Should new end user sign contract?

QUESTION:

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Hi Ken

    I have purchased and use your residential security contracts - Sales, Monitoring, Service Contracts (one contract) Residential / Commercial.

    My contract is with the client for 5 years. The client is now moving for 2 years and renting his home for 2 years to a new “tenant” . the tenant now wants me to service him and update access codes etc. Do I need to get the tenant to sign a NEW contract for 2 years? Or is it still serviced through the original owner who I have contact with?

Thanks

Bill Charney, BSEE

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ANSWER:

    Your subscriber is under a 5 year monitoring and service contract.  Subscriber lets you know that he is moving out and renting the premises to a tenant.  Should you continue to provide your service to the tenant?  Not a good idea now that you are aware of the new occupant.

    Your end user needs to be under contract.  Only then will you be protected by the contract provisions.  You might argue that your contract is with the property owner, not the tenant, and that the contract provides that there are no third party beneficiaries and that therefore you owe the tenant no duty whatsoever.

    That won't fly, especially in a residential setting, and even more so because you have been put on notice that your subscriber has moved out and a tenant moved in.  Other facts may make the case even worse for you, for example if you have changed codes or call information for the tenant or provided service while the tenant was there.

    A "no third party beneficiary" clause will be enforced, but not if the undisputed facts are that you are in fact servicing a non party to the contract.

    You don't mention who is going to continue paying you.  You can insist that payment come from the owner, your subscriber, but if you accept payment from the tenant you must have the tenant either assume the subscriber's contract, sign a new contract with the tenant [in which event you will have to terminate the existing contract unless the new contract expressly reserves your rights under the existing contract and the subscriber/owner consents to that], or have the tenant acknowledge in writing that he agrees to be bound by the existing contract terms except for payment which is to be made by the subscriber.

    The bottom line is that you should have an end user under contract.