1. Presented by Wendy Carlisle, Carlisle Law Firm, LLC

2. 1. Contracts That Can’t be Assigned
An “assignment” is when one party to a contract gives the contract’s obligations and benefits to another person

3. Assignment Provision
To make sure that you, but not your customer, can assign your contract, it should say something like this:
Assignment. Customer cannot assign this Agreement without Alarm Company’s prior written consent. Alarm Company may assign this Agreement or any of its obligations under this Agreement without notice to Customer.

4. 2. Contracts That Contain Typos
Typos in important provisions can be the death knell to your contract.

5. Even innocent typos can change the contract’s meaning:
“Customer agrees to indemnify, defend and hold Alarm Company harmless form any and all claims and lawsuits.”
A small mistake that could derail the whole provision.
"Client agrees that it does not desire the Company or Monitor shall not be liable for same."  
The double negative is a mistake, and makes it have the opposite effect of what they intended.

6. 3. Contracts That Ignore The Cooling-Off Rule
Cooling off provisions (also called 3-day right to cancel) are mandated by state and federal law.

7. What is required for the Cooling-off Rule?
You must give your customer at least three days in which to walk away from certain sales that are made in their home or at a trade show (and in some states by telephone).
Notice of this right to cancel should be in the contract by the customer’s signature in at least 10-point font.
Customer must be given two copies of a hand-out, separate from the contract, with information about right to cancel and how to cancel.

8. Does the Cooling-Off Rule Apply to You?
Yes, it still applies to you even if you do not have a door knocker sales model.
Yes, there are exceptions for emergencies.
No, it does not apply to commercial sales.

9. 4. Contracts that Fail to Keep Up with Technology
Privacy with cameras,
listen-in technology
VoIP transmission reliability
Cellular communication
User password, online
or application access
Data storage and corruption
Hacking

10. 5. Contracts That Fail to Keep Up With the Law
It is important that you keep up with laws in the books (statutes) and laws made by courts (case law) that affect your business.

11. Recent developments
Auto-renewal limitations– Arkansas, California, Connecticut, Florida, Hawaii, Illinois, Maryland, New Mexico, New York, North Carolina, Oregon, Pennsylvania, South Dakota, Tennessee, Utah, Wisconsin.
6th Circuit (Kentucky, Michigan, Ohio, and Tennessee) found standard provisions to be ambiguous.
Credit/lease disclosures may be required, especially in Ohio and California.
Limitation of liability can be invalid in some states if it exculpates for gross negligence or “negligence in any degree.”

12. 6. Contracts That Hide Important Provisions

13. Best Practices for Exculpatory Provisions
Don’t hide exculpatory provisions on back page.
Better to have multiple pages than tiny font.
Use bold and larger font for important provisions.
Make sure paragraph headings are accurate.
Include page numbers, and total pages: 1 of 3, 2 of 3…
Have customer acknowledge they read and received all pages. Consider initials on each page.

14. 7. Contracts that Have No Subrogation Waiver
A subrogation waiver is a provision that states that the alarm company will not be liable for any claims arising from hazards covered by the customer’s insurance.
Many lawsuits against alarm companies are subrogation lawsuits brought by insurance companies.
There are exceptions to this provision’s enforcement but it is wise to make sure your contract includes this provision because it is enforceable, under the right circumstances, in many jurisdictions.

15. Example Subrogation Waiver
No Subrogation. Customer does hereby for himself/herself and other parties claiming under him/her/it, release and discharge Alarm Company from and against all claims arising from hazards covered by Customer’s insurance, it being expressly agreed and understood that no insurance company or insurer will have any right of subrogation against Alarm Company. Customer agrees that this paragraph is not an exculpatory provision, but a risk shifting provision. It will apply to preclude any subrogation action without regard to Alarm Company’s conduct.

16. What Contract Terms Are OK to Negotiate
Term and auto-renewals.
As long as in compliance with
state law.
Early Termination
Amount in limitation of damages, e.g., $250, 500, $1,000 …
But don’t make it as high as insurance policy limit.

17. A Final Word About Risk Management

18. Avoiding Deceptive Trade Practices
Don’t make promises you can’t keep
Alarm or police response
Pricing
Make sure advertising is accurate
Include adequate warnings in your contract about the alarm system’s limitations
Don’t claim affiliations you don’t have.

19. Responding to Customer Losses/Complaints
Resolve small claims– not worth expense of attorney or insurance deductible.
For large claims:
Notify your insurer regarding potential losses immediately.
Involve an attorney.
Preserve the attorney-client privilege in internal discussions.
Investigate the loss:
Scene inspection.
Gather relevant documents: contract and service documents, police, fire report, articles.
Talk to employees with potential knowledge.

20. Questions? Wendy Carlisle Wendy@CarlisleLawFirm.com