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Comments On Valuation Of Contracts / More On Automatic Renewal Enforcement January 10, 2017

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COMMENT ON VALUATION OF CONTRACTS FROM DECEMBER 30, 2016 ARTICLE
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Ken
    SARRG offers underwriting (rate) discounts for companies using Ken Kirschenbaum contracts, the more contracts used the more discounts you get.
    No work should be performed without the proper contract in place. Third party monitoring agreements offer no benefit to service work or additional work on any system.
Bart A. Didden, Executive Claims Manager
Security America Risk Retention Group - SARRG
Security America Risk Purchasing Group LLC - SARPG
877-872-1266
bdidden@securityamericarrg.com 
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COMMENTS RE AUTOMATIC RENEWAL ENFORCEMENT FROM DECEMBER 29, 2016 ARTICLE
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Ken,
    A quick observation regarding Bob K’s comment regarding agreements that do not comply with statutes.  I am not an attorney but I am involved in transactions all over the country on a daily basis.  More often than not we have issues with poorly drafted or, as some attorneys refer to them, “infirmed” monitoring agreements.  Monitoring agreements with issues can slow down a transaction, reduce the multiple, cause the Buyer or Seller to have to recontract the customers, or, in some cases, cause the entire transaction to be cancelled. 
    Well written, compliant monitoring agreements get purchased without issue.  When monitoring agreements have issues, the Buyer many times is the one who decides if the agreement will be purchased or not.  If a Buyer doesn’t want to purchase a monitoring agreement that has an issue, it isn’t going to get purchased. 
    I am sure that Bob K is correct that that there may not be a liability issue with a non-compliant issue, but getting a Buyer to purchase it is another story. 
    Don’t be penny wise and pound foolish.  Your monitoring agreements are your biggest asset.  Make sure that they are marketable.  I have lost count of how many times I have been asked about the quality of a Seller’s agreements.  When I say “they’re Kirschenbaum Agreements,” we know that there won’t be an issue.
Mitch Reitman 
MReitman@sicc.us
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Ken, 
    A very thoughtful response by you. I agree totally with your analysis on the collection end.  The bottom line is that if challenged based on this law (assuming contract not in initial term) there undoubtedly will not be enough money to go after to even make it worth pursuing. 
    With respect to the more important other issues, principally the enforceability of the protective provisions like the limited liability clause, I am confident that your concern over the rest of the contract’s enforceability is not necessary.  I know the NY Statue is clear:  the only thing non-compliance with 5-903 regarding automatic renewal notice provisions does is make the automatic renewal clause, and the automatic renewal clause alone, void.
    Apparently the California statute precipitating this discussion is identical.  Look at the wording thereof:  “The automatic renewal provision shall be void and invalid without a separate acknowledgment of the disclosure by the consumer.” (emphasis added)  It clearly indicates that the only part of the contract affected if the statute is not complied with is the automatic renewal provision, period.
    But I did like the way you used this as the basis for yet another sales pitch!
Robert Kleinman
AFA Protective Systems, Inc., Chief Executive Officer, General Counsel
Syosset, NY  
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RESPONSE
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    Statute interpretation and contract interpretation is a function of the Judge, not jury, and not lawyers either.  Here is New York's statute in pertinent part:
    "No provision of a contract for service, ... which states that the term of the contract shall be deemed renewed .... shall be enforceable ..."
    This is far from "clear" and I am confident that you aren't willing to risk your company on your interpretation.  If the renewal term isn't enforced then the contract came to an end.  The statute could have, but doesn't read "and the contract can be terminated at will" or something to that effect.  I agree that your interpretation is reasonable, and I would make the same argument.  But, better to be safe than sorry.
    The Standard Form Agreements will continue to provide for automatic renewal month to month so that none of the existing and likely to be enacted statutes affect the renewal clause or contract enforcement.  And, yes Bob, thanks for the opportunity to make another "sales pitch", one you'd be wise to take advantage of.  
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