Inflation surcharge by Honeywell / contract update announcement December 17, 2021

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Inflation surcharge by Honeywell / contract update announcement
December 17, 2021

Inflation surcharge by Honeywell / contract update announcement

Ken
          Below is what we received from Honeywell re: All fire equipment.
Does the Fire Commercial All in One contract covers price increases?  And, will it cover it to this extent?
     Also, the letter is the first, but we have been advised by ADI (which has the same parent company as) and Anixter/Tri-ed that the same price increase is coming, and that we should expect written confirmation from each of them as well as Honeywell.
I will keep you posted, and forward any and all relevant documentation to you as it arrives.
Yours
Alan
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Here is the price increase notice from SDI Systems Distributors dated Dec 9, 2021

          Systems Distributors Inc., was made aware on December 8, 2021, by notification of Honeywell Fire Americas’ VP/General Manager Daraius Patell, that;
          “Effective Wednesday, December 15, 2021, all existing and new orders that ship on or after December 15, 2021 will be invoiced with the current pricing and a total 8.0% - 21% inflation surcharge regardless of when the order was placed.”
          Unfortunately, this includes all backorders that are in the manufacturing que.
          Your personal SDI Sales representative will be reviewing all Dealer open- Honeywell backorders that may be affected and will reach out to you directly, to determine what options you may have and to reevaluate quotes/pricing to best service your jobs.
          Read Honeywell Fire Inflation Surcharge Announcement
Sincerely,
SYSTEMS DISTRIBUTORS, INC
Scott Fowler, President

Response

          Let me start by stating that I have not verified this increase notice, I don’t know if only Honeywell equipment is involved, if only fire components are involved or if other manufacturers are doing the same thing or will be soon.  I also won’t get into the legal or ethical issue of whether a manufacturer et al can announce an increase on orders already placed.  Presumably its position is that you can withdraw the order if you don’t like the increase.  You are on different footing with your customers.  You may be under contract to provide specific equipment; in fact you probably are.  Your contract also has a price to be paid by the customer.  You may be excused from the contract performance if you cannot get the equipment at all, called impossibility of performance.  However, you won’t have the right to claim impossibility of performance just because the equipment is going to cost you more than you thought it would.  A price increase, something that ordinarily wasn’t something you needed to be concerned with since most alarm systems get installed shortly after the contract is signed, is now apparently the “new reality”.  By request I’ll leave politics out of this article, but we all know who is to blame. The price increase needs to be passed along to your customer, and for that you need a clear provision in your contract permitting that.
          Here’s what I do know.  The Standard Form Agreements, Commercial Fire All in One and the other form agreements, do not have any provision that your permit you to increase the price because of a manufacturer or distributor or supplier price increase.
          In fact you may have trouble getting a customer to sign an open-ended price increase provision.  Nevertheless, the Standard Form Agreements will be updated immediately to provide for this contingency.
          If you’ve purchased Kirschenbaum Contracts™ within 6 months you are entitled to a FREE UPDATE call our Contract Administrator Eileen Wagda at 516 747 6700 x 312 or email her at EWagda@Kirschenbaumesq.com for the free updated forms.
          If you’ve purchased Kirschenbaum Contracts™ within 6 to 12 months you entitled to update the contracts at half price.
          If you don’t have Kirschenbaum Contracts™ I suggest you get them now at www.alarmcontracts.com

To order up to date Standard Form Alarm / Security / Fire and related Agreements click here: www.alarmcontracts.com
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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