A minor change has been made to the standard lease and the standard monitoring contracts. Alarm Contracts Both of these contracts provide for the "agreed value of equipment." The change is that the provision now reads "agreed value of installed equipment." The purpose of the provision and the reason for the change follows.

The provision is found in the lease and monitoring contracts. In both of these contracts the subscriber is not being asked to pay for the equipment; in each case the equipment is leased. So why bother with agreed valuation? It's in case there is a default by the subscriber in the contract. In the event of default the contract provides that at the alarm company's option the subscriber can be required to permit removal of the equipment, or be charged and required to pay the "agreed value."  By agreeing to this agreed value the idea is that in a lawsuit for breach of contract the alarm company will not have to prove the value of the equipment since the value has been agreed to. This could avoid the necessity of a judge holding a hearing to determine valuation, reason enough to include the provision in the contract.

Subscribers should not complain about the provision since they are not being asked to pay the price, and even though the price kicks in if there is a default, few subscribers will consider this when entering into the contract because they are not focused on defaulting and the default provisions. Most will be primarily interested in when you can do the installation and how much it will actually cost.

In collection cases we have sometimes experienced subscribers and Judges challenging the valuation of the equipment. Needless to say, we often find the valuation exceedingly high. After all, the subscriber is not being asked to pay the value of the equipment, and the subscriber may in fact be impressed that the alarm company is willing to install such expensive equipment for a minimal installation charge and a low monthly charge for the lease, service and monitoring of the equipment. So a commercial subscriber who is getting a free installation and being charged $40 a month may not raise an eyebrow, an objection, when the lease provides that the value of the equipment is $4500.00.

When there is a default and lawsuit however and the alarm company is seeking 80% of the balance of the monthly charges and 80% of the agreed value of the equipment, the valuation issue first comes to light.

Of course we argue that the equipment value is not a permitted issue since it is agreed to in advance in the contract. But further argument is usually necessary. Is the price the alarm company's cost, a wholesale or retail value? Well, simply, it is the price that the alarm company would want for the equipment, installed. Wires and piping may have little value purchased new, and even less value after its used and  installed on a job, but to the subscriber it could have higher value since it is installed already in the premises, removal could be costly and leave damage, and replacement could be expensive.

I thought it would be easier to support a higher price for "installed" equipment than just the value of the equipment. Hence, the additional word was added to the contract provision. (the copyright date on this latest revision is now 11/01, in case you are wondering how outdated your contracts may be -- they are upgraded a few times a year).

While I am at it, one other change was made in this revision. Additional language was added to make it crystal clear that no service to the system is required if the subscriber is in default under the contract. This is for the lease, service and monitoring contracts.