Your obligation to explain the contract provisions / Free gift December 17, 2019

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Your obligation to explain the contract provisions / Free gift
December 17, 2019
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See below for free gift – no strings attached, really.

Alarm Co obligation to explain the contract provisions from article on December 5, 2019

Ken,
             Regarding explaining a contract, you wrote:
            “I don’t really want alarm company personnel explaining the contract provisions to the subscriber. You and your staff are not lawyers and any conversation about what a contract term means can leave you open to claims that you misrepresented the contract or intentionally fraudulently induced the customer to sign the contract.”
            However, the Tennessee law (0090-06-.04 (3)) states:
            “Alarm contractors shall train their employee registrants with respect to the terms and conditions of the contract so that a customer’s questions can be adequately answered at or prior to signing the contract.”
            I’ve appeared before the board on several occasions to raise this conflict with the board. I’m pretty certain that even the board members who were alarm contractors weren’t comfortable with the provision of law, but apparently there is a moratorium on any changes by the governor, and it doesn’t look like that will change soon.
            What’s your suggestion?
Roy Pollack
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Response
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            When the “contract” under discussion is a Standard Form Agreement, preferably a Residential All in One, the “employee registrant” should limit the explanation by reading the provision to the customer, with a follow up that the provision means exactly what it says.  An alarm company employee is not the customer’s lawyer.  In addition to reading the contract provision the employee can suggest that the customer seek guidance from their own lawyer for further explanation.
            Is this advice contrary to the Tennessee statute?  I don’t think so.  An adequate answer is an impossible criteria or standard, unless we default to a trial judge who holds that the judge will decide what’s adequate and what is not.
            If the contract is not a Standard Form © Kirschenbaum Contract ™ then the provision may very well require explanation or interpretation.  I’ve seen plenty of alarm contracts that I had to re-read several times and I was still not sure what the provision meant or if it was entirely enforceable.  If I can’t readily understand it how is a lay person alarm employee, or the customer [let alone the “least sophisticated consumer”] going to understand it.
            Term of this agreement is 5 years.   “What does that mean”?  Is there any better way to explain that provision than reading it?
            Monitoring is $24 a month, plus tax, for the term of this agreement.  What does that mean?
            Alarm company has no liability for your loss, even if alarm company breaches the contract or is negligent.  Can this be said more clearly?
            Arbitration clause.  What does it mean and what are the consequences?  The US Supreme Court is still trying to figure it out; state court judges barely have a clue, and Tennessee expects alarm company employee registrant to explain what it means and the consequences of signing with that provision included?  The arbitration clause is very clear what it means and what consequences follow.
            Limitation of liability clause.  How else can you say it?
            Here’s the thing about challenges to the contract provisions and the single most popular reason for the subscriber’s question, “what does this mean”:  What the subscriber is really saying is, “I don’t like this provisions; it’s one sided; it makes no sense to me that I would sign it”.  One thing is for sure, the subscriber knows damn well what it means.  What the subscriber may not know is whether it’s enforceable; whether it’s customary; whether the provision can be modified or omitted or whether with some objection it can be changed.  The term of the agreement is a common issue.
            “What does this mean, 5 years?  I want 3 years.”  OK change it to 3.
            “What does this mean your liability is limited to $250?  I want it to be $1 million.  OK, “no deal, find some stupid alarm company willing to risk its business for your $24 a month monitoring charge.”
            Of course the problem might be that Tennessee judges actually may start to take this statute seriously, imposing ridiculous standards on alarm employee registrants. If it gets to that point we may have to give a treatise explaining each provision of the contract; maybe a 50 to 75 page synopsis with explanation; large color font, translated in several languages and audio version as well.  As I write this the idea is taking shape in my mind.  Looks like another standard form I can offer or maybe Tennessee alarm companies will have to send their employee registrants to legal seminars, the equivalent of a semester of Contract Law at law school.
            For now, I’ll stick with my initial gut reaction and advice above.  A shrug of the shoulders and “let me read that to you again, very slowly this time”.
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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