contracting with the rich and famous October 15, 2018

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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contracting with the rich and famous
October 15, 2018
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contracting with the rich and famous
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Ken,
    We have a new client, a Fortune 500 high-net-worth individual whose name is often in the news. We provide monitoring services, and T&M repairs as needed, for residential burglar and fire alarm, for a residence we 
believe to be one of a half-dozen the client has worldwide. Appears to be a work location as well.
    Our small company got this job because client has had ongoing problems with large 3-letter companies.
    The alarm system is totally standard off-the-shelf components, uses landline communication pathway, has no weird customization. We are appropriately licensed to perform this work.
    Client has private security personnel, who are direct employees of client or one of client's nearby businesses. The security personnel are onsite or nearby, and we are instructed to notify them first, by phone call, before police or fire depts in the event of an alarm signal being received.
    Our Kirschenbaum Residential All-in-One agreement has been signed by the client's employee/person overseeing the security personal employees, and who has keys to and provided our technicians with access to the residence. His email signature says 'director', but he says no one within the organization has business cards. Three day cancellation notice is dated and attached to the agreement. This person told us that the client can't be bothered with details like signing vendor contracts.
    Can you comment on this situation, from a liability perspective, and offer thoughts on how to get wet-ink signature of the client, who we have seen, but not ever been introduced to face to face.
Thank you,
Anon in California
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Response
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    Contracting with the rich and famous can be challenging.  Think what you want, but the reality is that they are not like you and me.  One common characteristic is that they have layers of people to engage on their behalf so that they don't have to waste their time with mundane everyday things, like signing an alarm contract for their home.  Well, more power to them.  However, the Kirschenbaum TM Residential All in One levels the field.  The rich and poor, busy and not so busy, all have the same treatment.  They are all "subscriber" in the contracts.
    You are dealing with an "agent".  You know you are dealing with an agent because you know that you are not dealing with the person who owns the residence but someone acting on his behalf.  Once you know you are dealing with an agent you need to be satisfied that you are dealing with an agent who has actual authority to act for his principal, and that the agent is acting within his designated authority.
    You can ascertain if the agent has authority and is acting within that authority by getting confirmation from the principal.  Unfortunately the agent cannot establish his own authority.  Other than express confirmation from the principal, you can rely on the agent's "apparent authority".  In your case you appear to be dealing with someone involved with the principal's security department.  This person has keys to the premises, has access and allows you access and undoubtedly behaves in such a way as to convince you that he has authority.  When relying on apparent authority you take some risk, and surely people are not always whom they seem and act beyond their authority often.
    The law is clear though it's application not nearly as easily predicted.  A principal is bound by the acts of his agent who has acted within his authority or apparent authority and the agent has no personal liability.  An agent who acts beyond his authority or who acts for an undisclosed principal is personally liable for the contract. 
    The first issue to be addressed is how have you made out your contract?  It should be made out to the principal.  That means the name of the "rich and famous" person is on the contract; not the agent.  
    Next, be sure the identity of the agent is indicated by the signature line.  That means that where the rich and famous person would ordinarily be required to sign his or her name, the agent will be signing the agents name.  It will read like this:  John Doe signing on behalf of [or as agent of] Jack Daniels [the rich and famous person].  
    It's not likely that you will have any written confirmation from the principal that the agent has authority, so almost always you are working with someone with apparent authority.  Once the contract is signed you should send it to the principal, whether he or she wants it or not; send it.  Your monthly or other periodic invoices should refer to the original contract.  Asking the agent to get the principal to sign off on the contract would be preferred, but as you mention, not always possible.  Even a writing confirming the contract, after it's signed, would be better than no confirmation at all.
    Many rich and famous people have signed or had their agent sign a Kirschenbaum TM Standard Form Agreement.  How do I know?  Because I've had to help negotiate the contracts with their battery of lawyers, advisors, security personnel, guru of the month, relative, business agent, head of maintenance, etc.  That part is often fun.
    More fun is suing them.  I've done plenty of that too.  We sue the principal, not the agent, and these cases generally get settled quickly.  Agents are often embarrassed that they got their principal involved in a lawsuit, and rich and famous can be quite indignant when they don't want to pay their bill [though this is not a characteristic limited to the rich and famous].  But despite that indignation, just as the didn't have time to get involved in signing the contract, they don't want to be involved in the dispute process.  Commanding their personal appearance generally gets the case settled, and generally it's for everything owed under the contract.  And yes, the rich and famous are indeed not like us, they actually can pay once they settle; most of them anyway.  
    Dealing with high net worth subscribers means higher claims.  Dealing with rich and famous means dealing with people that are like the not so rich or famous, they sometimes don't pay their bills for whatever reason, though it's not usually because they can't afford the $39.99 a month or whatever they are paying.  You need to be sure that the contract is signed properly because you may have to enforce it in a collection proceeding or a defense case.  Last thing you want to hear is that the contract is not enforced because it was not signed or not signed by a person with authority or that the named subscriber was the agent but the protection was clearly for the principal who never knew or approved the contract. 
    Take the time to prepare the contract correctly and get it signed properly.  Do it often enough and you can be rich and famous too.
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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