Contracts for Termite Inspection and Protection
TN Attorney General Opinions, August 15, 2008
The termite inspection and protection plan that is the subject of this opinion provides for the inspection of a structure, future treatment if necessary, and the repair of damages caused by termites. In pertinent part, the plan provides:
For the sum of $_____, [pest control company] will provide a certified inspection to the identified property to identify subterranean termites (Reticulitermes spp. Heterotermes spp.) and Formosan subterranean termites (Coptotermes spp.). [Pest control company] will extend this Plan annually to the Purchaser for so long as Purchaser may own the property for $_____ per year payable on or before the end of the previous annual period. [Pest control company] will inspect the identified property annually or at any time the Purchaser requests it or if [pest control company] believes it is necessary. Future treatment and/or repairs, will be provided free of charge. After the second annual period and each annual period thereafter, [pest control company] reserves the right to revise the annual extension charge.
This certified inspection is backed by our Protection Plan and provides protection against new subterranean and Formosan termite activity and damage to the structure and contents, occurring subsequent to the effective date of this agreement. After the inspection, during the term of this Plan, any treatment found necessary by [pest control company] will be performed free of charge. If new damage occurs during the term of this Agreement [pest control company] will, upon notification, inspect and arrange for the necessary repairs or replacement by a contractor chosen by [pest control company] and pay the entire cost of labor and materials. Such determination as to the need for treatment or repairs shall be made solely by [pest control company]. New damage is defined as damage done by covered subterranean and Formosan termites subsequent to the effective date of this Agreement: the definition excludes damage existing at that date. Unless live termites are found in the damaged area, the damage discovered is old damage and is not covered under this Plan.
Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/AG/2008/ag_08_159.pdf
In analyzing the termite inspection and protection plan at issue in the same manner that the H & R Block Court analyzed the POM program, the plan does not appear to be a "contract of insurance" under Tennessee law. When the service-indemnity test is applied, the plan seems to fall on the "service" side of the test. The plan is one that guarantees the pest control company's inspection services, and it is "inextricably linked" to those services. Like the POM program, there would be nothing for the plan to guarantee if the pest control company were not providing inspection services. Moreover, the plan only protects the customer from new termite damage occurring subsequent to the effective date of the agreement. Consequently, the plan only guarantees inspections performed by the pest control company. Thus, the element of contingency is lacking as well. Id.
"[T]he Tennessee Application of Pesticides Act of 1978, Tenn. Code Ann. '' 62-21-101, et seq., places certain requirements and restrictions upon those engaging in business as commercial pest control operators. Pertinent here, Tenn. Code Ann. ' 62-21-103 prohibits any person from engaging in business as a commercial pest control operator until the person has obtained a charter from the Department of Agriculture, and Tenn. Code Ann. ' 62-21-114 requires every chartered person to enter into a written contract for any service rendered in the category of wood destroying organisms. Pursuant to Tenn. Code Ann. ' 62-21-118, the Commissioner of the Department of Agriculture is bestowed with the power and duty to administer Chapter 21 of Title 62 of the Tennessee Code. Accordingly, the Department of Agriculture has regulatory authority over the plan. Furthermore, as a consumer contract, the Division of Consumer Affairs could also exercise authority over the plan if an unfair or deceptive act or practice occurred in connection with the plan. Id.
TN Attorney General Opinions, August 15, 2008
The termite inspection and protection plan that is the subject of this opinion provides for the inspection of a structure, future treatment if necessary, and the repair of damages caused by termites. In pertinent part, the plan provides:
For the sum of $_____, [pest control company] will provide a certified inspection to the identified property to identify subterranean termites (Reticulitermes spp. Heterotermes spp.) and Formosan subterranean termites (Coptotermes spp.). [Pest control company] will extend this Plan annually to the Purchaser for so long as Purchaser may own the property for $_____ per year payable on or before the end of the previous annual period. [Pest control company] will inspect the identified property annually or at any time the Purchaser requests it or if [pest control company] believes it is necessary. Future treatment and/or repairs, will be provided free of charge. After the second annual period and each annual period thereafter, [pest control company] reserves the right to revise the annual extension charge.
This certified inspection is backed by our Protection Plan and provides protection against new subterranean and Formosan termite activity and damage to the structure and contents, occurring subsequent to the effective date of this agreement. After the inspection, during the term of this Plan, any treatment found necessary by [pest control company] will be performed free of charge. If new damage occurs during the term of this Agreement [pest control company] will, upon notification, inspect and arrange for the necessary repairs or replacement by a contractor chosen by [pest control company] and pay the entire cost of labor and materials. Such determination as to the need for treatment or repairs shall be made solely by [pest control company]. New damage is defined as damage done by covered subterranean and Formosan termites subsequent to the effective date of this Agreement: the definition excludes damage existing at that date. Unless live termites are found in the damaged area, the damage discovered is old damage and is not covered under this Plan.
Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/AG/2008/ag_08_159.pdf
In analyzing the termite inspection and protection plan at issue in the same manner that the H & R Block Court analyzed the POM program, the plan does not appear to be a "contract of insurance" under Tennessee law. When the service-indemnity test is applied, the plan seems to fall on the "service" side of the test. The plan is one that guarantees the pest control company's inspection services, and it is "inextricably linked" to those services. Like the POM program, there would be nothing for the plan to guarantee if the pest control company were not providing inspection services. Moreover, the plan only protects the customer from new termite damage occurring subsequent to the effective date of the agreement. Consequently, the plan only guarantees inspections performed by the pest control company. Thus, the element of contingency is lacking as well. Id.
"[T]he Tennessee Application of Pesticides Act of 1978, Tenn. Code Ann. '' 62-21-101, et seq., places certain requirements and restrictions upon those engaging in business as commercial pest control operators. Pertinent here, Tenn. Code Ann. ' 62-21-103 prohibits any person from engaging in business as a commercial pest control operator until the person has obtained a charter from the Department of Agriculture, and Tenn. Code Ann. ' 62-21-114 requires every chartered person to enter into a written contract for any service rendered in the category of wood destroying organisms. Pursuant to Tenn. Code Ann. ' 62-21-118, the Commissioner of the Department of Agriculture is bestowed with the power and duty to administer Chapter 21 of Title 62 of the Tennessee Code. Accordingly, the Department of Agriculture has regulatory authority over the plan. Furthermore, as a consumer contract, the Division of Consumer Affairs could also exercise authority over the plan if an unfair or deceptive act or practice occurred in connection with the plan. Id.
