Ask the Attorney: I frequently do work for builders who want me to sign a subcontractor agreement with an indemnity clause. Should I sign it? Continue reading
Ask the Attorney: It feels like I just bought a new contract, but it’s actually been years ago. Is it still good? How often should I update my contract?
Whenever I speak to at alarm company events, it never fails that someone tells me their contract is more than 20 years old! I hope you’re not in that boat. It may seem self-serving coming from an attorney, but the law really does change fairly often, necessitating everything from minor tweaks to outright revisions. Not only do the laws on the books (statutes) change, but also every time a court case is decided involving an alarm company, there’s usually something to learn from it. It’s also important to pay attention to not just what’s happening in your state, but others as well, as those court cases can be persuasive in your state. So, that’s my long way of saying, don’t wait 20 years—or even five. Best-case scenario, you should have a relationship with an attorney and regular (at least yearly) check-ins on changes or updates to your contracts. If you can’t stomach that, at least update your contract every two to three years.
Ask the Attorney: I have a customer who is just awful. She is belligerent and hateful to my employees and me. I would like to fire her as a customer. Can I do that?
This is a terrible situation to be in, and one that I hope does not happen often. I know your goal is to gain customers, and that you strive to make even the grumpiest of people happy. The customer is always right, as the saying goes. Despite your best efforts, unfortunately, there are times when a customer crosses the line. When a customer is verbally or physically abusive or is disturbing to your business due to his or her constant complaints—and you just cannot make the customer happy, no matter what—it is time to part ways. This is easy if your contract has a clause concerning situations such as this:
Alarm Company has the right to cancel this Agreement if, at Alarm Company’s sole discretion, it believes Customer is verbally or physically abusive to Alarm Company’s employees, subcontractors, or representatives.
If you don’t have a similar clause in your agreement, it can be trickier. After all, if you have a contract with this customer, you have obligations under the contract too.
As a practical matter, however, it likely won’t be worth your customer’s time, effort or money to sue you on your contract especially if they can find another provider for a similar price. You can help ensure the customer doesn’t sue you by giving the customer ample time to find another provider (60 days should be sufficient), and provide no cost monitoring during that time. In the right circumstances, you may also be wise to refund the customer for equipment they paid for but can no longer use. In the end, just remember that should you have to go to court, you want to be able to show that you treated the customer more than fairly—so that you look good, and so that the customer has no claim for damages. Oh, and along those lines, if you’ve got a written record of your customer’s bad actions (in emails, for example) hang on to it, in case you need to show the court why you backed out of the contract.
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: I have started texting my customers about service appointments, is there anything I should add to my contract?
Yes, you will want to add a provision to your contract (or by a contract addendum, or separate written and signed disclosure) that the customer is giving consent to contact from you.
The Telephone Consumer Protection Act (TCPA) restricts telemarketing calls and the use of automatic telephone dialing systems and prerecorded voice messages. Under the TCPA, sending text messages or autodialed calls to cell phones requires previous consent from the recipient. The TCPA also governs calls and texts to land lines of residences and businesses.
Running afoul of this law can get you in trouble with the Federal Communications Commission (FCC), and subjects you to private penalties of $500 to $1,500 per call/message. Private penalties are typically sought via a class action lawsuit, alleging millions of dollars of damages on behalf of class members.
To satisfy the TCPA, a consumer must give express written consent and receive “clear and conspicuous disclosure” that the consumer will receive future calls that deliver prerecorded or autodialed telemarketing messages by or on behalf of the business. Here is an example provision to include in your contract (including email consent):
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 [Alarm Company]).
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.