Alarm Company Looks to Employee / sub for Contract Breach  

January 31, 2013

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    Hey, I read your newsletter every day. After I secure my next round of investment capital I'm going to buy some of your contracts, and you've helped me avoid some tremendous pitfalls in my setup (especially grabbing my own number for panels to dial). You can really help me out by answering a question I have about something I am uncertain whether or not will be an obstacle to me starting out.

    My last employer is being sued for failure to complete a job. He squandered part of the customer's deposit and was unable to provide promised equipment. He's claiming however that the reason he failed to complete the job was an alleged failure on my part to show up. I told him many times, very clearly, that the installation was impossible to complete due to the fact that he provided no equipment to install.    The contract was with his DBA, the checks were written to his DBA, and he paid me my consulting fee (and months later an installation rate after his installer quit due to inconsistent work). He is now however insisting that I allegedly owe his company the full value of the contract due to some imagined alleged negligence on my part being what he alleges to be the reason the job was never completed. This guy is an idiot and he squandered their budget on personal expenses (groceries, going to the bar, paying his cable bills, holiday shopping, etc). He is attempting to offset his responsibility onto me. Should I just ignore him or is there any actual risk for me here?

    Thanks a million.





    This won't cost you a million.  But seems like you're well on your way to giving up more than that if you keep doing business this way.  

    If you're in the alarm business then you need to get your contracts now, not later. 

    It's not clear what your relationship was with your former "employer".  If you were an employee then the employer can't sue you for his damages on the lost contract that you contend he breached.  An employer who isn't satisfied with how the employee performs is pretty much limited to terminating employment.  

    But it doesn't seem like you were an employee.  You mention a "consulting fee" and later an "installation rate".  Both terms suggest a subcontractor relationship.  That may not be the relationship you had. but that's what it sound like.  If you're a subcontractor, or an alarm company that hires subcontractors, then you should be using a contract.  You can get an alarm industry specific subcontract form at  A subcontractor can be liable for installation delays or mistakes, depending on the contract terms.  That responsibility and exposure should be clearly expressed in the contract.  

    There is no excuse for not operating your business in a way that will maximize your profit, your cash flow, your growth and the value of your business.  You start with a proper business entity [corporation with sub S election], proper contracts [which you get at], relationship with industry attorney [you've got one at Kirschenbaum & Kirschenbaum], industry insurance broker [see The Alarm Exchange] and industry accountant [see The Alarm Exchange].  Need a little guidance?  See The Alarm Exchange for consultants, advisers, subcontractors, etc.  Call these people - they all want to hear from you.   




 Date:  Tuesday, February 5, 2013  

Time:  12:30PM - 1:30PM EST

 Place:  Your Computer

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 About:  Learn how to maximize the value of your company!  Looking to Buy?  Looking to Sell?  Learn about current pricing. RMR and EBITDA - what's the difference?  What type of Due Diligence is required? Letters of Intent - worthwhile or waste? Learn about the main drivers of pricing, and how to best position your company.  

 Presented By:  Dennis Stern, Esq.  

 In addition to his M&A practice, Mr. Stern regularly advises companies regarding matters of corporate governance, and general security industry legal and business issues.  He is also experienced in negotiating collective bargaining agreements, defending EEOC claims, negotiating real estate leases, and handling insurance claims litigation.

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