does Tennessee require your sales people to be lawyers?
Recently I attended the annual Tennessee Alarm Association Meeting where representatives from the alarm board presented changes to their licensing law. Having been an avid reader of your column for years, I noticed that there was one specific section that goes against things I’ve read in your column. You’ve always stated (paraphrased) that we should leave the interpretation of the contractual agreements to the lawyers. I was wondering if you had an opinion on the following provision of the revised Tennessee alarm law:
Rule 0090-06-.04 Contracting with Customers
• (3) Alarm contractors shall train their employee registrants with respect to the terms and conditions of the contract so that a customer's questions can be adequately answered at or prior to signing the contract.
Roy Pollack CPP SET
This is a tricky slope. You need to draw a firm line that your sales people cannot cross. Once your sales person explains the contract or has discussion on its terms you run the risk that the subscriber will later complain that the sales person misrepresented the contract. Yes, your response will be, well the subscriber had the legal obligation to read the contract. But, the claim will be "fraudulent inducement", and that is going to complicate your case because the court may very well refuse to enforce the contract, at least on a motion, so you may end up with a full blown trial.
You are probably thinking about collection cases, so perhaps you're not concerned. But think about a serious claim by the subscriber that the system didn't function; a claim is brought against you. Maybe you were, in fact, negligent in some way. Relying on your contract provisions is now vital to your defense of the claim. A fraud in the inducement claim will be a distraction at least, and perhaps a successful strategy by the subscriber to get the contract tossed.
So what exactly does Tennessee expect the sales person to know about the contract?
- the amount of the monthly payments and other monetary expenses the customer has to pay
- the term of the agreement; the subscriber's minimum commitment and early termination issues
- a description of what the systems is designed to do
- when it will be installed and how long it will take to install it
- how the system works so that the subscriber can turn it on and off or otherwise use it
- that the subscriber should carry insurance, and name the alarm company in the policy
- that permits are required and the subscriber has to pay the permit fees
- subscriber will be responsible for false alarm fines and subsequent non-response from first responders
- alarm company will not be responsible for any subscriber losses
- the intricacies of the exculpatory clause
- how the indemnity and waiver of subrogation clauses work
- how the insurance procurement clause is related to the indemnity and waiver of subrogation clauses
- the legal concept of gross negligence and how it affects the contract provisions
The intent of the statute is not to turn sales people into lawyers. There are many provisions in the contract that do not require a lawyer to interpret, and those items are in the Probably category, perhaps in the Maybe category. But not in the Definitely Not category. You have to keep in mind that any discussion of "what does this mean" opens the door to a claim that your sales person mislead the subscriber.
"What does this mean" should be responded to in this way:
- "Let me read it to you"
- "Do you mean you don't understand it or you just don't like it"
- "You may want to take the time to carefully read the contract or bring it to someone you trust to advise you"
- "I can tell you the details of the provisions we have negotiated and added to the contract, such as the equipment you're getting, the cost, when it will be installed, its general functionality and how it operates, but I am not qualified to explain the legal provisions that were prepared by the company lawyers and required by the company's insurance carry"
This is how I interpret the Tennessee statute.