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Contract retention / Original or copy

September 4,  2021
Contract retention
          In regards to Contract Retention do you still recommend 6 years?  Also does it vary by service or type of contract (Installation or monitoring/Subscription). I had searched your article archives and found the most recent response from 2018.
Name withheld
          Though a lot has changed in the alarm industry since 2018, contract retention time isn’t one of them.  Six years is still a safe recommendation for you to retain your terminated contracts. 
          Contracts are not the only records you should be maintaining.  Retain entire customer files, which you can of course digitize for storage purposes provided you scan entire documents and not selected pages. 
          There are several good reasons for maintaining records, such as contracts.  Be mindful that your contracts are your most valuable asset and a potential buyer of your business may want to see even terminated contracts during a due diligence period to determine patterns of termination and attrition, if any, and how that may predict future account performance.  Perhaps a more obvious reason to retain customer records is that you might get dragged into a lawsuit long after an account has been terminated.  Customers and others have statutes of limitations during which they can bring actions and you can be brought into a pending action even after the statute of limitations has run.  If you know of a loss and potential claim you should retain your records until you believe the potential claim has been resolved and there is no possibility of you being exposed to a lawsuit.  Incidentally, if you know of a claim it’s not just your records you need to preserve, be sure to get the central station’s Activity Report.   Absent your knowledge of a potential claim, six years is a safe time period.
          Accountants may have a different time frame based on IRS depreciation rules, which may be 7 or more years, so be mindful of that, though six years of terminated contracts should be enough for any IRS agent to look at.  Anyone have an horror story beyond the six years, please drop me an email.
Original or copy
    In today’s world of electronic media should we retain the original signature on contracts or will a copy suffice?  In my own situation I am a subcontractor using your Subcontractor Agreement with a Contractor.
Terry S
          A copy of a document will be accepted in evidence provided you can establish the authenticity of the copy and the original.  So the testimony that will be expected at the trial is that:
  *  there is a written document, such as contract or service record, etc
  *  there is a copy of the written document
  *  the original is not available because: 
            *  I looked for it with diligence and can’t find it
            *  I know it was destroyed and no longer exists
            *  I never had or don’t have the original
  *  I compared the copy to the original and I know that they are the exact same, and I know this because I made the copy from the original, or it was made under my direction and supervision, or the original and copies were made concurrently and compared at the time.
          This is close enough for purposes of our discussion, and the bottom line is that you can retain only an exact copy of the signed original.

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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301