QUESTION:
I have a customer who is under a 5 year contract (yours) since 6/15/2005.
Due to a fast talking salesman he wants to switch alarm companies. After 3
months of back & forth phone calls we agree on 500.00 buyout. I send him a
certified letter stating:
Enclosed is a copy of the contract for your alarm monitoring. There are 38
payments of 27.99 remaining on the contract for a total of 1063.62. As a
courtesy to you, I am willing to terminate the contract with your
termination payment of $500.00. This offer will remain valid until Midnight
April 30th 2007.
In return I receive a certified letter prior to April 30th stating "i
accept your offer" But no check. When I attemp to reach him he says he will
send it when he is ready...
Finally the Question.
Since I stated termination with payment, can I forget about my offer and
attempt to collect the 1063.62, plus equip. cost, & legal fees.
Ron M
ANSWER:
You should send your subscriber a letter stating that "since my offer to
accept $500 provided payment was made by April 30, 2007 was not accepted
and the money received, I hereby rescind my offer. The contract between us
remains in full force and you are further advised that unless you cure all
arrears and bring your contract payments up to date no later than 10 days
from the date of this letter, you will be in breach of the contract and I
will enforce the contract terms."
Parties to a contract can of course agree to modify the contract. If they
are changing the terms and ending the contract the new agreement would be
an "accord and satisfaction". If the relationship is continuing the new
agreement would be a modification or amendment, unless an entirely new
agreement is entered into, in which event the new contract would be a
novation agreement.
Should you hold this subscriber in default you should pursue the balance of
the contract payments, less the liquidated damages percentage discount, the
agreed value of the equipment if you are leaving it there, assuming you
have stated the value, and legal fees. You can also file a UCC-1 financing
statement to perfect your security interest in the alarm equipment to
secure the indebtedness. All of this is available in your monitoring
contract.
If you believe you have lost the subscriber then you should consider a
compromise and settlement. Unless you do a lot of collection work you may
not want to invest the time and energy to pursue the defaulting
subscriber. If you do have enough subscriber defaulting then you should
put a collection program in place and pursue those breaching. You can
recover significant revenue that you may otherwise miss.