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Guarding Against Acts of God

Ken Kirschenbaum analyzes "acts of God" provisions in standard form contracts.

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As I write this article, thousands of people are still in the midst of the Hurricane Sandy calamity. For an idea of what it’s like, watch the TV show “Revolution” about the breakdown of our society after nationwide power failure (although in my opinion not very good show, very timely for the East Coast). Thousands of people are still without electricity, many (including me) without Internet, gas is scarce and rationing is in effect. Homes lost or uninhabitable number in the thousands.

I have not heard of any central stations that were down. All real central stations have backup power and backup plans (hopefully). But electronic alarm monitoring could not have been possible in the affected areas. Central stations were blasted with alarm failures, low batteries, and who knows how many intrusion, environmental or fire alarm signals. There was no point in reporting these signals because response by either police or fire was not possible. So many areas were inaccessible and police and fire personnel were overwhelmed with helping those in life-threatening need. I read in the paper that traffic and parking tickets came to a halt. Dealing with permits to remove trees, fences, debris became a joke as no one had time to submit or process them.

Not only couldn’t the central stations provide monitoring, but dealers that agreed to provide service were also unable to perform. This raises the question: What exposure do alarm companies face in these types of extreme and unusual conditions?

While you would expect that judges called upon to deal with disputes arising out of failed alarm services would understand “act of God” exceptions, the contract bargained for and agreed upon by the parties is a starting point, and sometimes determinative. Just prior to the hurricane, I received an inquiry asking me to review a contract demand by a subscriber. This subscriber contract required the alarm company to repair the alarm system during the warranty period no matter what the cause, including acts of God. Obviously, this provision placed an unfair burden on the alarm company. Alarm contracts should, in fact, address the acts of God issue.

There are a number of provisions in standard form contracts that deal with these unusual situations. Here are some examples:

“Subscriber acknowledges that signals transmitted over telephone lines, wire, airwaves, Internet, VoIP, or other modes of communication pass through communication networks wholly beyond the control of ALARM COMPANY and are not maintained by ALARM COMPANY. If ALARM COMPANY owns the radio network, ALARM COMPANY shall not be responsible for any failure that prevents transmission signals from reaching the central office monitoring center or damages … ”

“ALARM COMPANY may, without prior notice, suspend or terminate its services, at central office’s sole discretion … or in the event the central office facility or communication network is nonoperational … ”

“DELAY IN INSTALLATION: ALARM COMPANY shall not be liable for any damage or loss sustained by Subscriber as a result of … equipment failure, or for interruption of service due to electric failure, strikes, walk-outs, war, acts of God, or other causes … ”

So there you have it. We are a resilient people and I am sure by the time you read this the New York metropolitan area and Long Island will have dug out from the Hurricane Sandy disaster. However, the next such incident could be just around the corner so make sure your business is prepared.

Ken Kirschenbaum has been a recognized counsel to the alarm industry for 35 years and is principal of Kirschenbaum & Kirschenbaum, P.C. His team of attorneys, which includes daughter Jennifer, specialize in transactional, defense litigation, regulatory compliance and collection matters. The opinions expressed in this column are not necessarily those of SSI, and not intended as legal advice.

Article Topics
Business Management · Central Stations · Ken Kirschenbaum · Legal Briefing · Natural Disasters · All Topics

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Central Stations, Ken Kirschenbaum, Legal Briefing, Natural Disasters

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