Best Practices for Security Contract Agreement Formats: An In-Depth Guide

What is a Security Contract?

The security contract will identify what services are going to be provided by a company, and also outline the duties and obligations of both the security company and the customer. Such security services can include guards, mobile patrol, guarding, monitoring, body guarding, and investigations. A company should be able to demonstrate experience and capability to manage and undertake the contracts it tenders for. Agreements are necessary to formalize the relationship between parties , and protect the rights of all those involved. The object of an agreement is to provide evidence of details that are necessary for legal purposes. An agreement should be kept simple, clear and comprehensive. It should be consistent with the principles of agreement law, meaning it should not be illegal, fraudulent, immoral, uncertain, beyond possibility, or impossible. When written correctly an agreement will protect both parties in the event of any dispute or misunderstanding.

Components of a Security Contract

A security contract is a crucial agreement between a client seeking protection and guards, who have the responsibility to keep a property secure. The essential components that make up a security contract include scope of work, duration, payment terms, confidentiality clauses and clauses limiting liability.
The scope of task must include all aspects of the job such as number of guards, time of shift, guarding method i.e. static or patrolling, etc. Duration is important as there is no guarantee that the contract will be extended. It is essential that the agreement states how long the service needs to be offered for, usually some time period in months from start date. The payment term is usually expressed as an hourly rate but there can a minimum sum agreed for a certain period of time. The payment must clearly specify what the public holiday pay and overtime rates are. Some clients may prefer paying by the day or the week rather than the hourly rate to minimize costs. The BBC news reported the alarming statistic that 85% of outsourcing companies do not have a contract in place before putting a security guard on the front line. Confidentiality clauses are essential for any security contract as the security guard has access to confidential information about the company, the clients, the employees, the finances, the procedures, the products, the plans. This is too much sensitive information to risk being disclosed without penalty. Liability clauses are included to limit liability on either side and to provide relevant insurance coverage.

Legal Considerations for a Security Contract

When it comes to the legal requirements for security contract agreements, they can vary significantly by jurisdiction. In general, these contracts must adhere to local laws on contractual agreements as well as industry-specific requirements that may apply to the business of the contractor. Notably, certain contracts may be considered service contracts that require a different legal approach than traditional contracts.
For instance, California and a number of other states have laws that specifically apply to contracts for state guards. The California Contracts with State Agencies for the Performance of Services (Section 19130 of the Government Code) provides that every contract for services entered into by a state agency must meet one of the following conditions: Due to the nature of security guard work, this standard does not generally apply to private security contracts in California. However, for state security contracts, contractors and subcontractors must agree to drug test all workers, to allow for the state’s right to inspect work sites, and to not assign unskilled labor to tasks that require skilled labor, among other requirements (California Government Code Section 19130(b)). These requirements illustrate how the security contract agreement format will be dictated by jurisdictional law.
Professional licensing requirements may present another legal condition to be aware of, as many facilities that require security work require security personnel to be licensed. Like with state-specific contract requirements, contractor licensing requirements can vary by state. For example, while many states mandate licensure for security guards and/or companies providing security services, some have no licensure requirements at all. Licensing requirements may also vary by type of service offered, such as if the company offers armed or unarmed guard services, armed vehicle escort services, or private patrol services.
Labor laws may also impact how you choose to format your security contract. For example, under the Fair Labor Standards Act (29 USC 201 et seq.), employees must be paid at least the minimum wage. So, in an effort to cut labor costs and offset financial losses, some companies may employ "relief guards," who are meant to relieve other employees of their duties without providing extra coverage. However, if relief guards are scheduled to work a full or nearly full shift, they might be considered by the DOL to be performing "work." In this case, if relief guards are volunteering their time for free, this scenario could be in violation of the FLSA. When it comes to security guards, issues such as these should be illustrated in the security contract agreement format.
As the foregoing examples show, a clear understanding of the legal requirements that will impact your security contract agreement format is essential to drafting compliant contacts. By practicing good contract management and authoring a well-informed security contract, companies can improve the likelihood of avoiding disputes over their contract terms.

Different Forms of Security Contracts

When it comes to security contracts, there are many formats to choose from. This section outlines some of the most common types.
Service Agreement for Security Guards
This agreement is between the Client and the Security Guarding Company, setting out the terms under which the security guards will provide services on the Clients site. The agreement is entered into by the Client and the Security Guarding Company on a rolling month-to-month basis (unless recently terminated with notice). The agreement is subject to annual review with 90 days notice of the review required to be given by either of the parties. The agreement provides for amendments to be made to the services provided and additional fees to be paid by the Client to cover the costs of providing the new service. Furthermore, the Security Guarding Company must ensure that its employees are trained in accordance with the provisions of the Private Security Industry Act 2001, and continue to under-training and development of its employees. The agreement may also require the Security Guarding Company to notify the Client of any licensing requirements for the client or the premises(s); the need for such licensing requirements shall be the responsibility of the Client.
Cyber Security Agreement
This agreement is between our client and the IT Company for the provision of Cyber Security services. The Company provides a range of services and according to the Cyber Security strategy and this is set out with the various options available. For example, the Copper option will offer a basic level of service and the Gold option covers the highest level of service available. In addition to the set up costs, which are payable on signing of this contract, the fees payable are invoiced annually and the first payment is to be made on the Commencement Date, any subsequent payments are to be made annually six months in advance of the Commencement Date. There is an option to opt for a monthly payment plan. The Agreement also covers the maintenance and management of the Company and specifies that it has exclusive control over the upkeep and work required on the server. The Agreement is ongoing until terminated by either party with a minimum of 45 days notice in writing. Furthermore, the Company retains the right to pass on any fee increases, to the Client, which have been imposed on the Company by third parties for the provision of the services. And, during the term of this Agreement, the Parties acknowledge that the work to be completed will involve direct costs. Any such additional costs must be notified to the Client in advance as the additional costs must be agreed with the Client before being passed onto the Client unless: (a) at least 14 days advance written notice is given to the Client by the Company, in which case the Client must pay the Additional Costs; (b) the Company consults with the Client and agrees in writing that the Client will pay the Additional Costs; or (c) the Client knew (or ought to have known) that the Company was expected to incur the Additional Costs. All costs provided for within the Agreement do not include Value Added Tax, which will be included in any costs or expenses recoverable from the Client.

Instructions for Securing a Contract Agreement

Drafting a security contract can be an overwhelming process for anyone. However, with a little research and attention to detail, it is possible to create a comprehensive agreement that protects both parties. Here is a step-by-step guide on how to do just that: Step 1: Select an Appropriate Template There are many different types of security contracts available online or through legal aid offices. It is important to choose one that is relevant to your situation and contains all of the necessary clauses and provisions. For example, a template for a home security system may not be suitable for a contract regarding security at a corporate event. Step 2: Understand Your Rights and Responsibilities Once you have selected a template, be sure to read through the contract carefully and make sure you understand all of your rights and responsibilities under its terms. If you have any questions or concerns , it is best to consult with an attorney before signing the document. Step 3: Customize the Template After familiarizing yourself with the contract, modify it as needed to reflect the specific details of your agreement. For example, you may need to add or delete clauses or provisions depending on the nature of your arrangement. Step 4: Get Signatures from Both Parties Before executing the contract, be sure to get signatures from both parties. Additionally, if there are any witnesses who will be present during the period covered by the agreement, have them sign the document as well. Step 5: Make Copies After you have signed the contract, make sure both parties have copies of the document for their records. If you made any modifications to the contract, it is also wise to send them along with the others’ copy of the contract.

Security Agreement Mistakes

Mistake Number Four: Inadequate Descriptions of Services
Another source of disputes is a vague description of the services that will be performed. A security company might agree to provide "guards, patrols, equipment and support services". What does that mean? Courts, arbitrators and agents try to determine what the parties intended by looking at the contract language, past conduct of the parties and the situation surrounding how parties are performing under the contract. Underpaid employees, late deliveries, changes in pre-approved standards are all triggers for a disputed contract.
Mistake Number Five: Not Specifying the Hours of Service
Some clients want 24/7 services, some want services only during business hours and some want services that include weekends and holidays. Clients may incorrectly believe that anyone who provides security services should know when to be there. Without proper descriptions of the types of services and when those services should be performed, arguments over who is responsible for costs associated with unused shifts or extra shifts will be encouraged. For example if shift coverage is provided on a three-day holiday week, there will be an expectation to provide coverage for three 24 hour days. If there is not enough staffing to cover all three shifts, the parties head toward a conflict over which party is responsible for covering the third shift. If the contract prohibits overtime, the conflict will be exacerbated because someone will have to be paid at a premium for the new shift.
Mistake Number Six: Not Describing Applicable Standards
Let’s say a contract for guard services says that services will be provided according to "exemplary standards" of the client’s benefit manager. How are those standards defined? Are they contained in a manual? What are the penalties (if any) for failing to perform up to exemplary standards? Is a phone call to the benefits manager the only way to find out about the standards? This is a now set up the disastrous for the performing party. There is no penalty defined for paying employees to work extra shifts, but the standards require only a 37.5 hour work week and the contract specifies overtime is not permitted.
Mistake Number Seven: Not Indicating Cancellation and Termination Requirements
A good security contract should specify clearly conditions under which any party may terminate the contract. A contract with no termination clause is illusory. It obligates one party to continue providing services indefinitely with no right to receive compensation.
Mistake Number Eight: Not Including an Assignment Clause
A contract without an assignment clause can lead to potential bankruptcy problems for the nondefaulter. Who will pay the remaining amounts due under the contract upon the default? An assignment clause in favor of the nondefaulter is a way to protect his contractual interest and recover amounts due.
Mistake Number Nine: Leaving out Remedies or Not Specifying them Clearly
Leaving out liquidated damages, punitive damages, venue, attorneys’ fees or other remedies allows the breaching party to take advantages of loopholes and enforce the contract against a defaulting party more easily. For example if one party has already performed 75% of its obligations under a contract, but it intends to default on the rest of the contract, the non-defaulter would be entitled to the whole benefit of the contract. If the contract does not state that the non-defaulter will continue to receive the benefit of its contract, the defaulting party may conclude that it can engage in any conduct that would constitute a breach of contract without any risk of having to disgorge the benefit it obtained.

The Importance of Legal Representation in Security Agreements

Expertise of legal counsel is valuable when it comes to security contracts. Legal professionals have the know-how to ensure that such agreements, whether in the bank-outlined format or written in a non-standardized manner, comply with the law. The compliance required by the law includes the creation of enforceable agreements that protect your interests as the lender.
Examples of the types of legal issues that a security agreement is likely to run into include:
• Inserts. It’s a very simple task to just take a blank security contract template and fill in the missing information about interests and collateral options. However, there are some inserts that need to be addressed. The easiest example of this issue might be "All of Customer’s Assets." This phrase can equate to literally anything that the customer owns. Talk with your legal professional about whether this phrase is too broad, or whether it makes sense for you to have such a comprehensive contract. A lawyer will be able to write up something clearer so that you are only forced to collect issues that are essential to helping you get back your money in a timely fashion.
• Standards. Just as banks all have to follow certain standards in how they write contracts, so do customers. Therefore, this terminology that the contract uses must match with the terminology that is used in other agreements. Otherwise, there is a great deal of room for miscommunication to occur, which can compromise the contract’s integrity.
What you want to make sure you get out of a legal review or creation of a security contract depends on your line of business. However, at the very least, hire a legal professional to look over any important security contracts.

Security Contract Samples

EXAMPLE OF SECURITY CONTRACT FORMAT-I
THIS SECURITY CONTRACT IS MADE BETWEEN:

EXAMPLE OF SECURITY CONTRACT FORMAT-II
THIS SECURITY CONTRACT IS MADE BETWEEN

SCOPE OF WORK AND DURATION OF THE CONTECTION
The scope of work and duration of the contract will be as agreed upon with the company from time to time and being attached as Annexure A. A separate form of communication should be used for making such changes and intimating the company (This could be via a memorandum or a different format). The contractor agrees to take no more than 24 hours to acknowledge receipt of the said changes.
EXAMPLE OF SECURITY CONTRACT FORMAT – III
THIS SECURITY CONTRACT IS MADE BETWEEN

EXAMPLE OF SECURITY CONTRACT FORMAT IV
This Agreement made this ____________ day of ___________, 2004 (the "Effective Date") between __________________ (hereinafter referred to as the (Company") and ___________________________, (hereinafter referred to as "Contractor").
NOW THEREFORE, in consideration of the mutual benefits herein provided and other good and valuable consideration , the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
The Contractor shall perform the Services with qualified Contract Personnel as mutually agreed to by the parties from time to time and in accordance with the terms of this Agreement including, without limitation, pricing, term start and end dates and Service Specifications. This Agreement is applicable to all Services offered by the Company to Contractor under this Agreement.
Services shall be provided to Contractor in accordance with the following:
Price: The price for the Services shall be as mutually agreed to by the parties from time to time and detailed on the Pricing Sheets attached thereto according to the following structure:
Services are being provided pursuant to this Agreement commencing on the ___________ date of ___________, 2004 and continuing until this Agreement is terminated (the "Term"). Prices shall remain fixed until the end of this Agreement or the other party receives at least thirty (30) days notice of the other party’s wish for a price increase or decrease, unless otherwise agreed to by the parties in writing.