Arkansas: (a) No contract for professional home security services that is

entered into after August 1, 2003, shall state that the term of the

contract will automatically be renewed for any additional period beyond the

initial term of the contract. (b) No contract under subsection (a) of this

section shall be renewed for any additional period beyond the initial term

of the contract unless the person receiving the professional home security

service affirmatively notifies the person offering the service that he or

she wishes to renew the contract.

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So how does the alarm industry deal with this thoughtful legislation?

The law is clear enough. All alarm service contracts terminate at the end

of the initial term. The law does not impose any notice on the alarm

company before terminating service. [unless there is a statute that we

missed].

The contract itself is not permitted to contain a renewal provision, and

therefore even the month to month renewal which is now in all of the

standard alarm contracts is not proper. No doubt there is a deceptive

business practice statute lurking somewhere in Arkansas that could be

invoked against alarm companies who violate this contract provision and

mislead their subscribers into thinking that the contract automatically

renews, for any period.

 

 

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The statute does permit the home owner to notify the alarm company that the

subscriber wishes the contract to renew. Unfortunately that would seem to

suggest that the contract renews on all of its terms, which does not

include a renewal period. So one problem is what is the lenght of time of

the renewal? Are all services and charges to remain the same?

Alarm companies have several options. First, let the contract expire and

terminate service. Second, notify the subscriber that service is gonig to

cancel unless the subscriber returns a form notice that you provide [or

their own letter] requesting service to continue, and on what terms. If

it's your notice that the subsciber signs you can include your terms of

renewal. If not returned by the subscriber the contact terminates. Third,

notify your subscriber that the contract will terminate unless they request

renewal [which is really an extension period and not a renewal]. This would

extend the contract on the existing terms. A fourth option would be to send

a subscriber a new contract before the contract expires, advising that

unless it is signed the existing contract will expire and all services

terminate.

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Unless Arkansas has a statute limiting the initial term of the contract

alarm companies could also increase the term. Right now residential

contracts have 5 year terms in my standard forms. For Arkansas we will be

removing the month to month renewal.

For those of you concerned with liability issues, it would not be wise to

continue servicing a subscriber with a terminated contract. Though you

could take the position that the effect of the statute would be merely to

permit the subscriber to cancel at any time, a more prudent analysis would

be that the contract terminated and your services were provided without

benefit of the contractual protective provisions.

Insurance carriers need to be careful writing E&O in Arkansas and need to

get even more serious about requiring proper contracts as a condition of

coverage.

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Here is the Alarm Law Issues page link.

 

http://www.kirschenbaumesq.com/legal.htm

 

 

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We will of course update our standard form contracts to include new state

requirements

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