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Subscriber challenges contract provisions and kills deal
September 5, 2019
Subscriber challenges contract provisions and kills deal
            We had an interesting experience with a customer recently when we sent them our contract.  We ended up canceling the installation and giving them their deposit back as they had issues with the contract (oddly enough this would have been the second house we installed an alarm system in and they signed the contract the first time without issue)   I was wondering what your thoughts were on his comments below:
            "Have you ever closely read the various terms in the contract, and from the perspective of your customers?  There are some very troubling terms. The approach your lawyer took was obviously to write all terms your favor completely, and at the expense of your customers. Looking at it objectively, I see some significant over-reaching.   
            I would think as a good business practice you would not want to give your potential customers such a bad impression with some terms that are so extreme. I would think it would scare them away or make them very unhappy to do business with you.  I encourage your management to review some of those terms.
            I don’t expect that we would ever have a problem, but some of the terms are just so troubling. Let me give you a few examples.
            I’m not even sure all terms would be upheld as they seem to be against public policy.  For example, the contract demands that we name you as an additional named Insured on our insurance policy.  My insurance company likely won’t even allow that but there is no reason I should have to do that. I have never heard of such a requirement in a consumer contract.  
            Another example is that it even excuses you for your own negligence and breach of contract. 
            A third example is that it would require us to indemnify you in s suit with us or if some third party sued you for your wrong-doing.  
            Please advise ASAP about the refund I asked about at the top."
I have never had this happen before and I feel it was an over-reaction on his part, but curious as to what your thoughts are.
 Thank you,
            This is not likely to be your last customer to challenge the contract terms.  You may have been able to salvage the deal by having me talk to the customer.  
            His challenges are not surprising.  He objected to the Insurance Procurement clause, the Indemnity clause and [seems like] the Exculpatory clause.  We could have modified those provisions so that you remained protected but softened the terms for the subscriber.
            When subscribers learn that the contract provisions are intended to shield the alarm company from catastrophic damages they usually understand.  Subscribers don’t expect you to rebuild their building or replace their inventory; at least the reasonable subscribers don’t expect that.  You are not their insurance company and they understand that.
            As for never seeing a contract like an alarm contract, perhaps your customer should think about the car rental agreement that he has to sign unless he wants to take a bus from the airport; or the terms he agrees to when he goes to a ball game; or gets on an airplane; or orders cell or TV service.
            I am sorry you lost this customer, but not as sorry as you would be if you lost your company to this customer’s loss.

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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