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contract provisions explained October 12, 2017

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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contract provisions explained
October 12, 2017
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contract provisions explained
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Ken
    We purchased the Residential All in One and the Commercial All in One contracts a couple months ago.  We are just about to put them in place and start using them and I have some questions.  FYI our business model has clients paying for their hardware, we do not plan on on financing or leasing any equipment.  I have a few questions about some of the provisions:
    The provision titled  PASSCODE TO CPU SOFTWARE REMAINS PROPERTY OF Alarm Company.  This provision says we continue to own the passcodes and all the programming, among other issues. What is the basis for this?   Is this to prevent us from giving up the installer code?
    Another provision states that not all signals or transmissions will require notification to the authorities and Subscriber may obtain a written response policy from us.  What is a written response policy? Is this simply writing out how our central station will handle alarms?
    Another provision requires our customer to obtain insurance and name us as an additional insured, among other issues.   Why are we requiring subscriber to have insurance and have us named as additional insured. Is this in case we are financing equipment?
Jay 
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Response
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    Good questions and not uncommon questions.  
    Alarm companies want to retain their customers and most believe that retaining the passcodes and programming is a good way to encourage customers to remain loyal, for no reason other than it could be costly for them to replace equipment if passcodes and programming is not available to existing systems.  If a customer owns the system then you probably should give the passcode so that they can make some changes, but only if they complete the contract.  I don't think you would ever give the programming; no software provider would.  
    Written Response Policy is the written instructions or training manual your central station provides its operators so they know how to respond to signals.  You need to know how they intend to respond and you should be giving the written Response Policy to your subscriber, especially if they ask for it.  Better that everyone knows how signals are going to be responded to.  Then all the central station has to do is follow its own procedures.  I also think it wise not to ask the central station to alter its procedure for a particular subscriber.  This is a invitation to make a mistake.  Make this request sparingly.  
    You are requiring the subscriber to name you for a bunch of reasons which I have addressed in many articles.  If you're named an additional insured the subscriber's carrier won't be able to sue you if there is a loss.  That's one good reason.  Elsewhere in the All in One the subscriber has agreed to indemnify you.  It's smart for the subscriber to cover that indemnity with insurance.  Naming you as an additional insured serves that purpose. 
    I am providing these explanation so that you understand the provisions.  Under no circumstances should you or your sales persons explain these provisions to the subscriber.  All you should be doing is presenting the contract, if asked explain that its the company's standard form, it's standard in the industry, it's required by your central station and your insurance company.  You can read it to them without explanation.  The courts deem almost all residential subscribers as "the least sophisticated consumers".  Best you be that category too.  As far as commercial subscribers, they are almost always held to the terms of the contract they agree to.  There's no presumption they are "least sophisticated", which is no doubt synonymous for other colorful terms.  The insurance has nothing to do with whether you finance the contract, or if it's a lease or sale.
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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