KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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should you agree to central station's demand for direct contract with your subscribers
June 29,  2017
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should you agree to central station's demand for direct contract with your subscribers
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Ken:
    We're a California based ACO [Alarm Company Operator] and have been working with a monitoring center based in New York to establish them as our service provider.  They require a Master Agreement with us, of course, and also an agreement with the subscriber specifically, signed by them.  I've noticed more and more central stations are moving to this model. I am really uncomfortable with this and am not in favor of the individualized agreement between them and our customer. 
    My thought is the Master Agreement between our ACO and the monitoring provider should suffice.  Do you have any advice for getting around this requirement or should we just find another vendor?  At the very least, what should the Master Agreement specify if we should somehow be forced into contracting with this center?
    I would like to remain
 Anonymous if you should choose to print this question.
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Response
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    It's a great question and raises additional questions.  Let's examine them.  
    Some [foolish in my opinion] may believe that the central station's only customer is the alarm dealer, not the subscribers.  The argument goes, since the subscriber is not the customer of the cs, the cs owes no duty to the subscriber and can't be sued by the subscriber.  While it may be true that the cs agreement with the dealer states that there are no third party beneficiaries of the agreement, that is a contract argument.  However, even if there is no contractual duty owed to the subscriber, the fact that the cs has undertaken to provide monitoring services to the subscriber there will be a common law negligence cause of action if the services are negligently performed.  "Negligently performed" is really a legal standard, but the common language vernacular is close enough for our purposes.  Bottom line, the subscriber will be able to sue the cs station for monitoring errors.  For that reason the cs has a right to require that there be a proper contract in place to protect the cs.
    The Master Agreement [called a Dealer Agreement if they are using the Standard Form Dealer Agreement; formerly called the Installer Agreement] requires the dealer to indemnify the cs, but that indemnity is only as good as the dealer or the dealer's insurance, assuming the dealer has insurance.  So even if a Dealer covers the cs with its insurance , a claim by the subscriber could easily exceed a Dealer's insurance coverage and exceed the value of the dealer.  Keep in mind it's the Dealer getting most of the monitoring charge paid by the subscriber, not the cs.  Why should the cs accept such enormous risk without trying to protect itself.  The first layer of protection is the contract.
    So the cs is clearly right demanding a contract with the subscriber.  I know many Dealers don't like the idea of a contract between the cs and subscriber [usually also signed by the Dealer, making it a 3 Party Contract].  There is a way around the 3 Party Contract and the cs' demand that it have a direct contract with the subscriber.  How?  Use a proper alarm contract, one universally recognized by the alarm industry and those serving the alarm industry.  That's right, it's the Kirschenbaum TM Contract.  You get the contracts you need for your alarm operation at www.alarmcontracts.com.  Need help figuring out which contract forms you need?  Contact our Contract Administrator Eileen Wagda at 516 747 6700 x 312 and she will assist you.
    OK, so what's so special about the Standard Form Agreements bearing the Kirschenbaum TM and copyright?  

    On a more serious note, the agreement between you and the cs should be read carefully and should be negotiated to protect you.  Like your subscriber agreement is written to protect you, the cs Agreement is written to protect the cs.  It can be and should be modified.  I've addressed the points to look for in other articles and I'm sure we'll get to them again, but this article is long enough.
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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
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www.KirschenbaumEsq.com
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