QUESTION:

 

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Ken,

     Can you answer this question:

     If I do a sell something to a non contract customer or do a service call on a T&M basis also for a non contract customer, and they fail to pay the bill is there a statute of limitations on collecting the debt.        

    The reason I ask I found two service calls we did for one company on Long Island for their Fire Alarm on a T&M basis on 2/11/05 and 3/3/05 for a total of $3,592.87 that remains unpaid. Can I still collect? I was told by a friend that after 4 years I can't sue anymore and I'm out of luck.

     I do not have a contract with the company and I don't really use contracts with my customers. When we sell a Fire Alarm we do it on a standard proposal that the customer signs and if they have monitoring I use the central station information contract that they sign and I write on it the amount they pay for monitoring.

     I have been receiving your email for quite some time and really never put much weight on contracts until now. I am thinking of retiring in the next 3 years and I now realize all the people that I service and monitor have no contracts and I don't think anyone will buy them from me. I have been a hard worker for 36 years building my company, what do I do now?

    Can you advise me?

    Anonymous and Embarrassed

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ANSWER:

     You may be beyond help.  But I'll do my best to answer your questions.

     First, the statute of limitations for breach of contract varies state to state.  In New York it's 6 years, so if you're in NY you can still sue for the service call.  A claim for "work, labor, services and material" is a claim for  breach of contract.  You have 6 years from date you completed performance and payment was due.

     Assuming the subscriber is still in business you will face the difficulty of establishing your claim without a contract, particularly after all this time.  You should not have performed any service without a Service Contract - which you should get at www.alarmcontracts.com.  That contract, good for servicing any security equipment can be used for recurring revenue or per call.

     Second, you are nuts to be doing commercial fire alarms without a contract.  You need to get the Fire Alarm Sales contract and the Fire Alarm Inspection and Service contract [assuming you do inspections].  These contracts - www.alarmcontracts.com - provide the protection you need as an alarm company, and if used properly and as intended will compel you to comply with AHJ fire alarm requirements.  All forms of security systems are important, requiring you to be careful and properly protected by contract, but fire alarm systems expose you the most to liability.

    Third, you need your own monitoring contract.  The contract provided by the central station is NOT for you, it's for the Central Station.  Although it may provide some protection for you, it is to protect the central station.  That contract does not contain all of the provisions you need with your subscriber.  You happened to notice one of them, the amount the subscriber has to pay.  That will be found on your Monitoring Contract.  If you use my Standard Monitoring Contract you will find that some central stations will not require that your subscriber sign the THREE PARTY Contract that is provided by the central station. 

     Finally, good luck selling your business without properly drafted alarm contracts.  Either you will be getting much less than you could have if you had contracts, or you will be postponing your retirement while you run around getting contracts signed.  Since you don't have contracts it's also likely that you don't have many subscribers.  Sad after 36 years of work.

     When you go to sell your business your potential buyer is going to ask what your recurring revenue under contract comes to.  That's the starting point of discussion.  If you don't have contracts then get started today - buy them at www.alarmcontracts.com - and get them signed by your subscribers.