## Facts

- Synnex (a distributor of information-technology products) contracted with ADT to design, install, and monitor a burglar alarm system for Synnex’s Edison, New Jersey warehouse.
- ADT used a standard-form agreement containing (1) a provision stating the agreement was not binding unless approved in writing by an “authorized Representative of ADT,” and (2) a limitation-of-liability/exculpatory provision requiring Synnex to rely on its own insurance for theft losses and capping ADT’s liability at the greater of 10% of the annual service charge or $1,000.
- The agreement was signed by Synnex’s representative and an ADT sales representative, but it did not contain a signature by an “authorized Representative of ADT.”
- ADT nevertheless performed under the agreement by installing and monitoring the system and accepting payment.
- Intruders defeated the security measures and stole millions of dollars in equipment.
- Synnex’s insurer paid the loss and, as subrogee, sued ADT in Synnex’s name for negligence and breach of contract.
- The trial court refused to enforce the contractual limitation-of-liability clause based on the missing “authorized representative” signature and entered a substantial damages judgment against ADT.
- ADT appealed the refusal to enforce the limitation clause; Synnex cross-appealed on other issues.

## Issues

1. Whether an alarm-contract limitation-of-liability clause requiring the customer to rely on its own insurance and sharply limiting the alarm company’s liability is unenforceable as contrary to public policy given New Jersey’s licensing and regulation of alarm companies.
2. Whether ADT could enforce the limitation-of-liability clause when the contract stated it was not binding absent written approval by an “authorized Representative of ADT,” but ADT performed and accepted payment without such a signature.

## Decision

- The court reversed the trial court’s refusal to enforce the limitation-of-liability provision.
- The court held the exculpatory/limitation clause was not void as against public policy and functioned as a permissible allocation of risk to the customer, who is best positioned to insure against theft losses.
- The court held ADT could invoke the limitation clause despite the absence of an “authorized representative” approval signature because the approval condition was for ADT’s internal protection and was waived/ratified by ADT’s conduct in performing the contract and accepting payment.
- The court limited ADT’s liability to the contractual cap (the greater of 10% of the annual service charge or $1,000) and directed adjustment of the judgment consistent with that limitation.

## Legal Principles

- Limitation-of-liability provisions in commercial alarm-service contracts that require the customer to obtain insurance for theft losses and cap the alarm company’s exposure are generally enforceable when clearly expressed and agreed to.
- Industry regulation and licensing, without statutory language invalidating such clauses, do not by themselves render risk-allocation clauses unenforceable on public-policy grounds.
- A contractual condition requiring formal corporate approval may be waived by the party for whose benefit it was included.
- A party’s performance under an agreement and acceptance of payment can constitute adoption/ratification of the contract and its terms, including a limitation-of-liability provision.

## Conclusion

The court enforced the alarm contract’s limitation-of-liability clause, holding it consistent with public policy and concluding that ADT’s performance and acceptance of payment waived any internal requirement for a separate “authorized representative” signature, thereby capping ADT’s liability at the contractually specified amount.


Synnex Corp. v. ADT Sec. Servs., Inc., 928 A.2d 37 (N.J. Super. Ct. App. Div. 2007)