June 29, 2011

Question

Hello Ken, I hope all is well. Our Company has identified a number situations were servicing or testing of obsolete equipment could result in a large repair if the equipment fails in any way during the time that we are doing our work.

The "repair" could be a complete system replacement.

These include

Older Fire Panels especially if they have a large number of 2 wire smoke detectors

Older Multiplex Devices

Older Addressable Devices

Older Wireless Devices

Combo Panels

Our service techs would like a supplemental release of liability that they could have signed by the client

at the time of service or testing, prior to them even opening the control box. Although the client is already under

a contract that releases us from the liability we would like to reemphasize that release at the time of the service.

The idea would be some wording such as

"The client understands that the equipment is obsolete and individual components can not be replaced or repaired and any failure of any single components may result in the the entire system needing to be replaced at the client's expense."

Also a restatement of the limit of liability.

We had a situation years ago were we replaced the batteries of a fire system and the system went into trouble and would not go normal. We then had a argument with the client who thought we had done something wrong. The fact was that the obsolete panel decided to crap out at that time. Maybe the surge of the new batteries did it, but we had done nothing wrong.

Do you have such a document?

We have already purchased your packet of contracts.

Our Company is a traditional alarm company with a number of commercial accounts.

Thank you for any assistance.

JL

 

Answer

Obsolete and unrepairable equipment is a problem when you have a full Service Contract or lease that requires you to repair or replace equipment. Because the routine practice in the alarm industry is to rely on continuous automatic renewal provisions, and most subscribers are not going to want to upgrade their working alarm systems, alarm equipment remains in place for a long time, too long in some situations. When a subscriber is paying a recurring charge for service their is a reasonable expectation that repairs will be made when necessary. On the other some alarm systems cannot be repaired because components have reached their useful life expectancy and replacement parts cannot be found; repairing the system is no longer cost effective when weighed against a new system - if you can get the subscriber to pay for it of course.

The Standard Form Contracts do contain an obsolesce provision that requires the subscriber to pay to replace these components. Why then would a separate document be necessary or advisable as the above question suggests?

Too often subscribers one of two unreasonable positions [unreasonable that is to you]. First, "I didn't see or understand that part of the contract and therefore I never really agreed to it, so don't enforce it - repair the system at no cost", or Second, "I don't care what is in the contract, I don't like it, I won't pay to fix the system and if you won't I am getting a new alarm company and suing you for the cost of a new system". In these situations the contract may hold up in court, but won't be much use in retaining your subscriber as a customer.

The Disclaimer Notice was initially designed to call the subscriber's attention to several issues, all of which are covered in the Standard Alarm Contracts. The separate notice was prompted by a lawsuit where the subscriber claimed that the salesman failed to adequately explain the system, alternative options, and that these failings amounted to misrepresentations which in turn amounted to fraudulent inducement in the execution of the contract. Lot's of crap, but enough for a crazy judge to hang his hat on and push a settlement by threatening not to enforce the alarm contract. So, the Disclaimer Notice - a simple form containing several disclaimers - designed so that even the "most unsophisticated consumer" [and the dumbest or most unreasonable anti alarm contract judge] can understand. (as I write this I am wondering if we need warnings similar to the new cigarette warnings - pictures on contracts showing a burglary in progress or building burning down with slogan that the alarm system is not intended to prevent these events, blah blah blah)

Finally, in answer to the question, yes, I can add an obsolescence provision to the Disclaimer Notice, which you can get your subscriber to sign as often as you like since it's not a contract and doesn't require the payment of any money or commit the subscriber to any obligation. I can also add an obsolesce provision to a service slip. I don't think it's necessary. Adding it to the Disclaimer Notice is a sufficient precaution.