KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Exculpatory clause wording to disclaim tort liability in Oregon / Las Vegas meetings still available -private and group
March 21, 2024
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Exculpatory clause wording to disclaim tort liability in Oregon
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Every properly worded alarm contract must contain provisions that disclaim liability for torts [negligence]. Having a paragraph heading isn’t enough. Courts will look for ways to refuse to enforce a contract that seeks to disclaim liability for negligence; simple as that. Can be in the alarm industry or other industries. Some industries cannot have such contractual disclaimers, but the alarm industry can, should and does.
But there are basically two ways to word these “contractual disclaimers for tort”:
* the wrong way
* the right way
The consequence of the wording?
* wrong way won’t be enforced
* right way should be enforced, and will be even if you have to appeal to a higher appellate court
K&K goes to great lengths to word these protective provisions correctly in the Kirschenbaum Contracts™. In our Standard Form Agreements we generally use universal wording that covers the bases in all jurisdictions. In the Standard Form Agreements for nationwide use the nuances of states are covered when necessary.
There are generally two types of cases dealing with these disclaimer provisions. One is whether a disclaimer provision, no matter how it’s written, will be enforced, especially in the context of the specific lawsuit where a party seeks to enforce the contract. The other is whether the actual wording of the contract meets the necessary minimum standards and criteria so that the provision will be enforced.
My position is that these protective provisions are vital in your contracts. Your central station agrees, your insurance company writing E&O coverage agrees and any potential buyer of your alarm accounts and contracts agrees. Exceptions are, well to be kind, just stupid.
Because it’s accepted in the alarm industry that the protective provisions are essential in the contract it necessarily follows that contracts with the protective provisions will be more valuable, create more equity, command a greater multiple on the RMR when selling, than contracts without the provisions or contracts with poorly drafted provisions.
There are, again two ways, to find out if your contract has properly worded protective provisions. One, you can wait for a lawsuit and see if a judge enforces or tosses the provision, finding you free of liability or holding you to damage, which you may or may not be able to pay. Two, you can seek advice of counsel, an attorney who actually knows the alarm industry. If you wonder or can't figure out where you can find one, you’re hopeless, cross your fingers and best of luck. One thing is for sure, option two, seeking expert advice is a better option than waiting for the lawsuit.
If you have Kirschenbaum Contracts™, any of the Standard Form Agreements, you can sleep easy. Sure, that may sound like “puffery” rather than a legal opinion, but it’s highly unlikely you know attorneys with more alarm contract experience than K&K. If you don't use or haven't updated your contracts then what exactly are you waiting for? Are you driving around holding your breathe with tires about to blow because they have way too many miles on them? That can only kill you. Crappy contracts can leave you broke [rather than rich, which is what you should be from your alarm business]
The question that comes up regarding the protective provisions is whether the word “negligence” needs to be in the contract. In some states it may not be necessary; in others it may be necessary and in all states its better than not. But Oregon apparently won’t require the magic word negligence, but to avoid that word [not sure why you’d want to] you do need to meet some high standards. Excerpts from the following case discuss the issue. It’s not from the alarm industry, but issues are the same.
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Certain Underwriters v.TNA NA Mfg.
Supreme Court of Oregon
The issue in this case is the specificity of contract language required to disclaim tort liability under Oregon law. SunOpta, Inc. (SunOpta), purchased food processing equipment from Food Design, Inc. (FDI), for use in its sunflower seed production. Following a listeria outbreak that resulted in a recall costing SunOpta's insurer, Lloyd's London (Lloyd's), nearly 20 million dollars, Lloyd's brought claims for negligence and product liability against FDI and TNA NA Manufacturing, Inc. (TNA), FDI's successor in interest. On summary judgment, the trial court held that SunOpta had waived any action in tort through its purchase contract with FDI, and specifically looked to four provisions of that contract-sections 5, 7, 11, and 12-reasoning that, when read together, those provisions reflected a waiver of tort liability. The Court of Appeals affirmed the trial court, on narrower grounds, concluding that one provision, section 11, when viewed in the context of the contract as a whole, constituted a waiver of tort liability because the provision, "implicates liability beyond that arising under the contract." Certain Underwriters v. TNA NA Manufacturing, 323 Or.App. 447, 454, 523 P.3d 690 (2022). Lloyd's petitioned for review, which we allowed.
Throughout this opinion, we refer to the parties by name and use the term "defendants" to refer collectively to FDI and TNA.
We conclude that both the trial court and the Court of Appeals erred. Oregon law establishes that "a presumption will be indulged against an intention to contract for immunity from the consequence of one's own negligence." Waterway Terminals v. P.S. Lord, 242 Or. 1, 19, 406 P.2d 556 (1965). In considering whether that presumption has been overcome, "a contract will not be construed to provide immunity from the consequences of a party's own negligence unless that intention is clearly and unequivocally expressed." Estey v. MacKenzie Engineering Inc., 324 Or. 372, 376, 927 P.2d 86 (1996) (quoting Transamerica Ins. Co. v. U.S. Nat'l Bank, 276 Or. 945, 951, 558 P.2d 328 (1976)). As we will explain, to waive tort liability, contract language must be clear and explicit; waiver will not simply be deduced from inference or implication. The text of the contract must show, clearly and unambiguously, that the parties intended to disclaim actions outside of contract, i.e., actions in tort. Generic text that purports to waive all liability, or any loss, will typically be insufficiently specific to overcome the presumption against the waiver of tort liability. Accordingly, the decision of the Court of Appeals is affirmed in part and reversed in part. The judgment of the circuit court is reversed, and the case is remanded to the circuit court for further proceedings.
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Private and Group meeting schedule now available
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Group Meetings: See schedule below. Reserve your spot by calling Stacy Spector at 516 987 8428.
Private Meetings:
Schedule a Private Meeting with Ken Kirschenbaum by calling Stacy Spector at 516 987 8428.
Register for a Group Meeting by calling Stacy Spector at 516 987 8428
Schedule Private meeting with broker Rory Russell by calling Stacy Spector at 516 987 8428.
Group Meetings: Topics and Schedule
Tuesday April 9. Group Meeting: 3:00 pm to 4:00 pm – Monetize on your monitoring accounts; new incentive program; learn how to get unheard of incentives from your central station or move to another one. Group meeting conducted by Ken Kirschenbaum.
Wednesday April 10. Group Meeting: 11:00 am to 12:00 pm - Selling and buying alarm accounts; Things to know. Group Meeting conducted by Ken Kirschenbaum.
Wednesday April 10. Group Meeting: 2:00 pm to 3:00 pm – State sales tax and complex company valuation. Group meeting conducted by Mitch Reitman of Reitman Consulting Group.
Wednesday April 10. Group Meeting: 3:00 pm to 4:00 pm – Central station – dealer relationship; contract issues; understanding the dealer agreement terms and why you need the K&K Rider. Group meeting conducted by Ken Kirschenbaum.
Thursday April 11. Group Meeting: 10:00 am to 11:00 am - Insurance for your alarm business – best options; availability, pricing and claims. Group meeting conducted by Shawn Iverson of The Insurance Center.
Thursday April 11. Group Meeting: 11:00 am to 12:00 pm – Contracts – which ones you need and why you need them. Group meeting conducted by Ken Kirschenbaum.
Thursday April 11. Group Meeting: from 3:00 pm to 4:00 pm -
The Corporate Transparency Act. Group meeting conducted by Mitch Reitman of Reitman Consulting Group.
Private Meetings with Rory Russell of AFS:
Schedule a private meeting with Rory Russell of Acquisition and Funding Services (AFS) to discuss buying or selling security, fire and integration business. Available times to meet with Rory Russell are as follows: Wednesday April 10 and Thursday April 11 between 7:30 am and 11:00 am and 12:30 pm and 4:00 pm. Contact Stacy Spector to schedule a private meeting with Rory. Call 516 987 8428
ALL TIMES ARE PACIFIC STANDARD TIME.
Contact Stacy Spector, Esq. for all scheduling at Sspector@kirschenbaumesq.com or 516-987-8428.
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STANDARD FORMS 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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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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