Key Takeaways:

  • Clear scopes of work, service levels, and performance standards are critical in security company contracts.
  • Contracts should address technology integration, emergency protocols, and escalation procedures.
  • Defining client responsibilities and payment terms helps prevent disputes.
  • Termination clauses must protect both parties and outline rights upon exit.
  • Ongoing communication, reporting, and KPIs should be specified to monitor service quality.

Security company contracts refer to contracts between security companies and hiring parties for the rendering of security services. Such a contract contains many important details pertaining to the hiring of a security company – from the security company's qualifications to remuneration. It provides a clear description of the parties' legal obligations so as to minimize disputes in the future.

Security Guard Contract Checklist for a Client

Reviewing a security guard contract can be tedious, especially when you need to go through the fine print with the security guard agency. It is particularly problematic if you are hiring the agency only for supplemental work and not as a major component of your program. Regardless of your purpose of hiring a security agency, there are a number of things you need to do before signing the contract, including:

Check the Security Agency's License

Before anything else, you must request the security agency to provide a copy of its license and validate the license by contacting the appropriate state agency. You can also obtain a report from Dun & Bradstreet to check the agency's solvency or use your company's methods for vetting new vendors.

Ask for a Liability Insurance Certificate

It is essential that you clearly communicate all your liability insurance requirements to the security agency you wish to hire, including general liability, workers' compensation and employer's liability, and excess liability. You can work with your risk management team to determine these requirements.

Establish a Defense and Indemnification Clause

A defense and indemnification clause, or “hold harmless” language, provides protection against lawsuits that result from the negligence of the security guard agency. It ensures that the security company will be responsible for the legal defense cost incurred in defending against a claim that arises from a security guard's negligence and the compensation awarded to the injured party.

Make Sure the Security Guards Meet Your Standards

The security guards who are assigned to guard your property should have adequate qualifications. They must provide a valid individual security guard license if such licensing is mandatory in your state.

State Frequency of Ongoing License and Background Checks

If you are entering into a long-term contract with a security agency, you should set the timing for ongoing background, license, and other checks. For example, the checks can be performed quarterly, biannually, or annually.

Beware of Subcontractors

There are security agencies that claim to be nationwide but actually hire subcontractors to undertake projects across the country. If you allow the security guard agency to hire a subcontractor, you must define your terms clearly. The terms that are required of the main agency should also apply to the subcontractor.

Specify Wages and Benefits

It is important that you specify the hourly wages that you wish to pay the security guards. Also, you should know whether the security agency provides its security officers with benefits. Companies that do so usually have better security guards and a better retention rate.

Include a Cancellation Clause

Typically, a security company contract has a 30-day cancellation clause. Make sure your contract has a clause that applies to both the agency and you, so that the agency will not just walk away and leave you unprotected.

Establish Emergency Protocols and Escalation Procedures

Security contracts must prepare for unexpected situations. Include provisions for:

  • Emergency response protocols (e.g., fire, active shooter, bomb threat)
  • Chain of command and escalation paths
  • Timeframes for response and notification
  • On-call availability or rapid deployment clauses

These measures help both parties act swiftly during crises and reduce liability.

Specify Technology Use and Integration

Many modern security operations rely on integrated technology. If applicable, the contract should detail any equipment provided, such as surveillance cameras, two-way radios, or mobile apps for reporting.

Clarify:

  • Who owns or leases the equipment
  • Maintenance responsibilities
  • Data access and privacy policies
  • Integration with client systems (e.g., building access or alarms)

For example, if guards use a mobile device for real-time reporting, this should be addressed in terms of data ownership and software licensing.

Define the Scope of Services and Deliverables

A well-structured security company contract should explicitly define the scope of services. This includes the type of security personnel provided (armed/unarmed), hours of coverage, number of guards per shift, and whether mobile patrol or surveillance is included. Clarify any add-on services, such as concierge duties, access control, or incident reporting.

Deliverables should be clearly listed to set expectations, including:

  • Frequency and format of incident reports
  • Post orders and patrol protocols
  • Alarm response procedures
  • Guard tour requirements and reporting methods

This section helps avoid scope creep and disputes over services provided.

Security Contract Checklist for a Security Company

If you are a security agency entering into a contract, it is recommended that you use a written contract. Such a contract will clearly state the important aspects of the agreement, including the agreed duties, control and supervision of the security officers, number and nature of security officers, and all contractual obligations. If you find onerous terms in the contract, it is advisable that you consult a legal expert before signing the contract. 

Some clients may use a standard-form contract. If you are required to sign such a contract, you should look out for these phrases:

  • Indemnification, indemnity, or hold harmless
  • Waiver of subrogation
  • Additional insured
  • Owners Contractors Protective (OCP)
  • Terms of agreement

In most cases, a security company contract contains a statement indicating that your agency is an independent contractor and not an agent for the client. Theoretically, this language protects the client from liability for your agency's acts and omissions. In addition, it protects the client and you from joint employment claims, which can lead to both of you being held accountable for employee-related claims, such as benefits, pension, and union issues.

Protect Confidential Information and Data

Since security personnel often have access to sensitive business operations, include confidentiality clauses. These clauses should:

  • Prohibit guards and staff from disclosing client information
  • Address protection of surveillance footage or incident reports
  • Survive the termination of the contract

You may also include a non-disclosure agreement (NDA) as an addendum for added legal protection.

Outline Performance Monitoring and Reporting Expectations

Security contracts should contain key performance indicators (KPIs) to measure service quality. Consider including:

  • Guard attendance and punctuality
  • Patrol log completion rates
  • Incident response times
  • Client satisfaction surveys
  • Monthly or quarterly review meetings

Regular reports and meetings help maintain transparency and foster long-term success. If KPIs are not met, the contract should allow for remediation steps or corrective action plans.

Add a Termination for Cause Clause

Beyond a general cancellation clause, include a “termination for cause” section. This allows either party to exit the agreement if the other breaches material terms—such as failing to provide trained staff or missing payments. Clearly define:

  • What constitutes “cause”
  • Required written notice period
  • Whether a cure period applies (e.g., 10 days to resolve the issue)
  • Any associated termination fees or penalties

This ensures a fair exit strategy when contract terms are not upheld.

Include Terms for Invoicing and Payment

To avoid misunderstandings, outline:

  • Billing frequency (e.g., weekly, monthly)
  • Accepted payment methods
  • Late payment penalties
  • Reimbursement procedures (if guards incur expenses like parking fees)

Also, include any escalation process for resolving billing disputes. Consistency in payment helps ensure uninterrupted service and workforce stability.

Clarify Client Responsibilities and Cooperation

The client's role is often overlooked but should be detailed in the contract. Specify the client's obligations, which may include:

  • Providing site access and keys
  • Notifying the security company of events or risks
  • Maintaining working cameras or lighting
  • Allowing guards access to break areas or restrooms

Failure by the client to fulfill their obligations can compromise safety and performance, and these responsibilities should be documented to protect the security provider.

Frequently Asked Questions

1. What should be included in a security company contract? A comprehensive contract should include scope of services, payment terms, liability clauses, termination rights, and client responsibilities.

2. Can a security company terminate a contract early?Y es, with proper notice or in cases of breach, a security company may invoke a termination for cause clause if included in the agreement.

3. How are performance standards measured in security contracts? Common metrics include guard attendance, response time, report quality, and client feedback. These should be agreed upon in advance.

4. Who is responsible for equipment maintenance in security services? Responsibility should be specified in the contract, especially if the company provides technology like cameras or radios.

5. Should subcontracting be allowed in security contracts? It depends on the client’s comfort level. If permitted, ensure subcontractors meet the same licensing and training standards as the primary firm.

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