Machinery Share Contracts
Mike Bracegirdle, a partner in our Agricultural Department, examines the benefits and drawbacks of Machinery Share Contracts.
Machinery costs have escalated and many family farmers have turned to outside contractors for assistance during the harvest season. Others are considering the option of sharing machinery, but are worried about the potential for disputes as to who is going to use the machinery and when, or who is to pay for their warranty and repair costs.
One of the many questions posed to our Agricultural Team at the Nantwich Show last year was – ‘Have you prepared a Machinery Share Contract and could you give me some “pointers”?’
Such a question is not a surprise, given the display of the latest agricultural equipment on offer at the show, with equally impressive price tags for the larger tractors/combines etc. The short answer was “Yes” and “Of course”!
In the North West, the option of a new combine for the arable acres under cultivation for the family farm is not realistic. Aside from land purchase, machinery costs are significant, often outweighing the cost of buildings. Having six figures tied up in a combine, which are frequently used for just three weeks of the year, is not particularly economic.
That said, many farmers are independent and don’t wish to restrict their options. Even if they do find a like minded farmer, they may be at such a geographic distance as to make a machinery share impractical.
Our experience is that machinery shares work when:
1. The farmers have both similar crops and acreage;
2. They operate within the same geographic location; and
3. They ensure that robust agreements are put in place at the outset
In such agreement, regard should be has as to:
A. Timing – for example, the use of the combine for milling wheat prior to feed wheat;
B. Sharing – the drying costs of grain to ensure that, if cereals have to be harvested when there is a high moister content, no one is financially disadvantaged;
C. Machines break down! – agreements must account for warranties and repair costs.
The best legal basis is to have a Machinery Share Agreement. In effect, this is a type of partnership. At Butcher & Barlow, our Agricultural team works closely with both our Commercial, Litigation and Dispute Resolution teams to ensure that, however complex your problem, we can find a workable agreement or solution to suit you.
Contact the team on 01606 334309 or via email at email@example.com