“Battle of the Contract Forms”

A “battle of the contract forms” refers to the clash of the standard form contracts exchanged between a security alarm company and its customer. This “battle” is becoming more and more common in commercial sales, where an owner or property manager often insists that its contract form prevails over yours. A “battle of the contract forms” is a big red-flag for your Company. You should not simply sign each other’s contract form and hope for the best, because very often the key provisions of your contact (like term, automatic renewal, limitation of liability and 3rd party indemnification) directly conflict with the key provisions of your customer’s contract (which often has a 30 day termination right for convenience, no automatic renewal, no limitation of liability, and requires your Company to indemnify the customer for 3rd party claims). Further, in the event of such irreconcilable conflicts, a court of law is likely to “knock out” the conflicting provisions of both contracts, leaving your Company without key provisions and protections and exposed to unlimited liability.

While a well-drafted security alarm contract will include an “entire agreement clause” (stating that your contract is the entire and only agreement between the parties), this clause is unlikely to hand you a victory in the “battle of the contract forms” because your customer’s contract form likely contains the same clause (that is, stating that your customer’s contract is the entire and only agreement between the parties). Hence, a court of law is likely to simply “knock out” those conflicting “entire agreement clauses” and then “knock out” the conflicting provisions of both contracts, leaving your Company exposed.

HENCE, THERE IS NO SHORT CUT WHEN YOU FIND YOURSELF IN A “BATTLE OF THE CONTRACT FORMS” SITUATION — THE INCONSISTENCIES AND DISCREPANCIES BETWEEN THE CONFLICTING CONTRACT FORMS MUST BE CAREFULLY RECOGNIZED AND RECONCILED EITHER THROUGH AN ADDENDUM OR ENTIRELY NEW CONTRACT FORM WHICH SATISFIES BOTH PARTIES.  Without doing so, the likely outcome is your key provisions and protections of your Contract (like term, automatic renewal, limitation of liability and 3rd party indemnification) will be “knocked out” of the contract by a court of law leaving your Company exposed to unlimited liability.

Day in and day out, the lawyers at KURTZ & REVNESS, P.C., represent security alarm companies in recognizing, negotiating and resolving “battle of the contract forms.”

MICHAEL J. REVNESS, ESQ., is the founder of alarmlegal.com and a founding partner at the law firm of KURTZ & REVNESS, P.C. Please contact me at mrevness@kandrlaw.com (OR 610-688-2855) if I can be of assistance with a “battle of the contract forms” issue, drafting security alarm contracts, purchase or sale of security alarm accounts or other related security industry legal services.

This article is for information purposes only and does not constitute, and should not be relied upon as, legal advice.