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are your alarm contracts unconscionable March 13, 2018

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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are your alarm contracts unconscionable
March 13, 2018
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are your alarm contracts unconscionable
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    This issue is raised when your subscriber is asked to read and sign the contract, and when there is a claim and the subscriber seeks to avoid the consequences of the contract terminology.  
    An unconscionable contract is one that is “so grossly unreasonable in the light of the mores and business practices of the time and place as to be unenforceable according to its literal terms.”  To establish unconscionability there must be a showing of both substantive and procedural unconscionability.
    Substantive unconscionability requires looking at the substance of the bargain and deciding whether the “terms were unreasonably favorable to the party against whom unconscionability is urged.”     Procedural unconscionability is analyzed by considering a number of factors, including: (1) the size and setting of the transaction; (2) whether deceptive or high pressured tactics were used; (3) the use of fine print; (4) the experience and education of the party claiming unconscionability, and (5) whether there was a disparity in bargaining power. 
    If you use the Standard Alarm Contracts they are not unconscionable.  They are enforced.  Don't take my word for it.  How about the findings of a Federal Court Judge [there are plenty of cases but this one caught my attention while researching another issue].  Here are a few edited quotes from the case, without citations:
    Subscriber argues that the Contract is unenforceable because it is an unconscionable contract of adhesion. The court disagrees:
    There Is No Showing of Substantive Unconscionability
    New York courts routinely uphold limitations of liability contained in alarm company contracts. Contractual language upheld by New York courts includes language strikingly similar to the language at issue here.
    The rationale for enforcing these limitations of liability lies in the fact that alarm companies are not insurers and exculpatory clauses allow the companies to provide affordable systems and services to their customers.  Were the companies to be held liable as insurers, they certainly could not provide such service.  (price paid to alarm company does not “include a sum designed to anticipate the possible need to pay the purchaser the value of the property that the system is designed to protect”).
    
In view of the fact that contracts such as the one entered into by the Subscriber are routinely enforced, the court rejects any claim that the Contract is substantively unconscionable. 
    There Is No Showing of Procedural Unconscionability
    Nor can it be concluded that the Contract is procedurally unconscionable. Although the print is small, Subscriber has failed to establish that the print size violates state law. Indeed, it offers no proof in this regard. Nor is there evidence that deceptive or high pressure tactics were employed when the Contract was signed.
 Moreover, the language of the Contract is in no way ambiguous. It does not require one to “resort to a magnifying glass and a lexicon,” and contains clear terms regarding the intent of the parties to limit alarm company's liability. 
    Based on the foregoing, the court rejects the argument that unconscionability prohibits enforcement of the Contract.

    The Standard Form Agreement in this case, from before year 2000, was modified by the alarm company, reducing the print size.  But the terminology was retained, luckily for this alarm company.
    You need to think beyond getting the contract signed and receiving your deposit and installation charges.  You need to think about more than perhaps having to start collection proceedings because the subscriber stopped paying you.  Of far more importance is:
being able to rely on the contract if you get sued
being able to sell the contracts for a reasonably high multiple when the time comes
    Update your contracts today.  Go to alarmcontracts.com and stop worrying if you have the right contracts.
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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
516 747 6700
www.KirschenbaumEsq.com