KEEPING UP WITH THE CONTRACTS
Think it's easy to keep up with contract requirements in 50 states, hundreds of cities and who knows how many local municipalities? It's not. And, by the way, help from you and others in the alarm industry are very helpful giving us the heads up that change is needed. Last year we prepared alarm contracts for Canada, New Zealand and a few other places that I don't recall.
I recently assigned a research project to one of our Alarm Law Attorneys to update a Canadian contract. Here is his report. The issues are important in all jurisdictions.
CONTINUING SERVICES CONTRACTS UNDER BRITISH COLUMBIA CONSUMER PROTECTION LAW
Does an alarm monitoring contract fall within the definition of a “continuing services contract” under British Columbia’s 2-year term limitation rule?
Alarm companies and other types of contract professionals consistently face potential problems when it is discovered that their contracts do not comply with one of a myriad of consumer protection laws that vary on a state, local and provincial level. One such law our firm encounters are contract term limitations. Depending upon the types of services being performed, some consumer protection statutes will limit how long a service contract term can be. Under British Columbia’s (BC) Business Practices and Consumer Protection Act, if a consumer contract provides for the performance of services on a continuing basis, the term of the contract may not exceed 24 months and automatic renewal clauses are prohibited (even if services are only renewed on a month-to-month basis). A renewal contract is only permitted when the consumer notifies the contracting company in writing within 30 days of the expiration of the contract indicating that s/he wishes to continue receiving those goods or services. What’s more alarming, a consumer may cancel their contract at any time if there is a material change in their circumstance. This includes if a customer relocates to a new residence where the address is 30 kilometers (18.6 miles) further from your place of business than the address at the time the parties entered the contract.
Fortunately, alarm companies are not on the hook for this particular provision as alarm services have not been designated for regulation under this law. Despite that a plain reading of the statute gives the impression that the law actually covers a far wider range of businesses, the provision only applies to contracts for gym membership, dance lessons or other fitness related services.
Nonetheless, this scenario illustrates a more general lesson. If you own or operate a business that provides goods or services to consumers across multiple states, cities, or municipalities, it is imperative that you protect yourself and your business by using consumer contracts that are prepared in consideration and compliance with all possible local consumer laws. Too often, an obscure consumer protection provision or a new amendment goes unnoticed and a company’s consumer contracts are never updated in accordance with those changes. The potential consequences from overlooking consumer laws could be damaging if not devastating. Companies may end up servicing consumer accounts that won’t yield a sufficient profit margin (as might be the case for a 5-year alarm contract that is subject to a 2-year term limit) or worse, contracts may be rendered unenforceable in court. Your business may very well be subject to regulations that are similar to the one discussed above and you might not realize it until it’s too late. Because consumer protection laws vary considerably across state, municipal, and provincial levels and are regularly amended, we strongly discourage attempts to track all consumer laws and amendments on your own because it can quickly turn into a full-time job and there is a good probability that despite your most thorough efforts you will make a fatal mistake that could harm your business.
Samuel Atlas, Esq
Kirschenbaum & Kirschenbaum PC
Alarm Law Division
516 747 6700 x 311
RANDOM THOUGHTS BY DENNIS STERN FOR THE NEW YEAR
Hope you had a good holiday; a couple of thoughts on recent Legal Email Newsletter items:
1) Steve Rubin in his response to valuations mentioned that some companies are now sending out new contracts 6 month prior to the expiration of the old contract term, so as to avoid the automatic renewal restrictions in some States of having to go month to month- my question is whether you think a really clever litigation attorney would argue if he were trying to set aside the contract/limitation of liability, that sending out a "new" contract with I presume a new five (5) year term and requiring the customer to sign or be terminated at the end of the "old" original contract period in effect constitutes a "renewal" not in keeping with statutory requirements and therefore the "new" contract is void; your thoughts?
2) also on the valuation response about being heavily influenced by length of term; don't agree; have seen few if any valuations that take that into account (perhaps if all the seller's contracts were month to month, maybe then); fact is that in the normal course one expects a certain percentage of the contracts to be in renewal phase; the real question for the month to month accounts is how long have they been a customer; if for any extended period of time, the fact that they now have morphed into a monthly contract in practical terms should have no impact; some buyers do distinguish multiples for RMR and test and inspections and service contracts, and rightly so given the margin difference; however if the T & I is only a small part of the total recurring, more buyer's then not, don't bother to distinguish; the distinction if it occurs, may be from a 40 for RMR, to 30-35 for T & I and service contracts;
3) last item relates to Bart's comments regarding the "hidden" exposures that companies open themselves up to on the basis of it "will never happen to me"; real question is assessing the risk of a $30 RMR account against potential loss of the entire business; no company should do any fire business without a standard contract (even if it means increasing the limitation of liability clause to $10,000-15,000- beats open ended exposure- the risk assessment for b/a is somewhat different, unless it is a high value premise, i.e pharma warehouse etc.) ; if the customer is a governmental agency, real estate company or real estate management company, etc. at a minimum need to have added to their form of contract which they all require our standard form of limitation of liability provision either (and deletion of their indemnification clause) as a rider or through attaching our form of standard contract with the provision that in the event of any conflict in terms, our standard form will take precedence over theirs;
4) finally, the one item that wasn't mentioned is the over issuance of "additional Named Insured" certificates; usually these are issued by the company or their broker, no questions asked because usually no charge for this certificate; real problem is that naming someone as an additional insured makes your insurance coverage primary for the customer; so in effect negates the limitation of liability clause, because instead of suing under the contract, they merely file an insurance claim under the servicing company insurance policy; in addition, technically if the customer even has a claim unrelated to their alarm system, the could file a claim for that under the servicing company's policy; naming someone as an additional insured has to be limited to " operations under the security services agreement dated _______ and applies solely to general liability claims arising out of Provider's acts while on the premises; furthermore, as to any claim related to the furnishing of monitoring or other security related services, the limitation of liability provisions of the agreement shall nevertheless apply" or words of similar import;
Those are my thoughts for the coming year; have a very happy New Year
Dennis Stern, Esq
Note: Dennis is "of counsel" to Kirschenbaum & Kirschenbaum PC and handles sophisticated merger and acquisitions transactions. You can reach Dennis at 516 747 6700 x 323
MBFAA’S SECURITY LINE MAGAZINE IS NOW ONLINE
Starting with the January/February 2017 issue, Security Line, the official publication of the Metropolitan Burglar & Fire Alarm Association of New York (MBFAA), will be available exclusively as an online publication.
The first print issue of Security Line (Volume 1, No. 1) was published in March, 1978. The last print issue of Security Line is the November/December 2016 issue, which is also available online for the first time and accessible to both association members and non-members.
“That's a nice long run,” said MBFAA executive director Alan Glasser. “However, times change and most of our members are using smart phones, tablets, or computers, and reading "on- line." Production costs are up. Printing costs are up. Postage costs are up. Hence, we made the change to go from print to digital.” Going from a print to a digital publication offers a variety of benefits for association member. In addition to unlimited pages and content, the association will be able to increase circulation, lower costs and deliver information in a timelier manner.
Both members and non-members can access the November/December issue of Security Line at http://www.mbfaa.com/Security_Line.htm
Be sure to sign up for MBFAA's newsletter.
For further information about the Metropolitan Burglar & Fire Alarm Association of New York, call (718) 894-6712 or visit www.mbfaa.com.
About the Metropolitan Burglar & Fire Alarm Association of New York
The MBFAA is one of the oldest associations of burglar and fire alarm professionals in the United States. Many of the founding members can trace their history back to the very beginnings of the electronic protection industry. The Association's mission is to support and promote the electronic security industry and life safety providers in the Metropolitan New York City and Long Island Area, and to assist electronic security dealers with their mission to protect the public from criminal and life safety threats. To accomplish our mission the association provides training, governmental interface, and networking services for security professionals. Membership is open to professional electronic security system dealers and installers, locksmiths, service providers, central monitoring stations, and related equipment manufacturers.
Alan Glasser, Executive Director
METROPOLITAN BURGLAR & FIRE ALARM ASSOCIATION OF NEW YORK, INC.
2017 CONTRACT UPDATES ARE READY - ON SALE NOW - SEE SALE ANNOUNCEMENT
The Standard Form Agreements have been updated for 2017. We've added a non-disparagement provision. We added a liquidated damage provision when the installation is delayed by the subscriber or others. We modified the monthly payment provision for services so that you have option to give one lump sum instead of separate charges. Fire Protection contract inspection provision was modified in several ways. Retention of ownership of decals and yard signs was added. Warning on audio and video added. Fire All in One added provision to deal with inconsistent agreements. Other changes have been made and you should check with our Contract Administrator Eileen Wagda at 516 747 6700 ext 312 to see if your form needs updating. We starting adding the updates several months ago so you may be up to date. Keep in mind that our updates are free for 6 months and half price for 12 months. Updates will be prepared and sent out after the new orders are processed. The sale ends January 6, 2017, so please be patient.
Notice Of Contract Sale - order at www.alarmcontracts.com [you don't need a lawyer to figure this out - order during the sale and save thousands of dollars - call our Contract Administrator Eileen Wagda at 516 747 6700 x 312 for assistance]
Contract sale starts now and runs through January 6, 2017, ending at 3 PM. The discount will be accepted on all orders received between now and January 6, 2017 by 3 PM*. This will definitely be the best deal of 2017. Here's the deal:
Buy 1 Residential, Commercial or Fire All in One and get $100 off and $25 off Disclaimer Notice
Buy 2 All in One forms and get $100 off first and $200 off second and $50 off Disclaimer Notice and $100 off alarm.com rider. Save up to $450.
Buy 3 or more All in One forms and get same as above and $300 off the third form and $400 off the fourth form. Save up to $1150.00 [Residential, Commercial, Fire, Home Automation]
Commercial Mobile Surveillance Lease $1000. Save $500
The Fire All in One with Security Rider $1250.00. Save $400.00 Add the Commercial Fire All in One and the Commercial All in One and get $200 off each. Save $800.00
Qualifier Agreement $1200.00 Save $300.00
Nationwide DIY with monitoring. $3500.00 Save $1000.00**
Nationwide PERS with or without GPS tracking. $3500.00 Save $1000.00**
* Your order must be placed on line at www.alarmcontracts.com and received by our office no later than January 6, 2017 by 3 PM EST. Orders must contain valid credit card payment. Fill out the order form, add up your charges (we will check the arithmetic) and put in "promo" after your total. Orders arriving after sale ends will be returned or with your approval charged regular published rates. Orders will be processed in order received. Rush orders, delivered by email within 48 hours, add 15%.
** Does not include consultation or modification
What's our Guarantee policy re updates?
Free updates within 6 months of purchase*
Half price within 6 months to 1 year*
* applies to original purchase only
To check if you need or are entitled to an update contact our Contract Administrator Eileen Wagda at 516 747 6700 x 312. Update orders are processed after discounted or full price orders.