If you are thinking about becoming a Certified Dealer for a security alarm system manufacturer or service provider (e.g., Honeywell or Alarm.com), there are several important things you should know that may affect your business and your own contracts with your customers. Continue reading
Ask the Attorney: I sometimes have customers ask to remove their spouse or significant other from the account due to divorce or domestic violence allegations. How should I handle these requests?
Tread carefully here because if you make the wrong move, you are opening your company up to potential liability. There are a few things you need to consider. You need to determine whose name is on the contract. If both spouses or significant others are on the contract (which is the best practice), then you can make the change, and get a new contract from person requesting the change. I would notify the other party in writing that s/he is being removed from the account. If the person requesting the change is not listed on the contract, you need to investigate further. Determine if there is legal authority for the change—is there a divorce decree, or a restraining order? I find it helpful to do a little extra sleuthing sometimes as well. For example, can you find anything from online property records about whether the person making the request owns the property? If you have legal authority that the person seeking the change has ownership or possession of the property, you can get a new contract with the person requesting the change. Be aware, however, that, while unlikely, there is the risk that person dropped from the account could sue for breach of contract. Save all correspondence and documentation regarding the change and your decision-making. If you really want to be extra cautious, you could ask for indemnity from the new account holder for any claims made by the person being dropped from the account.
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.
Ask the Attorney: I sold an alarm system to a local business. The business owner wasn’t available to sign the contract, but she told me to have the assistant manager sign the contract instead. Is that OK?
The agreement is enforceable if the person who signed it had apparent authority to sign. If the company told you (or the circumstances reasonably led you to believe) that whoever signed had authority to do so, the customer cannot later claim the contract is unenforceable because the “appropriate” person didn’t sign it. If you can, document the situation—save the emails or write a memo explaining who signed and why and keep it in your customer’s file.
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: If I am making changes to an existing Customer’s alarm system, should I have the customer sign a new contract or what else can I do to document the new equipment?
You can use either a new contract or an addendum. A new contract is especially appealing if you’ve updated your contract and would like the customer to sign the latest version; or if you’d like to lock in the customer to a new contract term.
You could, however, also do an addendum to the customer’s contract. You will want to reference the Customer’s current contract, note the changes being made, alert the customer that the terms and conditions in the current contract still apply, and have the addendum signed by the customer. This addendum language could be part of a work order/invoice, or a separate documents. And, as always, ensure you keep a copy of the signed document for future reference.
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.