Automatic Renewal Prohibited

on this subject. I thought some here might be

appellate decisions proscribing automatic renewal under

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.

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.

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

homeowner continues to make payments and the alarm company

contract remain in effect. By continuing to pay the

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

cancellation date stating that he does not wish to renew the

automatic renewal. By making those payments he has assented

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

paying and sevicing, then the alarm company could be

paid. Most well-written alarm monitoring contracts

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

automatic renewal. In such locations, either the renewal

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

try sending an email to Ken Kirschenbaum. His email

assents by signing or continuing to honor his obligations

some companies use them in an abusive manner. One common

only reason for such a long advance notice is that most

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

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

client will change his mind later or that the next

company makes no effort to retrieve its hardware within a

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

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.

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.

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

then the alarm company has no further

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

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.

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?