I recently had a conversation with my father regarding the American Simmental Association’s (“ASA”) Suggested Sale Terms and Conditions. There are other livestock breed associations that have similar suggested sale terms. I think it is great that livestock breed associations are giving members some suggested guidelines that memorialize important terms such as choice of law, health requirements, registration, identification, pedigree, guarantees for fertility/breeding, embryo transfer history, disclosure of genetic defects and other material information, genetic testing, return of animal, and other guarantees such as the development of scurs.
However, it is important to note that these terms are simply “suggested” and are not necessarily legally binding. Both parties have to agree to the terms in order to be legally binding in a contract. Pursuant to the Statute of Frauds, contracts for the sale of goods over $500 must be in writing (with limited exceptions). An animal is considered a “good” under the Uniform Commercial Code (“UCC”). Therefore, it is important that both parties agree to these terms in writing. If you are a seller and would like to abide by the suggested terms of your breed association, I suggest having a copy of the terms available for all potential buyers. I also suggest printing very clearly in the sale catalog that the sale abides by the suggested terms and conditions set forth by your breed association. Finally, when a potential buyer registers at a sale, I recommend having the potential buyer agree in writing to the suggested terms of the breed association. Doing so will prevent an argument later that the buyer was not aware of such terms and there was no meeting of the minds.
Additionally, I want to note that these terms are only suggested and parties can adopt all or part of the suggested terms and create additional terms. For example, the ASA Suggested Sale Terms and Conditions is silent as to guarantees with semen’s ability to freeze. This term might be material to a contract for the sale of a sire. To illustrate, this past winter I had a conversation with a cattle producer who purchased a bull in an European country in hopes to infuse his genetics into the cowherd via artificial insemination. This particular bull’s semen was not freezing and the bull was across the Atlantic Ocean.
The elements of a contract are as follows:
(3) Legal purpose of the agreement;
(4) Meeting of the minds;
(5) Consideration; and,
(6) Competent parties.
To illustrate, Cattle Farmer Jane wants to sell Cattle Farmer Joe a Simmental bull. Joe comes to see the sire and asks Jane her price. Jane makes her offer at $3,000.00. Jane also notes that she abides by the suggested sale terms and conditions provided by the American Simmental Association. Joe agrees but then counters by saying that he wants to ship semen to Brazil so it is important that the bull semen freeze. Jane accepts these terms so there is a “meeting of the minds.” The sale of a bull is a legal purpose under contract law. The $3000.00 payment is the consideration. Assuming both Jane and Joe entered the agreement under their own free will then they will likely be considered competent parties. The contractual agreement should then be memorialized in writing under the statute of frauds since it is for the sale of a good over $500.00.
That said, I understand the culture and practical reality of the livestock business. How many livestock producers put terms of sale in writing? Very few. I have previously blogged on the legal implications of doing business with a handshake. Having a written contract does not mean that you do not trust the other person. In my opinion, it is a sound business practice. I get phone calls every week from livestock producers who who should have have a written contract. Contacts do not have to be 20 pages long and they do not have to be drafted by an attorney (although I advise consulting with one before drafting your own agreement). This is business. Things go wrong outside of people’s control.
Take home points: Suggested Sale Terms and Conditions from any livestock breed association are just that — suggested. Both Buyer and Seller have to agree to the terms (in writing) in order for the terms to be legally enforceable, contractually speaking. Either Buyer or Seller can suggest changes to the terms to fit his/her specific needs.
As a reminder, contract law is state specific so please seek the counsel of an attorney licensed in your jurisdiction.