January 2, 2012
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If you operate your business in more than one state you may be wondering why you need contracts designed for each state. While that is not always the case, most states do have laws that affect contracts, particularly contracts with residential consumers. Standard Form Contracts are customized to address not only your company information but the laws in the jurisdiction you are conducting business. We do suggest you have them checked with your local attorney just in case we missed something [something like an exculpatory clause]. What are the various types of laws that we typically see varying state by state?
Here are a few:
prohibiting waiver of jury trial
prohibiting waiver of bringing counterclaims
prohibiting or calling for special notice for indemnity provisions
prohibiting or restricting automatic renewal
prohibiting liquidated damages unless specific notice is given
prohibiting shortening of statute of limitations
prohibiting waiving certain consumer rights
requiring particular warranty language
requiring payment disclosures
requiring specific font size
requiring specific font color
requiring specific provisions, such as notice for waiver provisions or regarding execution of contract
requiring license information
requriing consumer complaint information
requiring specific cancellation notice and cancellation form
Generally the above are the subject of statutes. Then case law has to be checked to see if the courts in your jurisdiction have imposed some other requirements. These may include:
right to increase limitation of liability
placement, font size and wording of particular provisions
interpretations of statutes or the state's public policy that may not be easily understood
To make matters a bit more complex, new statutes and court cases can affect alarm contracts at any time. Although the changes will not usually affect an existing contract, it will govern contracts entered into after the effective date of the new law. Therefore, just like technology changes and gives cause to change contracts, the law changes as well, necessitating contract changes.
What does that mean for you? Read these emails and check with me every once in a while for contract updates. The contracts are the most important part of your business; don't neglect them.