Automatic Renewal Prohibited

[Robert L Bass]

On Ken Kirschenbaum's website there is a page with state by state information on this subject. I thought some here might be
interested. Here's the link:
https://www.kirschenbaumesq.com/autorenewal.htm

In brief: Arkansas, Connecticut, Illinois, New York and Utah have case appellate decisions proscribing automatic renewal under
certain circumstances.

--

Regards,
Robert L Bass

=============================>
Bass Home Electronics
941-866-1100
4883 Fallcrest Circle
Sarasota · Florida · 34233
http://www.bassburglaralarms.com
=============================>

 

[J.]

On Ken Kirschenbaum's website there is a page with state by state information on this subject. I thought some here might be
interested. Here's the link:
https://www.kirschenbaumesq.com/autorenewal.htm

In brief: Arkansas, Connecticut, Illinois, New York and Utah have case appellate decisions proscribing automatic renewal under
certain circumstances.

I'm curious as to what legally happens once the contract expires.
Does the relationship between the alarmco and subscriber legally cease
to exist? who is responsible for initiating a new contract? If
something goes wrong after the contract expires like a failure to
dispatch resulting in a death, does the alarmco bear no responsibility
since there was no contract in place at the time? If the alarmco
continues billing and the subscriber continues paying, does this imply
a voluntary extention of the contract. It makes since to me that if a
subscriber wants to cancel service on a system they own, there should
be no reason why an alarmco should be able to hold them to a contract.
However, automatic renewals clauses ensure the conditions of the
service being provided are legally defined regardless of the terms of
the contract. If the system is being leased, the customer would be
bound by the terms of the lease agreement regardless of services being
provided.

 

[Robert L Bass]

I'm curious as to what legally happens once

the contract expires.

That depends on where the protected premises is. Different states have different laws.

Does the relationship between the alarmco
and subscriber legally cease to exist?

Usually not, but the naturew of the relationship is modified. If the homeowner continues to make payments and the alarm company
continues to provide services, most if not all of the provisions of the contract remain in effect. By continuing to pay the
homeowner can be said to have constructively assented to the terms unless he has made a counter offer or made some demand for a
change of terms. For example, if the client sends a letter before the cancellation date stating that he does not wish to renew the
contract, but he continues to make payments he has cancelled only the automatic renewal. By making those payments he has assented
to the rest of the terms.

who is responsible for initiating a new contract?

Either party can initiate a new contract though usually it is done by the alarm company. The law doesn't care who takes the first
step.

If something goes wrong after the contract
expires like a failure to dispatch resulting in
a death, does the alarmco bear no responsibility
since there was no contract in place at the
time?

That would depend on the rest of the facts. If the two partied continue paying and sevicing, then the alarm company could be
liable, assuming that it failed to provide services for which it had been paid. Most well-written alarm monitoring contracts
include limitation of liability and liquidated damages clauses. If the contract remained in effect at the time of the loss, then
the terms of the contract would remain in effect, even if there was no signing.

Note that some states *require* an active assent by the client to enforce automatic renewal. In such locations, either the renewal
alone might be voided or the entire contact might be null and void. To be certain how things woprk in your state you'd need to
consult an attorney knowledgeable in alarm contract law. You could also try sending an email to Ken Kirschenbaum. His email
address is on his website, which I've referenced in a reent post.

If the alarmco continues billing and the subscriber
continues paying, does this imply a voluntary
extention of the contract...

In most places, yes.

It makes since to me that if a subscriber
wants to cancel service on a system they
own, there should be no reason why an
alarmco should be able to hold them to a
contract...

Beyond the initial term of the agreement, they shouldn't unless the client assents by signing or continuing to honor his obligations
under the contract.

However, automatic renewals clauses ensure
the conditions of the service being provided
are legally defined regardless of the terms of
the contract...

There's nothuing inherantly bad about automatic renewals. Unfortunately, some companies use them in an abusive manner. One common
trick is to require 60 or 90 days advance notice of cancellation. The only reason for such a long advance notice is that most
people will forget t9 cancel until they receive another bill. By then they're stuvk for another one, two or sometimes even five
years.

If the system is being leased, the customer
would be bound by the terms of the lease
agreement regardless of services being
provided.

True, until the lease expires. At that point the client should notify the alarm company that he doesn't intend to renew. Most of
the time the alarm company will leave the system in place, hoping that the client will change his mind later or that the next
occupant will sign up for services. If the client notifies and the alarm company makes no effort to retrieve its hardware within a
reasonable period, the homeowner can consider the alarm system his to keep or dispose of as he pleases. How long is "reasonable"
varies by jurisdiction.

--

Regards,
Robert L Bass

=============================>
Bass Home Electronics
941-866-1100
4883 Fallcrest Circle
Sarasota · Florida · 34233
http://www.bassburglaralarms.com
=============================>

 

[Nomen Nescio]

J. @netscape.net said:

I'm curious as to what legally happens once the contract expires.
Does the relationship between the alarmco and subscriber legally cease
to exist? who is responsible for initiating a new contract? If
something goes wrong after the contract expires like a failure to
dispatch resulting in a death, does the alarmco bear no responsibility
since there was no contract in place at the time? If the alarmco
continues billing and the subscriber continues paying, does this imply
a voluntary extention of the contract. It makes since to me that if a
subscriber wants to cancel service on a system they own, there should
be no reason why an alarmco should be able to hold them to a contract.
However, automatic renewals clauses ensure the conditions of the
service being provided are legally defined regardless of the terms of
the contract. If the system is being leased, the customer would be
bound by the terms of the lease agreement regardless of services being
provided.

Here's my guess. When the contract expires, if the alarm company sends out
a bill, that's an offer to renew the contract for the length of time
covered by the bill. If the subscriber pays it, he's accepted the offer,
but is only bound for the period the bill covers (quarterly billing =
quarterly contract, annual billing = annual contract).

If automatic renewals are prohibited, then the alarm company has no further
contractual obligations once the contract expires, assuming the subscriber
doesn't pay the renewal bill.

The sticky legal problem arises if the contract hits its expiration date
and the subscriber is a month late sending in his next payment. I would
argue that if the subscriber continues to use the system, he's agreeing to
the same terms that were previously in effect.

But listen, you have ADT's lawyers on speed-dial. Why not call them and
ask, and let us know what they have to say?

- badenov

 

[Bob Worthy]

That depends on where the protected premises is. Different states have different laws.


Usually not, but the naturew of the relationship is modified. If the

homeowner continues to make payments and the alarm company

continues to provide services, most if not all of the provisions of the

contract remain in effect. By continuing to pay the

homeowner can be said to have constructively assented to the terms unless

he has made a counter offer or made some demand for a

change of terms. For example, if the client sends a letter before the

cancellation date stating that he does not wish to renew the

contract, but he continues to make payments he has cancelled only the

automatic renewal. By making those payments he has assented

to the rest of the terms.


Either party can initiate a new contract though usually it is done by the

alarm company. The law doesn't care who takes the first

step.


That would depend on the rest of the facts. If the two partied continue

paying and sevicing, then the alarm company could be

liable, assuming that it failed to provide services for which it had been

paid. Most well-written alarm monitoring contracts

include limitation of liability and liquidated damages clauses. If the

contract remained in effect at the time of the loss, then

the terms of the contract would remain in effect, even if there was no signing.

Note that some states *require* an active assent by the client to enforce

automatic renewal. In such locations, either the renewal

alone might be voided or the entire contact might be null and void. To be

certain how things woprk in your state you'd need to

consult an attorney knowledgeable in alarm contract law. You could also

try sending an email to Ken Kirschenbaum. His email

address is on his website, which I've referenced in a reent post.


In most places, yes.


Beyond the initial term of the agreement, they shouldn't unless the client

assents by signing or continuing to honor his obligations

under the contract.


There's nothuing inherantly bad about automatic renewals. Unfortunately,

some companies use them in an abusive manner. One common

trick is to require 60 or 90 days advance notice of cancellation. The

only reason for such a long advance notice is that most

people will forget t9 cancel until they receive another bill. By then

they're stuvk for another one, two or sometimes even five

years.


True, until the lease expires. At that point the client should notify the

alarm company that he doesn't intend to renew. Most of

the time the alarm company will leave the system in place, hoping that the

client will change his mind later or that the next

occupant will sign up for services. If the client notifies and the alarm

company makes no effort to retrieve its hardware within a

reasonable period, the homeowner can consider the alarm system his to keep

or dispose of as he pleases. How long is "reasonable"

varies by jurisdiction.

Take the advice of your attorney and your insurance carrier. Not what
someone posts here, especially when they are not in the trade. Their
opinions will not help you in court.

 

[Everywhere Man]

J. @netscape.net said:


Here's my guess. When the contract expires, if the alarm company sends out
a bill, that's an offer to renew the contract for the length of time
covered by the bill. If the subscriber pays it, he's accepted the offer,
but is only bound for the period the bill covers (quarterly billing =
quarterly contract, annual billing = annual contract).

If automatic renewals are prohibited, then the alarm company has no further
contractual obligations once the contract expires, assuming the subscriber
doesn't pay the renewal bill.

The sticky legal problem arises if the contract hits its expiration date
and the subscriber is a month late sending in his next payment. I would
argue that if the subscriber continues to use the system, he's agreeing to
the same terms that were previously in effect.

But listen, you have ADT's lawyers on speed-dial. Why not call them and
ask, and let us know what they have to say?

- badenov <

In NY the renewal offer needs to be sent either certified mail or hand
delivered to the end user 30 days prior to the conclusion of the
original term, and requires the end user's signature. Without that the
service becomes a month to month term.
It keeps alarm companies on their toes.

 

[Bob Worthy]

J. @netscape.net said:


Here's my guess. When the contract expires, if the alarm company sends out
a bill, that's an offer to renew the contract for the length of time
covered by the bill. If the subscriber pays it, he's accepted the offer,
but is only bound for the period the bill covers (quarterly billing =
quarterly contract, annual billing = annual contract).

Makes sense on the surface, but let me ask this, what happens if the bill is
sent out and the company continues to monitor in good faith. An incident
happens prior to recieving the payment. How does the insurance company look
at it. They see an expired contract and no payment received, regardless of
intent to pay, and your insurance is based on the existance of an agreement
which is in force. Now what? I have clients that are under contract and we
bill in advance as is customary, however the clients are in the mind set
that they will not pay until after they have received the service. (old
folks, old school) The receivables show they are 90 days late. They have
been that way for 15 years. It doesn't bother me because they pay like
clockwork on that 90th day. But, if they were not under an agreement,
because of expiration, that relationship would be way to risky for both of
us.

If automatic renewals are prohibited,

Bad legislation. To bad they don't do their homework before passing bills.

then the alarm company has no further

contractual obligations once the contract expires, assuming the subscriber
doesn't pay the renewal bill.

The sticky legal problem arises if the contract hits its expiration date
and the subscriber is a month late sending in his next payment.

Sorry, should have read the entire post before posting the above. We are on
the same page.

I would
argue that if the subscriber continues to use the system, he's agreeing to
the same terms that were previously in effect.

Wouldn't it be great if we could argue our points of common sense.
Unfortunately, the courts don't give us that opportunity when the laws are
already in place. Back to bad legislation. Should have been argued there. If
the industry in these states were to get unified, spend some money on a good
lobbying effort, got the right senator and representative behind them to see
the problem, the law could probably be amended to protect everyone, client
and company. What I see here is that in some of these states, the industry
is very weak with really has no major presense and the others, the industry
is not unified enough to be effective. This is what happens.

 

[Bob Worthy]

In NY the renewal offer needs to be sent either certified mail or hand
delivered to the end user 30 days prior to the conclusion of the
original term, and requires the end user's signature. Without that the
service becomes a month to month term.
It keeps alarm companies on their toes.

If it went to month to month, I would want that receivable in prior to the
first of the month. Have the insurance companies put out an opinion letter
on this at all that you know of?

 

[secure15]

In NY the renewal offer needs to be sent either certified mail or hand
delivered to the end user 30 days prior to the conclusion of the
original term, and requires the end user's signature. Without that the
service becomes a month to month term.
It keeps alarm companies on their toes.

NY CLS Gen Oblig § 5-903 (2006)

§ 5-903. Automatic renewal provision of contract for service, maintenance
or repair unenforceable by contractor unless notice thereof given to
recipient of services

1. As used in this section, "person" means an individual, firm, company,
partnership or corporation.

2. No provision of a contract for service, maintenance or repair to or for
any real or personal property which states that the term of the contract
shall be deemed renewed for a specified additional period unless the person
receiving the service, maintenance or repair gives notice to the person
furnishing such contract service, maintenance or repair of his intention to
terminate the contract at the expiration of such term, shall be enforceable
against the person receiving the service, maintenance or repair, unless the
person furnishing the service, maintenance or repair, at least fifteen days
and not more than thirty days previous to the time specified for serving
such notice upon him, shall give to the person receiving the service,
maintenance or repair written notice, served personally or by certified
mail, calling the attention of that person to the existence of such
provision in the contract.

3. Nothing herein contained shall be construed to apply to a contract in
which the automatic renewal period specified is one month or less.