Sometimes it’s the little details that can make or break your contract. Attorneys pay a lot of attention to the larger—seemingly more important—contract terms, such as limitation of liability and damages, subrogation waiver and indemnity. But oftentimes it is something small, but no less important, that can spell doom (or at least a major headache).
- Your contract should address what your business is doing.
Well, duh. More times than I care to count, I have encountered contracts that just do not cover the actual service the company is providing. This spells big trouble in the case of a loss. And it makes your business and contracts undesirable for acquisition.
This sounds so simple. If you are selling alarm equipment and providing installation, service, and monitoring, your agreement should specifically address all of those things.
If you are providing installation and service, but your agreement addresses only monitoring you have no contract protections for installation or service. If you are providing monitoring but your contract only addresses installation and service (and the “service” is not monitoring), then you have no contract protections for monitoring.
So if your agreement says “monitoring agreement” ensure that there are also provisions addressing the sale, installation, and service. Likewise, if your agreement says “Installation and Service Agreement” ensure that it also covers monitoring.
- You should have a contract that protects your business, not just the central station.
For good reason, your central station may have a contract that it requires you to use with the customer. Let’s be clear about this: this contract provides protection for the central station.
It is a mistake for you to assume the central station contract provides any protection for your business as the installer or service provider. Sometimes it does, sometimes it doesn’t, and sometimes it provides minimal protection.
You need to read the central station contract so you know whether, and to what extent, it protects you. If it does not fully protect you, which is likely the case, you should get your own agreement so that you know it’s written to protect you to the fullest extent of the law.
- If your agreement requires a management signature to be valid, then ensure it is signed.
Some states specifically require that the contract have an authorized management signature. In other states, it’s just become the norm, and is a widely adopted practice in alarm contracts. In theory, it’s for contractual reasons, so your customer can’t change the terms without your knowledge and consent via signature. Whatever the reason, though, if your contract says it is not valid without management signature then you need to ensure someone from management approves it. Is your contract void without it? Probably not, but there will be legal hoops to jump through to ensure your contract protections are enforced. Why go through that huge hassle and uncertainty, when it’s a small administrative issue to just get the contract signed by management?
- If you are calling or texting your customers, ensure you have their permission.
The Telephone Consumer Protection Act restricts unsolicited telephone advertisement, including via text. Violations can result in money damages of $500 or more for each violation. While there are exceptions when there is an established business relationship, for the avoidance of doubt, it’s a good idea to get your customer’s consent for you to solicit their business via telephone or text message, and for good measure email. Here is an example provision to include in your contract:
Consent to Telephone and Email Contact. Customer expressly authorizes Alarm Company to contact Customer using an automated calling device, text, or email to deliver a message to set/confirm a service/installation appointment, notify of alarm alerts, for marketing related purposes or other updates at the telephone number(s) or email address shown above (in addition to those currently on file with Company).
- Make sure you are in compliance with any third-party dealer agreements.
Many alarm service and installation companies have dealer agreements with manufacturers and service providers, which allow them to sell certain brands of products and services. These dealer agreements often require that the alarm company maintain certain protections for the manufacturer’s or service provider’s benefit.
The manufacturer or service provider may require that the dealer add them to its contract so they are protected from its limitation of liability and damages provisions. One such agreement, from Honeywell states that “If Dealer limits, excludes or disclaims its potential liability to its customers or anyone else with whom it does business in any written documentation relating to the sale, installation, servicing and/or monitoring of security systems utilizing the Products, Dealer shall also limit, exclude or disclaim the potential liability of Honeywell to such Dealer’s customers or other such persons in substantially identical language and to at least the same extent as its own liability has been limited, excluded or disclaimed. ”
Other manufacturers and service companies may require you to get the customer to sign their own contract in addition to yours.
So, if you are selling another company’s products or services under a dealer agreement, please read the agreement to ensure you are in compliance with any requirements they have for their own protection. If you don’t, you are in breach of your dealer agreement, and you face liability and some large headaches should a loss arise.
- Make sure you are in compliance with state law regarding what information is required (or not allowed) in your contract.
This is state specific, so you will have to look up what is required in your state. Some states have no requirement, some want your license number on your contract, and some want a license number and the phone number for the regulatory authority in case of a complaint. Some, such as California, have very specific requirements and wording that must be included in the contract. Some, such as Pennsylvania, have a whole licensing and contracting law related to home improvement contracts that dictate what can and cannot be in a contract. Bottom line, figure out what your state requires and follow it.
© Wendy Carlisle 2016
