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CONTRACTS
In general, there is no advantage to signing a contract if the security service gives a guaranteed rate in writing for a reasonable specified period. Some liability insurance carriers, either client's carriers or the contractor's, may require that such contracts exist, however.
However, should the contract service be forced to make large expenditures to commence service (i.e. purchase of a patrol vehicle, extensive radio equipment, etc.) the service may require a contract. In situations such as these, a written guarantee by the client to purchase the equipment at a depreciated rate in the event service is terminated may be acceptable in place of a contract per se.
Most contracts prepared by security firms include a specific monetary penalty which is applicable if a client hires a security officer for a proprietary position. This clause is both reasonable and customary, assuming the penalty is also reasonable.
Some large client companies, particularly national retail chains, have been known to require that the contract service sign unreasonable hold harmless agreements or include such clauses in contracts. Most security contractors expect to hold the client company harmless (as much as possible) in the event of a deficiency on the part of security personnel. However most will refuse to sign any contracts which attempt to hold the client company harmless in the event of deficiencies beyond the control of the guard service--such as the actions of the client company personnel.
Often these hold harmless agreements do nothing for the client anyway, since frequently this additional responsibility, which is beyond the control of the contractor, is specifically excluded from the contractor's insurance. Frequently it has been found that the only contractors readily agreeable to signing such covenants are the ones the client company would otherwise not consider. In one case, the local branch of a national company had to obtain a corporate waiver so it could contract with a quality service after finding that no decent provider in the area would sign such an agreement.
It is strongly recommended that a service not be shut out of the bidding for refusal to sign an inappropriate agreement such as this.
Although courts have gone both ways concerning these hold harmless situations, it appears that client companies generally cannot eliminate their exposure by delegating responsibility which they cannot legally delegate.
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