Ag Law

1. Ag Law Chapter #11

2. Choosing Council • Ignorance of the law is no excuse • Attorney’s fees are cheaper than a court trial • Compromise is usually cheaper than a trial • Attorneys vary in their competency • Choose council that you can trust • An attorney that knows his/her limits

3. Written Versus Oral Agreement • In most cases, a producer’s handshake is good enough to “close a deal” • Get agreements in writing to avoid confusion later • What if one dies? Or is unsatisfied?

4. What is a Contract? • Legally enforceable arrangement or agreement between two or more parties • Expressed Contract: parties state the terms of the contract orally or in writing • Inferred Contract: the actions or conduct of the parties indicate an intention to contract

5. Elements of a Contract • Two or more legal parties must have legal capacity to act mentally competent legal age • Offer and Acceptance evidence that all parties intend to be bound by agreement offer or proposal and accepted by other party

6. Elements of a Contract • Sufficient Consideration promise of each party to fulfill contract money, goods, or a promise • Must not offend public policy or morals contracts are not enforceable if unlawful or immoral

7. Statute of Frauds • Certain agreements must be in writing • Commission for sale of real estate • Contracts for more than one year • Promise to be responsible for debt, default, or misdoing by another person • Agreements upon consideration of marriage • not agreement to marry

8. Statute of Frauds • Promise of an executor to pay debts for deceased out of own pocket • Contracts for sale of goods over a certain value • Land leases

9. Breach of Contract • Failure to comply with the terms of a contract • In the event of a breach, injured party may: • Request completion or payment • Be entitled to specific performance of the contract • Agree in advance to the amount of damages • Request the contract be canceled

10. Risk of Nonpayment • Get your payment when you deliver • Checks are not cash: you don’t get your money until the check clears the buyers bank and is deposited in your account • Float: buyers use your money interest free • A buyer may use a distant bank, thus take a long time for the check to clear • Demand checks drawn on local banks, cash, or a certified check

11. Forward Contract • You are obligated to deliver the kind, quality, and amount of commodity within the time specified, buyer obligated to pay you the agreed price • If the buyer declares bankruptcy, you may have to deliver the commodity, but only receive partial payment • Bankruptcy court requires all bills to be paid in full to the bankrupt firm, then pays it’s debts at partial value

12. Storing Crops • Get a warehouse receipt • can be used for collateral for loans • May possibly be sold

13. Safeguarding your crop or livestock • Deal only with licensed warehouseman, brokers or dealers • Don’t be deceived by the size of a company • Investigate the financial condition of the buyer before forward contracting • Demand a scale ticket marked “sold” or “storage” • Demand payment immediately drawn on a local band • Be on the lookout for financial instability

14. Leases and Leasing • Cash Lease • Share Lease • Manager Operator or Partnership, sometimes called Profit Sharing

15. Cash Lease • Set a fixed price per acre etc. • Good type of lease for: • small farm • landlord lives a long ways away • tenant has • Landlord may prefer Cash Lease because: • guaranteed income • less supervision by landlord

16. Cash Lease • Man not be preferred by landlord because: • generally lower income • landlord has less control of the land • may be difficult to collect lease if crop fails • Tenants may prefer Case lease because: • more profit if crops are successful • may expand business and lower fixed costs

17. Livestock Share Lease • Landlords like Livestock Share Lease because • they retain an active interest in management • it encourages more efficient use of resources • it generally makes more returns than other leases • Benefits to tenants: • less risk • gain experience from the guidance of successful owner • landlord is more willing to make improvements • requires less tenant’s capital

18. Crop Share Lease • Most common crop lease in U.S. • Benefits to Landlord: • more opportunity for supervision • more opportunity for maximum income • Benefits to Tenant: • less financial risk • landlord more likely to improve productivity

19. Manager Operator Lease • Landowner and tenant specify in advance who will furnish what (labor, $$, mgmt) • Landowner usually provides all capital • Manager provides all the labor, shares in the returns by a fixed percentage (35-40%) • Popular lease with family operations

20. Manager Operator Lease • Suggestions for Manager Operator Lease: • Separate living quarters for each • Good records • Farm business large enough to support all • Ability to get along with each other • Revision of the agreement from time to time

21. Leasing Machinery • Financial Lease • Use for one season, can return it then • Usually an option to buy at end of lease • Operator must: • make annual payments • make repairs • do the maintenance • provide shelter for the machine

22. Leasing Machinery • Operating Lease • More than one year • Not responsible for repairs, other than neglect

23. Insurance • Insurance policy pays a professional risk taker to assume financial burden in case of the unexpected. • Protects you financially from loss due to fire, flood, tornado, lawsuits • Meets obligation to others who might suffer injury or loss because of something you did • Makes it possible for you to take risks that you otherwise wouldn’t

24. Common Kinds of Insurance • Life Insurance: protect against loss in the event of death • Accident and Health Insurance: medical costs, loss if income due to illness or accident • Property Insurance: if property is damaged, destroyed, or stolen • Liability Insurance: protects against lawsuits if you cause personal injury damage

25. Points to remember when buying insurance • Insure against losses that may lead to financial disaster • Insure irreplaceable items first • Don’t insure anything you can’t easily replace yourself • Adequate coverage, homes appreciate • Buy insurance that provides coverage for situations which are likely to occur

26. Legal Liabilities of Farmers and Ranchers

27. What is Negligence? • The omission by an individual to do something which a “responsible person” would do under similar circumstances • Failure to use reasonable care under the circumstances

28. Duties towards your neighbor • You must keep your buildings etc in good repair • If you do something on your land, and it affects your neighbor negatively, you are responsible • ex: dig a hole, causes neighbor’s land to cave in • building blows onto their land

29. Duties toward people on the land • Invitees • Licensees • Trespassers

30. Invitees • A person on your farm with your consent and for your benefit, or your mutual benefit • ex: someone comes onto your land to buy produce, or a hunter who pays a fee to hunt • ex: a salesman who has your permission to deliver his product, postman, contractors • You have a duty to warn invitees of known hidden dangers • You have a duty to inspect your property for hidden dangers

31. Licensees • Someone who comes onto your land solely for their own pleasure, benefit or convenience • The visitor is tolerated rather than invited • ex: hunters, guests • Your duty is to warn of hidden dangers • You have no obligation to make the land safe, or make inspection

32. Trespassers • Someone who is not invited nor desired on your land • You are only responsible for personal injury if you intentionally inflict them • You may use reasonable force to remove trespassers • May not use deadly force except for self-defense

33. Implied Consent • If you see a trespasser on your land, and you do not ask them to leave • They are then not trespassing

34. Doctrine of Attractive Nuisance • If you negligently keep an object or condition on your land that is attractive and dangerous to children, you will be liable if a child is injured • Landowner must know that children trespass where the object or condition is located • Ex: machinery, buildings, refrigerators • Usually doesn’t apply to natural conditions (lakes etc.)

35. “No Trespassing” signs • Doesn’t pertain to people who: • can’t read and understand the sign • feel that the sign doesn’t apply to them • can’t see the sign

36. Liabilities of Employees • If you direct and control a person’s tasks, that person is an employee • The employer is liable for the actions of all employees

37. Laws for Agricultural Labor • Fair Labor Standards Act: min wage, max hours, child labor • Migrant & Seasonal Ag. Worker Protection Act:guidelines for seasonal labor • Immigration Reform & Control Act: penalties for employing illegal aliens • Occupational Safety & Health Act: (OSHA) provide safety in the workplace by eliminating hazards

38. Employer’s Responsibilities • Train employees thoroughly • Provide a safe place to work • Provide reasonably safe tools, machinery • Warn & instruct employee of dangers which they could not reasonably expect to discover • Provide competent fellow employees • Make reasonable rules for conduct

39. Agents • An agent has the authority to either transact business or manage the affairs of the employer • Employer has less control over an agent • Ex: hired farm manager • Employer is responsible for agent’s acts while the agent is doing your work

40. Independent Contractor • A person or organization performing a job without control from the employer • Employer only determines results • Ex: custom harvester, crop duster, well driller

41. Independent Contractor • In general, the employer is not responsible for the negligent acts of an independent contractor except: • negligence in hiring a competent contractor • furnishing a contractor with faulty plans • interfering with a contractor • hiring to perform a dangerous task

42. Legal aspects of fencing • Inside Fences: no stipulations • Boundary Fences: some state laws require landowners to enclose their own land with a fence tight enough and strong enough to turn livestock • Responsibility for Division Fences: People who build fences between their property. Each usually pays half • Check State Laws

43. Common Laws Regarding Livestock • A livestock owner who maintains good fences, is not liable for damage caused by livestock. The owner must not be aware the animals are in the habit of breaking out, and must make an immediate attempt to retake them when they do break out • when animals break through a division fence, and fence is not good, animal owner may not be responsible

44. Common Laws Regarding Livestock • an owner of a trespassing animal may be held liable if: • animals are in the habit of breaking out, regardless of fence condition • the owner's fences are defective or insufficient • negligence such as leaving the gate open causes the trespass • animals that are driven along a road get out of control and enter adjoining fields, even though the road is not fenced

45. Summary of Fence Laws • if a producer is negligent in maintaining their fences, liable • if a producer keeps fences in good repair, but animals are in habit of breaking out, liable • if producer doesn't make a reasonable effort to get animals back in, liable

46. Handling strays (not dogs or cats) • landowners or local law may confine and care for strays • a reasonable attempt must be made to locate owner • finder is entitled to make reasonable use of strays (milk cow) • owner must pay for feed etc • if owner does not claim animal: • becomes property of finder, or • sold at public auction, money goes into county funds

47. People injured by animals • People injured by animals: owner may be liable for injuries if: • owner negligently allows or causes them to commit the injury • owner is aware that it is a vicious animal, and animal inflicts injury upon someone not acting negligently • Animal Diseases: check state laws

48. Brands, Pollution, Chemicals • Brands: must have brand inspection to sell livestock or transport out of state • Livestock Pollution Laws: registration of farm with sanitation department may be required • Agricultural Chemical Laws: must have permit to work with restricted use chemicals

49. What is a Riparian area? • Area along a stream bank • owner of a stream bank may dam a stream as long as they do not: • violate water right laws • interfere with use of water by downstream owners • divert the course of the stream • reduce the amount of water unreasonably • cause water to back up on the land of those above him

50. What is surface water? • Runoff from snow melt or rain • Damming surface water at own risk • Check water right laws