QUESTION:
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Ken,
I have followed your emails for years and I am sure I remember a discussion on who should sign a contract for services (primarily in commercial applications) such as a corporate officer, manager, bottle washer etc. I tried to locate this in your archives but was unable to find anything. Could you point me in the right direction as to where I could find this or explain it again?
The situation is that I have a commercial sales rep who has a hard time understanding why we require commercial systems installation and/or monitoring contracts be signed by a corporate office or at least get a letter from an officer that authorizes the person to sign for the corporation. We have made a form specifically for this purpose so it can be faxed or mailed to their headquarters for the signature. I was actually advised over 25 years ago by Ron Davis at a seminar that contracts must always be signed by the proper person for residential and commercial applications. We have tried to follow this advice over the years and I am sure you discussed it some time back to reinforced this again.
Thank You!
Cory Schott, President
Dehart Alarm Systems, Inc
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ANSWER:
There is no point getting a written contract if you're not going to be able to enforce it. Whether you are looking to sue the subscriber for non payment or use the contract to defend yourself against a lawsuit by the subscriber [or insurance company suing in subrogation] the contract is useless unless signed by the party against whom you wish to use the contract.
If your subscriber is a corporation or other business entity then you need to be certain that the party signing has authority to bind the entity. An officer usually qualifies without further verification. A manager usually qualifies. You get into a gray area when you accept the signature of an employee who does not identify himself in his representative capacity, in other words, writes down his position. You generally have the right to accept the signature of anyone with actual or apparent authority.
Actual authority would be an officer or manager. Apparent authority would be someone who conducts themselves as if they are in charge and entitled to sign your contract. A store manager would qualify; a cashier probably would not. A security manager would qualify; a maintenance man, guard or salesperson on the floor, would not.
For residential subscribers it's best to get both husband and wife, or all adults in the house, to sign. It's not always practical or possible, but try and think like a litigation attorney who fears the worst.
It's one thing to be thinking about collection issues when you enter into contracts, but especially in the alarm business, it's another to think about all the ways you can be sued by your subscriber and others. Your first and best line of defense is the contract, and it's not going to do you much good if the one suing you claims the contract is not enforceable against them.
Also, remember, just because you are paranoid doesn't mean they aren't out to get you !! By the way, it's always good idea to follow Ron Davis' advice.