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can't find the assignment clause? Are your subscriber contracts assignable?
October 25, 2018
can't find the assignment clause? Are your subscriber contracts assignable?
    Despite the law being very clear on the topic, brokers, lawyers, bankers and yes, even alarm company owners, continue to panic over the assignability provision in the subscriber contract. I see it in Letters of Interest or Letters of Intent, in Asset Purchase Agreements, in company detail sheets used by brokers. I see it in the check list for what every proper alarm contract should contain [yes, even those prepared by so called industry counsel]. 
    Why the concern and why is this issue so widely misconceived? An alarm contract does not have to specify that it is assignable in order to be assignable. There, I said it. The law is quite clear that, as a general rule, all contractual duties are delegable and the contract assignable except under certain exceptions, such as when contractual rights involve matters of personal confidence, when delegation or assignment is contrary to public policy or the terms of the contract.
    In the security arena, I can see a personal body-guard contract being non-delegable and non-assignable. This contract and relationship would be akin to contracting with a famous singer. No one would think that this singer could delegate or assign the contract, the performance of the contract to another. Security systems and security services do not meet that criteria.
    Why and how does this issue of assignability typically arise in the alarm contract scenario? The assignment provision typically provides that the subscriber can't assign the contract and the alarm company can. Subscribers read this as unfair. Note this is a different provisions than the provision that permits subcontracting, something very close to assignment, that is addressed in a different provision.
    It may be time to reconsider the assignment provision. Interestingly enough, an assignment does not get the assignor off the hook. The party assigning remains responsible, merely adding an additional party, the assignee, as responsible. Of course the assignment could relieve the assignor from any further responsibility or liability, and that is exactly how the provisions reads in the Standard Form Agreements. The provision includes the prohibition that the subscriber cannot assign the contract. 
    I don't see why this shouldn't be softened and changed to make the provision more acceptable to subscriber's who actually read the contract and challenge this provision. Why does the alarm company really care if the contract gets assigned, and in most instances wouldn't the alarm company consent to the assignment if the alternative was the loss of the account, to be pursued in collection. More often than not the subscriber will want to assign when it is selling or transferring its business or going out of business. It makes more sense to permit the subscriber to assign with the consent of the alarm company. Under what circumstances the alarm company could or would or would have to permit assignment can be specified in the Standard Form Agreement. For example, one change that is made when a subscriber objects to the assignment clause in favor of the alarm company is to require the assignee to be licensed, tied into a sale of the alarm company, or sometimes requiring approval of the subscriber. The only drawback is here is one more provision adding to the length of the already lengthy and cumbersome contract.
    I'll consider this for the 2019 contract updates and welcome feedback on the issue.

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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
516 747 6700