CA law limiting breach of contract damages to 20% of contract /schedule meeting at ISC February 26, 2026

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
You can read all of our articles on our website. Having trouble getting our emails? Change your spam controls and whitelist ken@kirschenbaumesq.com
****************
CA law limiting breach of contract damages to 20% of contract /schedule meeting at ISC
February 26, 2026

schedule meeting at ISC
*
   You should have planned your trip to Las Vegas for the ISC West 2026 show; hopefully you have time to spend and meet with your attorney. I'll be at the Palazzo scheduling meetings at the Prestige Lounge. To book time for free consult contact Kathleen Lampert at 516 747 6700 x 319 or KLampert@Kirschenbaumesq.com. Concierge Client can also contact the Concierge Program Coordinator, Stacy Spector,Esq at 516 747 6700 x 304 or SSpector@Kirschenbaumesq.com.

CA law limiting breach of contract damages to 20% of contract
*
Ken:
   How is CA's law on limiting recovery on breach of contract going to affect the K&K Contracts that provide for 80% of balance of contract if the subscriber breaches the contract during the term?
Ean Bezemer
Bezemer Industries

Response
*
   Good question. I am not sure of the answer. The law affects fixed term contracts; it excludes home improvement contracts. We are assessing the new law and how i t applies to the K&K Contracts for consumer contracts. While home improvement is excluded from the law the K&K contracts make clear that the installation is not a fixture; not an improvement to real property. The contracts do call for a fixed term that renews month to month. We can word the contract to comply with the law we may still be subject to the 20% recovery in the event of default.
   The questions are:
do consumer contracts apply to residential and commercial customers
is the continuing service contract a fixed term
how will the continuing services be distinguished from a sale or service with payment over period of time
   We are looking at the home improvement contract requirements, which the Residential All in One for CA may already comply with. If so we can modify the Residential All in One to specify that the work is in fact a home improvement. Most customers treat it that way anyway.
   We will keep you posted on contract modifications for California. By the time you read this you can also check with K&K's Contract Administrator Eileen Wagda to check on updates. She can be reached at 516 747 6700 x 312 or EWagda@Kirschenbaumesq.com.
*
Explanation of the law: LEGISLATIVE COUNSEL'S DIGEST
Fixed term installment contracts: cancellation fees.
Existing law makes it unlawful for any person doing business in California and advertising to consumers in California to make any false or misleading advertising claim. Existing law makes various unfair competition practices unlawful, including any unlawful, unfair, or fraudulent business act or practice and unfair, deceptive, untrue, or misleading advertising.
Existing law regulates how a contract may be extinguished, and prescribes requirements for the formation and cancellation of certain contracts, including dating service contracts, weight loss contracts, and home equity sales contracts.
This bill would, for contracts entered into or modified on or after January 1, 2026, prohibit a fixed term installment contract, as defined, from charging a fee to a consumer who terminates the fixed term installment contract unless, at the time of entering the initial contract, the initial contract includes an explanation of the total cost of the cancellation fee or the method by which the fee is calculated, as provided. The bill would also prohibit a fixed term installment contract from charging a cancellation fee, termination fee, or any similar fee in an amount greater than 20% of the total cost of the contract.

The Statute:
The people of the State of California do enact as follows:
SECTION 1. Chapter 4 (commencing with Section 17800) is added to Part 3 of Division 7 of the Business and Professions Code, to read:
CHAPTER 4. Fixed Term Installment Contracts
17800. (a) For purposes of this chapter, “fixed term installment contract” means any contract for the sale of goods or the furnishing of services by a retail seller to a retail buyer for a deferred payment price payable in installments.
(b) For the purposes of this chapter, “good” and “service” include tangible and intangible goods, including digital software.
17810. A fixed term installment contract entered into or modified on or after January 1, 2026, shall not charge a fee to a consumer who terminates the fixed term installment contract unless, at the time of entering the initial contract, the contract includes either of the following:
(a) A clear and conspicuous explanation of the total cost of the cancellation fee in writing.
(b) The method by which the fee is calculated alongside an example of the method being used to calculate a cancellation fee, without the use of a tooltip, additional hyperlink, or any other feature which requires additional user interaction to view the clear and conspicuous explanation.
17820. A fixed term installment contract entered into or modified on or after January 1, 2026, shall not charge a cancellation fee, termination fee, or any similar fee in an amount greater than 20 percent of the total cost of the fixed term installment contract.
17830. This chapter shall not be interpreted to prohibit a contract from requiring the return of a good if the fixed term installment contract is canceled.

STANDARD FORMS Alarm / Security / Fire and related Agreements.   click here: www.alarmcontracts.com
*
CONCIERGE LAWYER SERVICE PROGRAM FOR THE ALARM INDUSTRY - You can check out the program and sign up here: https://www.kirschenbaumesq.com/page/concierge or contact our Program Coordinator Stacy Spector, Esq at 516 747 6700 x 304.
*
ALARM ARTICLES:  You can always read our Articles on our website at ww.kirschenbaumesq.com/page/alarm-articles  updated daily
THE ALARM EXCHANGE - the alarm industries leading classified and business exchange - updated daily
*
Wondering how much your alarm company is worth?
Click here:  https://www.kirschenbaumesq.com/page/what-is-my-alarm-company-worth

Getting on our Email List / Email Articles archived:
  Many of you are forwarding these emails to friends or asking that others be added to the list.  Sign up for our daily newsletter here: Sign Up. You can read articles and order alarm contracts on our web site www.alarmcontracts.com
**********
Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301
ken@kirschenbaumesq.com
www.KirschenbaumEsq.com