For those of you interested in a written bull lease, consider these terms:
Term: The term of the breeding season should be listed (e.g., March 1 to June 30, July 1 to September 1).
Number of Bulls: Note the number of bulls leased from the lessor plus any other bulls leased from other cattlemen during the breeding season.
Payment: The lease should note the amount owed, due date, payment instructions, type of payment accepts, interest and/or penalties for late payments. In some cases, the bull owner may request a deposit be made on the bull that will be returned upon the safe return of the animal to his/her farm or ranch.
Bull Owner Representations: The lessee may request that certain representations be made such as bull health, body condition score, fertility, breed registration, pedigree, structural soundness, libido, genetic DNA markers, strength with Expected Progeny Differences (“EPD’s”). If genetic DNA markers are relied upon by the lessor, there should be clause indicating that the bull owner is not liable if the genetic testing company made a mistake.
Lessee Representations on Cow Herd: The lessor may request the certain representations be made such as herd health, fertility (especially if there is a penalty for low conception rates), and number of cows that the bull(s).
Health: It might be appropriate to add more detail about the health of the bull and the cow herd of the lessee including health certification from a licensed veterinarian or special tests that need to be performed.
Delivery of Bull to Cow Herd: Who will pick-up and/or drop-off the bull(s) and payment for same? Will there be a penalty for late pick-up or drop off after the breeding season? How will the bulls be transported?
Movement of Bull from Lessee’s Farm: Will the lessee farmer or rancher be allowed to move the bull during the lease term?
Death, Injury or Illness of the Bull: who will be liable for the death or injury of the bull (i) before the lease date, (ii) during transportation or (iii) during the breeding season term? The bull owner should be promptly notified in these instances, including if the bull is missing.
Injuries to People: The lease should discuss potential liability (and indemnification) from an injury to a family member, farm employee, farm visitor or child from the bull.
Insurance: Will either party be required to carry insurance?
Performance: The lessee farmer or rancher may wish to be compensated if the bull has a breeding rate under a predetermined level. If this provision is added, it is important that the lessor have a provision relating to conditions such as a drought, weather extremes or deficient grazing that may affect the bull’s performance.
Management: The lessee should promise to use good management practices, proper animal handling techniques.
Feed and Nutrition: The lessee cattlemen should provide the bull(s) with adequate feed and dietary supplements. Any special feed or nutrition requirements should be memorialized. The bull(s) should not be allowed to be returned to the owner in state of malnutrition. In this instance, the lease should explain what the lessee’s responsibility or liability would be (e.g., payment for veterinary expenses and or feed during the recovery period).
Right of Inspection: Will the bull owner have the right to inspect the bull during the breeding term at the lessee’s farm or ranch?
Ownership of Bull: The lease should specifically state that the title and registration papers, if applicable, will remain with the bull owner to prevent a later dispute about ownership.
Option to Purchase: On that note, the lease may provide an option for the lessee to purchase the bull at the end of the term at a mutually agreed upon price. Perhaps the lessee is only given the option of first refusal to purchase the bull for 30 days after the termination of the lease.
Title of Progeny: The lease should specifically state that the lessee owns the progeny sired by the bull and that no profits are to be shared from their sale.
Relationship of the Parties: The bull lease should specifically state that the parties are not forming a partnership or joint venture.
Termination: The lease should include a provision allowing either party to terminate the bull lease with adequate notice with certain conditions.
Confidentiality: In every contract between cattlemen, including bull leases, the parties should ask themselves whether there is any information that they may wish to remain secret (e.g., payment terms). This is sometimes addressed in a separate Non-Disclosure Agreements (See Chapter 5).
Choice of Law: Contract law is state law so it is especially important to address this if the contract is between cattlemen across state or country lines.
Dispute Resolution: In every contract, it’s prudent to consider how the parties would like to resolve any disputes that may arise between them (e.g., non-binding mediation, binding arbitration, and/or choice of court forum) and whether a prevailing party should pay for attorneys’ fees. If the parties select a method of Alternative Dispute Resolution such as mediation or arbitration, the parties should still be able to get to court in an emergency.
This is an excerpt from my book that I co-authored with Pat Dillon, an Iowa food and agriculture lawyer and author of this Iowa agriculture law book. You can purchase a copy of the book “Field Guide: Legal Guide for New York Farmers and Food Entrepreneurs” on Amazon.com. A new (more user-friendly) Kindle version of my book has been recently uploaded (only $9.99 or $2.99, if you own the hard copy of the book).