch Reitman of Reitman Consulting Group.
Wednesday April 10. Group Meeting: 3:00 pm to 4:00 pm – Central station – dealer relationship; contract issues; understanding the dealer agreement terms and why you need the K&K Rider. Group meeting conducted by Ken Kirschenbaum.
Thursday April 11. Group Meeting: 10:00 am to 11:00 am - Insurance for your alarm business – best options; availability, pricing and claims. Group meeting conducted by Shawn Iverson of The Insurance Center.
Thursday April 11. Group Meeting: 11:00 am to 12:00 pm – Contracts – which ones you need and why you need them. Group meeting conducted by Ken Kirschenbaum.
Thursday April 11. Group Meeting: from 3:00 pm to 4:00 pm -
The Corporate Transparency Act. Group meeting conducted by Mitch Reitman of Reitman Consulting Group.
Private Meetings with Rory Russell of AFS:
Schedule a private meeting with Rory Russell of Acquisition and Funding Services (AFS) to discuss buying or selling security, fire and integration business. Available times to meet with Rory Russell are as follows: Wednesday April 10 and Thursday April 11 between 7:30 am and 11:00 am and 12:30 pm and 4:00 pm. Contact Stacy Spector to schedule a private meeting with Rory. Call 516 987 8428
ALL TIMES ARE PACIFIC STANDARD TIME.
Contact Stacy Spector, Esq. for all scheduling at Sspector@kirschenbaumesq.com or 516-987-8428.
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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301
ken@kirschenbaumesq.com
www.KirschenbaumEsq.com
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