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Do you need automatic renewal and can you refuse to accept contract modified by subscriber / webinar
March 9, 2022
Final K&K 2022 Webinars today
Today's Webinar:
March 9, 2022  Insurance Broker contribution to Due Diligence in                                                acquisition transaction
Do you need automatic renewal and can you refuse to accept contract modified by subscriber
          I’ve had a first. The only problem a potential customer has with the Standard Fire All in One is the month to month automatic renewal clause. They are fine with the initial term and all the protective provisions but want to “discuss at that time” the renewal.
          This seems kind of crazy to me and opens up questions of when does the contract start and end? The date they signed it, the date we begin monitoring? These dates are several months offset so when would the contract technically expire?
          On their own initiative they crossed out the automatic renewal sentence, signed the contract, scanned it and sent it back. How should we approach this client? Should I just reject it? Can I refuse to accept the contract now that they already signed it and sent it back?
          A challenge to the automatic renewal provision is not that uncommon, and the challenge should be met decisively. Without automatic renewal the contract will expire by its own terms.  The Fire All in One has a 10 year term.  The 10 year term begins on the date the contract is signed unless a provision is included in the contract specifying a different starting date.  So the default date is date of contract.  It probably makes sense to state that the RMR services start once the system is approved or put in service, so that’s a smart provision to add to the Schedule of Equipment and Services.
          Before I tell you why the automatic renewal clause is so important I want to stress that a provision that states that “parties will discuss renewal later” is beyond meaningless.  An “agreement to agree” is unenforceable in a contract.
          Alarm companies are exposed to all kinds of liability and risk; the industry does its best to insulate and reduce that risk by contractual provisions.  If a contract term were to come to an end without any notice or warning there is too much risk that an alarm company would be held accountable for not providing a warning before terminating service.  But why should the alarm company have the obligation to provide that notice?  It shouldn’t and the Kirschenbaum Contracts™ impose the obligation to cancel on the subscriber.  Until canceled the alarm services continue under the self-renewing contract.  That means that the terms of the contract, with all its contractual protection, remains the terms of service.  The alarm company needs the renewal clause and so does the subscriber. 
          I have had subscriber insist on no automatic renewal and I have insisted that the contract make it clear that the services will end without prior or subsequent notice; that the contract and all services comes to end on a specific date and time.  If your subscriber insists on no automatic renewal then make sure the subscriber understands the consequences of its reckless decision.
          I am mindful that the practical scenario is more likely that the alarm company will look to re-sign the subscriber before the contract expires.  But if the contract slips through the cracks the continued service could be deemed without contract protection.

Webinar:  Registration - sign up today
Webinar Title:  Insurance Broker contribution to Due Diligence in acquisition transaction
When:  March 9, 2022 12 PM ET
Topic Details:  Due Diligence to varying degree is essential in an acquisition transaction.  Insurance considerations are best reviewed by an insurance expert.
Presenter:  Shawn Iverson, CIC The Insurance Center,  Ogden, UT   801-622-2626
Hosted by:  Ken Kirschenbaum,Esq.,
Who should attend:   Company owners, CEOs, CFOs, personnel involved in acquisitions
Register Here:

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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