KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Does your contract need to be assignable / More on Comcast blocking alarm signals / ISC schedule
June 4, 2021
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Does your contract need to be assignable
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Ken,
How would the fact that a company we are looking to acquire doesn't use contracts that contain an assignment clause affect the multiple?
Brandon
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Response
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The problem isn’t the assignment clause; it’s what else might be missing from the contract.
I feel like I am going out on a limb; alarm contracts do not need an assignment clause. This statement is probably contrary to everything you hear from lawyers, lenders, insurance underwriters, consultants, brokers and potential buyers.
Alarm contracts are assignable, without an assignment clause, unless the contract specifically prohibits or conditions assignment. That’s the law, plain and simple.
The exception to the general rule is when the contract is for personal services, such as an entertainer or someone with such specific skills there is no substitute. For example, an association wants to pay me to come and speak. I can’t send _________ [put in your attorney’s name, if you have one] because he or she isn’t as knowledgeable or entertaining or good looking.
Because almost everyone involved in the alarm industry believes an assignment clause is necessary, and almost every client asks if it’s in the contract, when you tell me that it’s missing it makes me wonder what other provisions are missing. It’s the other provisions that really matter.
Yes, the Standard Form Agreements do have an assignment provision, and it’s actually an assignment provision that does matter to our clients. Why? When a contract is assigned the party making the assignment remains legally on the hook along with the party to whom the contract is assigned; they are both on the hook, so to speak. The assignment provision in the Standard Form Agreements relieves the assigning party of further responsibility and liability.
To answer your question directly, no assignment clause should have no effect on a multiple, though because of the widespread opinion that it’s required there may be some resistance from a buyer or lender.
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More on Comcast blocking alarm signals from May 20, 2021 article
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Ken,
We’ve been seeing this problem. I asked a couple of our techs about it. Their replies:
Manager: We’re seeing more and more problems with data on security systems going through internet modems, emails on ISP providers and texts on cell carriers as those carriers & ISP providers filter that data more & more for security and to deal with the prolific amount of spam & robo calls.
Tech #1: Yes this is completely true. Tomas (an IT professional) can help prove for other things like blocking ports but Robert (a large camera integrator) can also testify to this. We spoke about this last time he was here and while Nathaniel (one of are techs) and I were in Newport. Port 7700. They completely block it; especially with cameras.
Barney O’Donnell
HSI Security Systems, Inc.
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Response
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We got some really good responses from experts in the June 1, 2021 newsletter which you can read, along with all other articles on the K&K website at Alarm Articles: https://www.kirschenbaumesq.com/page/alarm-articles
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ISC schedule
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I’ll be at ISC in July and we are now scheduling private meetings and participation in round table discussions, topics and guest speakers TBA. Time for private meetings are limited so please reach out to Stacy Spector, Esq at 516 987 8428 or SSpector@Kirschenbaumesq.com. Concierge Clients with appointments are all set.
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To order up to date Standard Form Alarm / Security / Fire and related Agreements, click here: www.alarmcontracts.com
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CONCIERGE LAWYER SERVICE PROGRAM FOR THE ALARM INDUSTRY
You can check out the program and sign up here: https://www.kirschenbaumesq.com/page/concierge or contact our Program Coordinator Stacy Spector, Esq at 516 747 6700 x 304.
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NOTICE: You can always read our Articles on our website at ww.kirschenbaumesq.com/page/alarm-articles
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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
www.KirschenbaumEsq.com
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