7 Deadly Sins of

Alarm Contracts
Wendy Carlisle
Electronic Security Technology Summit, October 2014
2014 Wendy Carlisle

1. Contracts that hide important

provisions.
Dont hide exculpatory provisions.
Better to have multiple pages than tiny font.
Use bold and larger font for key provisions.
Make sure paragraph headings are accurate.
Include page numbers, and total pages: 1 of 3, 2 of
3
Have customer initial each page of paper contract.

2. Contracts that are legally

outdated.
Be aware of auto-renewal limitations.
6th Circuit (Kentucky, Michigan, Ohio, and
Tennessee) found standard provisions to be
ambiguous: company is not liable versus if
company is liable limited to $.

2. Contracts that are legally

outdated.
Credit disclosures may be required.
If you have a large termination fee, or require
entire balance of contract to be paid it may be
a credit transactioneven if you dont charge
interest.

Limitation of Liability is invalid in many

states if it exculpates for gross negligence
or negligence in any degree.

3. Contracts that do not protect

from third parties.
Insurance Companies
Third-Party Beneficiaries
The company whose system you are taking over.

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 Customers
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 Companys
conduct.

No Third Party Beneficiaries

No Third-Party Beneficiaries The parties agree that
Customer retains the sole responsibility for the life and
safety of all persons in the protected Premises, and for
protecting against personal injury and losses to Customer's
own property and the property of others in the Premises.
Customer and Alarm Company agree that there are no
third party beneficiaries to this Agreement.
Best practice: Get all adult household members to sign

Takeovers
Other Systems. When taking over or servicing an alarm
system not installed by Alarm Company, Alarm Company
assumes no liability, and extends no warranty, for the
components of such system. Customer warrants to Alarm
Company that such system is in good operating condition.

4. Contracts that ignore the

Cooling-Off Rule.
Must give your customer at least three days in which to
walk away from 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 customers 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.

The Cooling-Off Rule

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.

5. Contracts that are

technologically outdated.
Privacy with cameras, listen-in technology
VoIP transmission reliability
User password security
Online or application unauthorized access
Data storage and corruption

6. Contracts that are unassignable.

An assignment is when one party to a contract gives
the contracts obligations and benefits to another
person.
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 Companys prior written consent. Alarm
Company may assign this Agreement or any of its
obligations under this Agreement without notice to
Customer.
Avoid stating the agreement is not transferrable.

7. Contracts that have typos.

Typos in important provisions can be the death knell to
your contract.
Customer agrees to indemnify, defend and hold Alarm
Company harmless form any and all claims and lawsuits.
"Client agrees that it does not desire the Company or
Monitor shall not be liable for same."

Whats 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 dont make it as high as insurance policy limit.

 Wendy Carlisle
612-234-4116
Wendy@CarlisleLawFirm.com
Blog: www.AlarmLaws.com
www.CarlisleLawFirm.com

2014 Wendy Carlisle