COMMENT ON DMP AND HONEYWELL
Below is the Honeywell agreement regarding indemnification. I have signed agreements with most manufacturer’s and they all have something similar to DMP. Consider it industry standard… please withhold my information and post this anonymously.
Dealer shall at all times maintain Commercial General Liability Insurance for bodily injury and property damage, including loss of use thereof, in the minimum amount of $1,000,000 per occurrence, including coverage for products liability and completed operations, and Errors and Omissions liability insurance in the minimum amount of $1,000,000 per occurrence. The proceeds of such insurance shall inure to the benefit of Honeywell to the extent of Dealer's indemnification obligations hereunder and shall be applied to such indemnification obligations of the Dealer as provided in this Agreement. Dealer shall include Honeywell as an additional insured on the insurance policies required by this Agreement and shall provide proof of such coverage in the form of a Certificate of Insurance. The Certificate of Insurance shall provide that Honeywell will receive at least 30 days prior written notice of any modification, cancellation or non-renewal of such policies.
Notwithstanding the foregoing, Dealer's performance of its obligation to provide insurance coverage in accordance with this paragraph shall in no way limit or restrict its liability or obligations under the indemnification provisions hereof.
(f) If Dealer limits, excludes or disclaims its potential liability to its customers or anyone else with whom it does business in any written documentation relating to the sale, installation, servicing and/or monitoring of security systems utilizing the Products, Dealer shall also limit, exclude or disclaim the potential liability of Honeywell to such Dealer's customers or other such persons in substantially identical language and to at least the same extent as its own liability has been limited, excluded or disclaimed. Dealer shall provide Honeywell with copies of all of its form agreements, warranties or other written documentation provided to its customers or other persons with whom it does business evidencing the foregoing and shall provide Honeywell with copies of such agreements, warranties or documentation if they are amended or revised promptly upon such amendment or revisions.
5. Placing Orders, Pricing, Limited Warranty and Payment.
(a) Dealer shall place all orders for Products at ADI or as otherwise directed by Honeywell.
(b) Except as otherwise set forth in this Agreement, (i) all sales of Products through ADI branches shall be in accordance with ADI’s Standard Terms and Conditions of Sale ("ADI Terms and Conditions") as set forth on ADI’s invoices and catalogs as they may be revised from time to time, including without limitation, ADI's Limited Warranty (as defined in the Terms and Conditions) and disclaimers of liability IN NO EVENT SHALL HONEYWELL BE LIABLE UNDER THIS AGREEMENT, OR UNDER ANY SALE MADE PURSUANT TO THIS AGREEMENT, FOR ANY SPECIAL, INCIDENTAL, INDIRECT, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES (INCLUDING, WITHOUT LIMITATION, ANY AND ALL DAMAGES FROM BUSINESS INTERRUPTION, LOSS OF PROFITS OR REVENUE, COST OF CAPITAL OR LOSS OF USE OF ANY PROPERTY OR CAPITAL) EVEN IF THE LOSS OR DAMAGE IS CAUSED OR CONTRIBUTED TO BY HONEYWELL'S OWN NEGLIGENCE, FAULT OR BREACH OF ANY EXPRESS OR IMPLIED WARRANTY EVEN IF HONEYWELL HAS BEEN ADVISED OF, OR IS OTHERWISE AWARE OF, THE POSSIBILITY OF ANY SUCH DAMAGES AND/OR CLAIMS. HONEYWELL’S LIABILITY FOR ANY LOSS OR DAMAGE ARISING OUT OF, CONNECTED WITH, OR RESULTING FROM THE PERFORMANCE OR BREACH OF THIS AGREEMENT SHALL IN NO CASE EXCEED
$250. Dealer shall include the foregoing provision in all quotations, offers and contracts for the sale of Products.
11. Indemnification and Non- Assertion of Claims.
(a) Dealer shall indemnify, defend and hold Honeywell harmless from and against any loss, claim, suit, action, proceeding, liability, damage or expense (including reasonable legal expenses and costs) which Honeywell or any of the foregoing dealers may suffer, sustain or become subject to, (i) as a result of any alleged act, omission or obligation of or by Dealer or Dealer's agents arising out of (A) the sale, installation, maintenance and/or monitoring of Products by Dealer, (B) Dealer's operation of its business or Dealer’s violation of any law, rule or regulation, or (C) any alleged breach by Dealer of any of the terms, conditions or provisions of this Agreement or (ii) arising out of claims, suits, actions or proceedings by Dealer's customers based on failure of the Products to detect and/or warn of the dangers for which the Products were designed (collectively "Indemnifiable Matters"). Dealer shall reimburse any entity or person entitled to be indemnified hereunder for all expenses (including reasonable legal expenses and costs) as they are incurred in connection with investigating, defending or settling any such claim, suit, action or proceeding, whether or not in connection with pending or threatened litigation in which the entity is a party.
(b) Dealer agrees not to interpose any claim, counterclaim, crossclaim or third party claim against Honeywell in the event any claim, suit, action or proceeding is threatened or commenced against Dealer arising out of any of the Indemnifiable Matters. Notwithstanding any provision of this subparagraph or this Agreement to the contrary, Dealer shall have the right to prosecute any claim which it may have against Honeywell based upon a material breach of this Agreement by Honeywell or arising out of the defective manufacture of any Product purchased by Dealer hereunder to the extent of the Limited Warranty provided by Honeywell in the applicable Terms and Conditions. (c) The provisions of this section 11 shall (i) inure to the benefit of and apply to Honeywell and each of its present and future officers, directors, employees, parents, subsidiaries, affiliates, successors and permitted assigns, and (ii) be enforced to the fullest extent permitted by law and be interpreted and applied to a lesser extent, where necessary to be valid. *********************
At least the dealer can sue for a defective product under the limited warranty -- probably get back the cost of the defective item.
I am actually OK with the indemnity requirement until it gets to this part:
"(ii) arisingout of claims, suits, actions or proceedings by Dealer's customers based on failure of the Products to detect and/or warn of the dangers for which the Products were designed (collectively "Indemnifiable Matters")"
It's one thing for a dealer program to require the dealer to indemnify the Program since the Program isn't doing any installation or providing services, and it's another thing for a manufacturer to require its wholesale customers [that's you if you're in the alarm business] to indemnify the dealer if a manufactured product proves to be defective.
I'm looking for some other distinction. Honeywell is a true dealer program in the sense that it offers more than the purchase of equipment to its dealers. Also, any alarm company can go to ADI and purchase Honeywell products without signing up as a Honeywell dealer and agreeing to indemnify Honeywell. DMP, and perhaps others, is just a manufacturer who sells direct to alarm companies. For that privilege you have to provide indemnity for defective product.
Here's the bottom line for the time being. You better list all your vendors and manufacturers on your E&O policy, because you may have agreed to do just that, at least until you can confirm that you haven't agreed to indemnify them, and you better be using a proper alarm contract to protect you and all the vendors and manufacturers you have agreed to indemnify. You should be updating those contracts at www.alarmcontracts.com as often as your manufacturers keep introducing new product and services - which is often.