September 8, 2011

 

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Question re subcontract

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Ken,

I have a question:

We have been asked by an out-of-state alarm company to install an alarm system for one of their customers. This company will send us the pre-programmed equipment and we will provide the labor to install it in the customer's house. We will not own the Monitoring Contract.

Is the contract we need to have with this company your SUB-CONTRACTOR AGREEMENT?

Is that the contract that protects us, the subcontractor?

Do we need to have any contract or waiver signed for us by the homeowner?

Sincerely,

LR

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Answer

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You are correct, you need the Subcontracting Agreement. It comes in two forms, for the General Contractor and for the Subcontractor. You would be using the subcontractor form. It is designed to protect you, but be aware, it refers to a contract between your General Contractor and the end user. If that contract is not in place and properly drafted, then you can be without protection from claims by the subscriber. An indemnity from the General Contractor is not enough to protect you. The contract signed by the subscriber should exculpate both the General Contractor and all subcontractors. If it doesn't, and the General Contractor won't let you get your contract signed by the subscriber, then don't do the work.

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Comment on long term contracts / renewal

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Five years term is good. Beats 1 or 2 years contract. The difference between alarm contract and cell phone contract is that cell phone users come to the store and renew, while alarm company has to come to the customer and request renewal.

Dusan

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comment re omitting contract provisions

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Ken

With regard to the recent discussion concerning modification or deletion of selected contract paragraphs.

If the customer will not agree to the terms that safeguard your business, it's best to walk away and let a competitor have the liability. While this may be against every instinct a salesman has, in today's lawsuit crazy society, it's the smart thing to do. Our firm has been in business thru three recessions and have on more than one occasion during hard times, had clients claim someone broke into their building and stole material. We also encountered clients setting fire to their own buildings, all with the intent of collecting the insurance.

This recession is by far the worst and far from over. Desperate people will do desperate things. Even your best customer could end up becoming your worst nightmare.

Respectfully,

John W. Yusza, Jr., President

Monitor Controls, Inc.

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comment on getting PERS equipment after death

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Ken

Oh man, I got a chuckle out of this statement  "I have heard horror stories that after a death you can pretty much kiss everything good by". Ain't that the truth!

Mark Matlock, Senior Vice President

United Central Control, Inc.

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HERE IS THE ORIGINAL ARTICLE REFERRED TO (July 20, 2011):

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Question

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Ken

Although I bought your complete contract package last year, there is still a problem on a leased PERS if the user/signer dies.

How do we recover the equipment and past due payments especially if the death is shortly after install. Then there is the retirement centers that lock the apartment for only the family members to enter. I have heard horror stories that after a death you can pretty much kiss everything good by.

John

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Answer

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There are several variables with PERS. You can sell or lease the unit. You can install it or sent it to the subscriber for self installation. The Standard Form Contracts offer PERS in a Sales contract or a Lease.

Recovery of equipment is of course a problem. The PERS contract comes to an abrupt end in the event of death, but also terminates if the subscriber is too ill to use the system or moves to a nursing home facility. While the contract may give you certain rights to pursue your equipment, and you can always pursue a dead subscriber's estate, the reality is that the PERS unit is not worth pursuing, and more than likely neither is the balance of the recurring revenue due, assuming there is a breach that permits the balance to be recovered.

Another issue is stopping the signals from reaching the central station once the subscriber has stopped paying for the service. As I understand it, even signals that are ignored can be annoying. Knowing when you can ignore the signal is another issue.

The good news is that the PERS unit is not costly. I suggest you consider the unit a loss when you figure out what you will be charging for your services.