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Fire Alarm installation contracts and thereafter May 22, 2018

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Fire Alarm installation contracts and thereafter
May 22, 2018
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Fire Alarm installation contracts and thereafter
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Ken,
    As a Fire Alarm Company we are often hired as subcontractors by electricians for Fire Alarm System installs. We receive lengthy contracts to sign for the work. In order for us to receive the maximum protection should we be sending a contract of our own back to them? Is that standard practice for each party to have their own contract? We recently purchased the 
Fire All In One Agreement from your firm. Thank you ahead of time for your counsel.
Sincerely,
Laurel
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Response
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    Fire alarm companies are often engaged by electrical contractors or general contractors.  Their contract of choice is the AIA form or a variation thereof.  The provisions in those contracts are antithetical to your Fire All in One Agreement.  Just in case you're not sure what the word "antithetical means", it means "directly opposed or contrasted; mutually incompatible".  Indeed it is all those things compared to the 
Fire All in One.  
    The most glaring issue you will be confronted with is the indemnity provision.  You will be the one providing the indemnity, and not just for your mistakes, but mistakes of the owner, contractor, other subcontractors; even the architect.  Might not be a problem, because you will have to also get insurance and name all of them as additional insureds on your policies.  
    Exculpatory clause or limitation of liability - yes - those clauses may be in the contract, but they won't apply to you.  You aren't the intended party to be protected by those contracts.  
    What if you don't get paid?  Or, if the GC wants to terminate your job mid-way?  Well, the contract probably has a Termination for Convenience clause, maybe a Paid When Paid Clause, and an American Arbitration provision, so good luck getting paid.
    But it's a big job and you want to take the chance.  OK, you've got your attorney's approval.  Sign the contractor's form agreement, but only for the installation [and only after you've tried to get the Fire All in One signed].  If you sign that contract you will be on pare with all the other subcontractors, exposed to the same liability and taking the same risks.  Your outcome will depend, to a considerable degree, on the integrity of the owner and contractor.
    Is the risk worth it?  For one thing, you have to consider if you are getting the RMR items, or are you just doing the installation.  If just the installation then you know your price and your projected cost.  You know your profit, if there is one.  The contract is worth nothing to anyone else and only what the profit will be once you complete the job and get paid.  Very much different than a 
Fire All in One agreement.
    The job might not be as lucrative as your first thought if you're not getting the inspection, repair service and monitoring [what I refer to as the Recurring Monthly Revenue items].  If it is, go ahead and sign the contractor's form.  If it's not, then you need to require the owner, the end user, to sign the 
Fire All in One, at least for the RMR items.  That's where the money is for you.  The moment the Fire All in One is signed it is worth approximately 40 times the RMR.  So if you're getting $400 a month for that commercial fire contract the value is $16,000.  You could sell the contract or continue performance and collect for the full term.  [the Fire All in One has a term of 120 months, so over the life of the contract you collect $48,000]  
    You can't perform the RMR items however without the 
Fire All in One protection.  The RMR items is where most of the exposure is.  The installation, don't forget, is scrutinized by the GC, the electrician, the owner and finally the AHJ.  But the RMR items, you're on your own.  If there is a loss, the complaint won't be that the design or installation was defective, it will be some problem with inspection, repair or monitoring.  You have no contractual protection if you don't have a contract or all you have is the contractor's form.
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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