Dealing with Non-alarm Industry Standard Contracts

Usually, the general or electrical contractor will want the alarm company to execute its standard form construction contract (frequently an AIA contract form). This presents significant and difficult issues for the alarm dealer.

First and foremost, an alarm dealer should never agree to provide monitoring, alarm response or similar services pursuant to such a contract unless it has been substantially modified to incorporate all the appropriate clauses regarding monitoring.

These include a description of the service, limitations on communications facilities, a limitation of liability and third-party indemnification. The contract also should be binding upon the owner/occupant and not just the contractor. Generally, the alarm dealer should insist that the owner sign the alarm dealer’s standard agreement for monitoring and other services.

The subcontract form often will incorporate by references the prime contract between the owner and the contractor, and the general terms and conditions for the project. The prime contract may provide that the owner is entitled to all the rights and benefits of the contractor versus the alarm dealer under the subcontract.

Most standard subcontract forms will have a very broad sweeping indemnification provision that requires the alarm dealer to indemnify the contractor and perhaps the owner against any injuries or damages arising from the installation and use of the system. This conflicts with the limitation of liability and third-party indemnification provisions of an alarm dealer’s standard contract.

However, if this indemnity provision only extends to the contractor and only with respect to claims arising from the installation work, and the owner/occupant has agreed to sign the security dealer’s standard contract, this may be acceptable.

Remember, if the system fails after it has been installed and put in service, it is the owner/occupant and not the contractor who will sustain the injury and seek to recover damages.

Be sure that you can meet all of the insurance requirements, including requirements to name the contractor, owner or others as an additional insured.

If you are providing a mix of security and non-security systems, try to have them segregated into separate contracts.

Be sure to document all change requests or modifications. Do not volunteer to do work that is not authorized and specified in writing.