Limit Your Exposure to Risk by Prioritizing These Legal Provisions

Perhaps the most important  feature of your contract is its protective provisions. These are the provisions that deter and insulate you from liability and inclusion in a properly drafted alarm contract is essential for risk reduction.

The alarm and fire/life-safety business exposes you to risks that are unlimited and enormous. Your exposure to risk begins with your duty to another. There are, in fact, two ways to create a duty that for our purposes you can consider an obligation to another.

The first is by contract. You agree by contract to undertake performance. The second is by actual performance without first having a contractual obligation. In this situation you are responsible for conducting yourself in a reasonable manner.

In other words, once you start to do something you can’t do it negligently. Duty is a legal principle and whether a duty exists is going to be an issue reserved to the judge, not a jury. When it comes to contractual duty the clarity of the terms of your agreement is essential.

ADT was sued when an employee of a sporting goods store was severely injured and another was killed during a robbery (Banzhaf v. ADT Sec. Sys. Southwest Inc., 28 S.W.3d 180, 186). The injured employee and the parents of the deceased employee sued ADT Security Systems Southwest Inc., which provided security services to the store.

Pursuant to the contract between the store and ADT, however, ADT only provided services when the store was closed and all employees had left the premises. At the time of the robbery, employees were in the store, and ADT’s alarm and monitoring service was not activated.

Since the contract itself didn’t create a duty the plaintiffs in the case claimed that ADT undertook performance of protection, thereby creating a duty outside of the contract. The plaintiffs relied on the Restatement of Torts.

The Restatement (Second) of Torts § 324A (1965) provides: One who undertakes, gratuitously or for consideration, to render services to another which he should recognize as necessary for the protection of a third person or his things, is subject to liability to the third person for physical harm resulting from his failure to exercise reasonable care to protect his undertaking, if (a) his failure to exercise reasonable care increases the risk of such harm, or (b) he has undertaken to perform a duty owed by the other to the third person, or (c) the harm is suffered because of reliance of the other or the third person upon the undertaking.

The plaintiffs claimed that ADT had undertaken duties to protect the patrons, but the court rejected their argument noting that the Restatement of Torts imposes a duty only based on the particular services that are undertaken, and the uncontroverted evidence showed that ADT provided only those security devices and services for which the store contracted.

The court further rejected the plaintiffs’ argument that ADT owed a duty under tort principles because ADT, as a security company, had a duty to prevent foreseeable crimes and that the violent crime against the plaintiffs was foreseeable to someone in the security business.

The court refused to place such a broad noncontractual duty on security companies, for one reason, because the plaintiffs’ argument would shift the responsibility for protection against crime, without any contractual basis, from law enforcement agencies to security companies.

The court noted that purchasers are free to contract for the particular security devices and services that they consider to be necessary, and the court was not aware of any case extending the duty of security companies beyond their contracts as suggested by plaintiffs.

The court concluded that ADT owed no duty to plaintiffs based on tort principles. Duty is a principle often overlooked and misunderstood by attorneys (and sometimes judges). In your business you can’t afford to use an attorney who doesn’t get the subtle differences between duty and proximate cause, contractual and noncontractual liability for performance or nonperformance.

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