QUESTION:
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Ken:
Thanks for your emails.
Here is a situation we have not run into before.
A long time leased customer that is also monitored recently called to cancel their monitoring and requested we pick up our equipment. We asked them if they were unhappy with our company and they said NO that they were changing to a national company. The lease and monitoring contract stated that the initial term was for 5 years and automatically renews for successive terms of two years. These contracts were signed in 1999.
YES, we were wrong in not getting new contracts signed and that is our error. However, according to the existing contract, we calculated the amount owed and sent them a bill after we removed our equipment.
They sent us a check for the amount requested with a note that they were paying under protest and were considering suing us for breach of contract.
We have been using your contracts for many years with an initial term of 7 years and renewal on a month to month basis.
I know in several of your past emails this is the current best way on doing it. However, my question is should we hold them to the 1999 contract terms or would it just be better to return the check to them? Is month to month now the law in most states regardless what a contract may say? This is a small amount ($229.50) and we want to do the right thing even though they are no longer a customer of ours.
I certainly do not want to get involved in a lawsuit over $229.50.
What do you suggest ??
Yes, I know, keep your contracts up to date. This one fell between the cracks!
Ron
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ANSWER:
If you are in a state that does not legislate against automatic renewal then you are certainly in the clear. Keep the check and move on.
If you are in a state that has laws regarding renewal - and you can start your search at http://www.kirschenbaumesq.com/autorenewal.htm -
and if you haven't complied with the law then you should not look to recover into the renewal period. In your case you have the money and it is doubtful that the subscriber is going to pursue the matter. If you have trouble sleeping then send the money back, but you may open the door for a request for all money paid into the renewal period. So two ideas come to mind. Let sleeping dogs lie and a bird in the hand is worth two in the bush.
You are correct that I advocate getting a new contract signed rather than rely on the automatic renewal clause. While the provision is enforceable in almost all jurisdictions with the passage of time you are better off creating a new contractual relationship with your subscriber. Don't be surprised if your subscriber has changed entities and never bothered to tell you. Make sure the checks you receive come from your subscriber.
It's a good idea to update not only the contract, because the alarm contract continuously evolves [providing the alarm owner more and more protection] and no doubt the subscriber's alarm system could use some updates after 5, 7 or 10 years [the initial term under the standard contracts - www.alarmcontracts.com ]