My customer had a loss. What should I do now? Continue reading
Ask the Attorney: I’d like to go paperless. If I have my client sign the contract electronically, is that valid?
Yes, electronic signatures are valid. The laws, E-SIGN and UETA , require that the signature be attributable to the customer. That is, the signature is valid even if it is electronic, but you must still be able to show that it was the customer who signed and not someone else who didn’t have authority to sign. Here is what the UETA says:
“An electronic record or electronic signature is attributable to a person if it was the act of the person. The act of the person may be shown in any manner, including a showing of the efficacy of any security procedure applied to determine the person to which the electronic record or electronic signature was attributable.”
So, if your customers are signing via iPad, or other portable electronic device, you can prove it is the customer’s signature in any manner, including your security procedures. That gives you a lot of leeway to craft your own procedures, such as writing down the license or ID number or taking a photo of the customer’s driver’s license or ID card.
In conjunction with these security procedures, you need your customer’s signed consent for the electronic contract and electronic signature, which also states that the customer is providing a driver’s license/ID card or photo while signing as proof that the contract is attributable to him or her.
Ask the Attorney: My customer is questioning why there are limitations of liability and damages in my contract. How can I explain this, and can I change it?
First explain to the customer that the limitation of liability provision doesn’t protect you from all If an alleged failure of the alarm system is caused by the alarm company’s intentional, willful, or grossly negligent conduct, the limitation of liability will not apply.
The reason that you limit your liability is that the amount that an alarm customer pays for service is insufficient for the alarm company to insure the property protected. That is why the alarm company asks its customers to look to their own insurer should they suffer a loss. Insurance companies base their premiums on their assessment of the value of the property and the vulnerability of the premises. By contrast, alarm service fees are unrelated to the value of the property. Thus, an alarm company cannot undertake to provide an identical type of insurance coverage should the alarm fail to prevent a loss. The contract terms are designed to prevent that from happening. With any reputable alarm company, you will find similar contract language.
You can blame your insurer and attorney for the fact that you cannot negotiate the fact that your company’s liability is limited. You can, however, negotiate the amount of the limitation of damages—say from $500 to $1,000 (or even more). But don’t make it as high as your insurance policy limit.
Two high profile legal matters have been in the news involving allegations of alarm companies’ unfair and deceptive practices. What are these cases about? And what can you learn from them to protect your business from such claims? Read on to find out. Continue reading
Ask the Attorney: I am thinking about selling DIY security systems. Is there anything I need to do legally to sell DIY?
Even though your customer is doing the installation with a DIY security system, your business is subject to security alarm provider licensing requirements in many states (approximately 18) so if you plan to sell outside of the state where you are licensed, you might need to get additional licenses.
You will also need a new contract that is tailored towards the DIY product. The contract will have the same basic terms—including limitation of liability and damages—but the wording is slightly different for DIY contracts and you’ll want to include language protecting you from defects in the customer’s self-installation.
Ask the Attorney: Do I need to give the customer a right to cancel notice if he or she is an existing customer and I am merely servicing the system?
Whether you need to give notice of the right to cancel will depend on whether you are simply doing routine maintenance or service, or more (such as upgrading the system).
First, a refresher on the right to cancel: The Federal Trade Commission’s Cooling-Off Rule gives consumers three days to cancel purchases over $25.
The Cooling-Off Rule applies to sales at the buyer’s home, workplace or dormitory, or at facilities rented by the seller on a temporary or short-term basis, such as hotel or motel rooms, convention centers, fairgrounds and restaurants. The Cooling-Off Rule applies even if the consumer invites the salesperson to make a presentation in their home.
Under the Cooling-Off Rule, the consumer’s right to cancel for a full refund extends until midnight of the third business day after the sale.
Under the Cooling-Off Rule, the salesperson must tell the consumer about the cancellation rights at the time of sale. The salesperson also must give the consumer two copies of a cancellation form (one to keep and one to send if they decide to cancel) and a copy of the contract. You should also have a third copy of the form that the customer signs acknowledging receipt of the form, which you keep. Further, the customer’s contract should explain the right to cancel directly by the place for the customer’s signature, in at least 10-point, bold font.
Getting back to the question: One of the exceptions to the Cooling-Off Rule is where a consumer’s purchase is made as part of a request for the seller to do repairs or maintenance on personal property.
So, if you are performing regular service or maintenance for a customer, you probably do not need to give the customer notice of the right to cancel, even if the amount owed is over $25. If, however, you are doing more than routine maintenance or service—say, for example, upgrading a system, or installing new equipment—then you will want to give the customer notice of the right to cancel.
Ask the Attorney: I have some customers that just want equipment sold and installed for them but not monitoring service, what, if anything, should I do to protect my business?
Just as your monitored customers could experience as loss, so could a customer to whom you sold and installed alarm equipment. So, even if you are not facilitating third-party monitoring, you will still want a contract to protect your business. This contract won’t be the same as a typical monitoring agreement, but will still have some of the same essential elements:
- A detailed description (type, manufacturer, model) of the equipment sold and installed.
- An Indemnity agreement.
- Limitations of liability and damages.
- A subrogation waiver.
- A notice of the right to cancel.
- The customer’s signature.
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). Continue reading
You’ve been asking (and asking…) and I am finally delivering: customizable alarm contracts are now available online for immediate download.
Supporting documents also available: Schedule of Equipment & Services; Addendum/Change to Installation and Monitoring Agreement; Alarm Response Contact List; PERS Contact List & Data Sheet; Right to Cancel Handout
Don’t rest easy just because you have a contract with your customer. Whether your contract will be enforced by a court, or even applies at all if you are sued, depends entirely on what your contract says. Many alarm contracts I see, a staggering number actually, are riddled with errors that could make them useless. These contracts either simply don’t have the right provisions, or they say the wrong thing. This puts the business in jeopardy if a customer ever experiences a loss. Are you in that same boat? Here are some questions to ask your business. Continue reading