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QUESTION:  NEW HOMEOWNER - NO CONTRACT
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Alarm Co signs up and monitors a system for client – home owner.  Term of contract is 3 years.  After 14 months  client sells the home, shares the alarm code with the new owner and has paid Alarm Co for balance of second year; no request to terminate is received.  Fire or Intrusion occurs- perhaps a loss, perhaps a claim.  Alarm Co has no relationship or contract with new home owner,  although did continued to monitor the alarm as if original client never moved or sold the property.  How would this play out ?  Residentially or Commercially ?
Keith Fisher
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ANSWER
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    This is not an easy question and here's why.  The practical answer will most certainly depend on the facts and extent of the loss.  Horrendous facts and damages can change the outcome.  
    We start with the crux of the problem, something that could easily have been avoided if the alarm company followed the most basic tenet that I have stressed over and over - don't provide services without a contract with the end user.  So here we have no contract unless the judge accepts the argument that the new owner adopted, assumed or ratified the existing contract between old owner and alarm company.  Merely continuing the alarm service is not going to be enough to establish that the new owner is bound by the old contract.  Is there any communication discussing the old contract and it's continuation; what did the new owner know about the old contract?  These are some of the questions that a judge will look to.  If it's a loss that is more or less insignificant, let's say a small fire that causes $1000 is property damage, a judge may toss the complaint and say the new owner is bound by the contract.  If however it's a loss where personal injury or property damage is significant, where the alarm company conduct approaches but does not reach gross negligence, then the judge may very well hold that there is no written contract - and thus no protective provisions that may be found in the old contract.  It's a crap shoot that can easily be avoided by the alarm company refusing to continue service the moment it knows its subscriber is no longer the end user.  You can know this by communication from the subscriber or perhaps getting a check or wire from someone other than the end user with the contract.  
    You have the right to contract away your liability for negligence and breach of contract - do not miss that opportunity.  Your entire business and all of your personal assets may be at stake.
    By the way, as you may know, the Standard Form Agreements all prohibit the subscriber from assigning the contract.  That could actually work against you because the new owner will claim that since assignment was prohibited it never happened and you continued to monitor without the benefit of the contract.  Whether you like the argument or not, you don't want to test it in a law suit where substantial damages are at stake.
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QUESTION: CUSTOMER CANCELLATION
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Ken
    When a customer would like to cancel service, we require a written, signed notification in the form of a letter or a fax, 30 days prior.  Voice mails, emails and phone calls are never accepted and the soon to be former customers are read the cancellation procedures from a script to be sure there are no exclusions or misunderstandings.  My concern is primarily the inability to authenticate such requests without the signature.  Our Agreement (Standard All In One) specifically points this requirement out and the representative hand circle the specification.  In addition, the communicator or data belongs to us and we put a $500 charge on it.  For the most part customers agree and comply but when they don't, they become extremely vicious, usually making negative comments on line or attempt to lodge a complaint with the BBB.
    Two questions:  First, is there a sensible method to authenticate a cancellation that is not received without a signature?  Looking for something that would avoid the "I didn't cancel" when the premise is burglarized or damaged by fire, and second, what, if any recourse does the independent dealer have to combat these on-line attacks posted by the finest members of society when their temper tantrums aren't appeased?
    Thanks for your daily newsletter and  Judge Kraft"s Employment and Labor newsletter.  
ANON 
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ANSWER
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    This must be a common concern because I was actually interrupted while preparing this article by a phone call asking the exact same question.  
    The Standard Form Agreements do not have a provision for the subscriber to provide notice of cancellation, except in connection with a renewal period.  So attempted cancellation unless in regard to renewal would be a breach of contract; the balance of the RMR payments would accelerate.  The contract may have specific requirements for the cancellation notice, such as certified mail, etc, but I think that any notice that provides actually notice will probably suffice.  
    You need to be careful about your confirmation of cancellation because you don't want your subscriber to think that you are waiving any past due or the balance of the RMR contract charges, unless that is your intention.  Your subscriber needs to know that there is no early termination permitted charges continue to accrue.  
    If you have remote access to the system it may be a good idea to put a notice on the key pad "no monitoring service" or something to that effect.  You might also consider sending out confirmation to the address you have for the subscriber, perhaps including a survey inquiring why the subscriber canceled.  
    Holding subscribers to the contract terms may result in negative comments on social media or to organizations like BBB.  Can't be helped.  No point having long term RMR contracts if you're not going to enforce them.  
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QUESTION: E-SIGNATURE CANCELLATION
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 Ken,
    Thanks for the information you provided over the phone.  For the benefit of other readers, could you elaborate on the necessary safeguards/precautions we should employ in using an e signature service for monitoring cancellation requests?  And, how would an e signature hold up in court if somehow someone impersonated a legitimate requester?
Ed Meadows
Accounting and IT Support
IntelliSystems, Inc
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ANSWER
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    You have the same issue with e-signature as you do with any other form or communication, verifying the authenticity of the person communicating the cancellation instructions.  The measures you take to authenticate, the precautions you employ to guard against impostors and the procedures you use to follow up for confirmation, such as codes or call back to the alarmed premises to talk to the signer of the contract, will all factor in whether you will be held liable for wrongful and unauthorized termination of your services based on a bogus request.
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                                          SPEAKING ENGAGEMENTS
If you would like to schedule a free live video/webinar presentation for your association meeting or event contact Eileen Wagda at 516 747 6700 x 312.
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