Critical Contract Provisions for Christmas Tree Growers
The Christmas tree industry has experienced its share of tough
times over the years, but the past few years have been especially
hard for many growers. Christmas trees are a unique product. It
takes six or more years to grow a mature tree for sale to the
public. During that time the farmer goes to great time and expense
to grow a tree that can be marketed to a consumer that can be very
particular. There are many different types of risks that prevent a
successful harvest. Most farmers go to great lengths to insure that
they have a great looking tree to market and sell.
It is curious then when after going to great lengths to grow a
great looking Christmas tree to see farmers turn around and sell
their trees to a person or entity that may not ultimately pay the
farmer for their crop. Why? There are many different reasons. Many
farmers trust that they will be paid for their good quality
product. Others may not understand the legal risk that may exist.
Whatever the reasons for a farmer's failure to document a
transaction, farmers should know that with a little time and effort
they can substantially reduce their risk and exposure to not
getting paid for the fruits of their labor.
There are two types of contracts - oral and written. Oral
agreements are enforceable contracts even though the terms and
conditions may not be specifically set forth in writing between the
parties. In many cases these agreements can end with a hand shake
between the parties. In other cases, the oral contract can occur
during a telephone conversation.
The written contract is more formal and usually includes specific
terms and conditions. However, there are cases of written contracts
being written on napkins and matchbooks during a breakfast, lunch
or dinner. These simple written contracts can be enforced between
the parties. A written agreement is generally easier to prove in a
court of law than an oral agreement because there is written
documentation setting forth at least some of the terms and
conditions of the agreement between the parties. Oral agreements
can be difficult to prove and a person's credibility will be an
issue in the case.
In addition to the common law (historical cases and decisions by
judges), most states (including Washington and Oregon) have adopted
statutes commonly referred to as the Uniform Commercial Code
("UCC"). Many people do not know that the UCC provides "gap
filling" provisions. This means that to the extent your agreement
is silent on a particular term or condition, the UCC will provide
that term or condition. This term or condition may not have been
contemplated between the parties at the time of their original
contract, but the term or condition may spring into existence
because of the UCC. It is possible to limit these surprise
provisions by having an agreement that addresses the critical terms
and conditions of an agreement between the parties. This means that
a written agreement will override UCC specific provision.
What are the critical terms and conditions that should be included
in a contract for the sale of Christmas trees? Please remember that
each farmer may have unique issues that need to be addressed in any
contract, so it is important to consult with your own attorney for
what might be important in your situation. At the very least, you
should consider the following terms and
The contract should specify the number of trees being sold, the
species and quality (quality classification #1 or #2). If more than
one species is included in the contract, it should be clearly
stated. If different sizes of trees are to be shipped, then the
numbers of each size should be specifically stated as well as the
purchase price for each size and type of tree. Sizing can become an
issue in some cases, so you might consider a contract term that
allows for a variance in the number and sizes of a particular type
Shipping and arrival dates should be specified. Variances in the
dates can also be specified because you never know when Mother
Nature may strike and prevent a timely delivery of trees. You
should specify who is responsible for the expense of any carrier or
broker. FOB destination generally means that the farmer/shipper is
to bear the cost and responsibility for delivering the Christmas
trees to the buyer's facilities or destination. FOB farm (or the
farmer's place of business) means that the buyer will bear the
expense and risk of shipping the Christmas trees from the farmer's
place of business.
Obviously, the farmer wants to be paid for his/her trees and the
contract should specify the payment terms. Is there a
deposit? Is the deposit refundable or not? What is the due date for
any payment and will any unpaid balances accrue interest? These
terms may seem basic, but it is surprising how often these terms
are not included in a contract.
You should consider provisions that provide a duty for the buyer
to inspect the Christmas trees when they arrive at the destination.
Include provisions that require the buyer to provide written notice
of any complaints within 72 hours of receiving the Christmas trees
or such other length of time you determine to be appropriate. This
gives the farmer the opportunity to address any issues and if
necessary make any corrections or conduct any independent
inspections of the trees to determine if they meet contract terms
and conditions. In past difficult markets, it was common for buyers
who may not have sold all of their trees to complain about the
quality of trees. Therefore, provisions that waive these types of
delayed assertions after a certain period of time are
The UCC imposes certain warranties upon the seller of goods. It is
important to address these warranties and limit the warranties to
the extent possible. In these disclaimer provisions you can
contractually agree that the trees are true to name only and waive
expressed or implied warranties. These warranties include a
warranty of merchantability and fitness for a particular purpose.
It is recommended that you consider stating that there is no
implied warranty of merchantability and no reliance on a seller's
judgment. Make sure that the buyer knows that they are buying the
trees AS IS.
When you are showing your Christmas trees to buyers it is
important to make sure that they understand that a particular field
that you may show them is only a sample of trees that might be
delivered to them. If a buyer wants a particular field of trees and
you represent to the buyer that you will deliver that field to the
buyer, you better make sure that you do so.
Most farmers sell their trees to wholesalers for ultimate resale
to the consumers. In these cases confirm that the contract is
between "merchants" and for commercial purposes only. If you are a
farmer who is selling directly to the consumer, then there may be
different UCC provisions that may apply to your sale to a
Limit your liability so that your damages can never exceed the
amount of the contract price. The UCC allows for incidental and
consequential damages, including lost profits. For protection, a
farmer should specify that these types of damages are
If there is a dispute between the parties, your contract can
provide where the dispute will be heard. The venue for any dispute
should be in the county and state where you are doing business. It
is, after all, where the trees are generally grown. Identify any
terms of default (including payment) and the remedies that you can
pursue against a buyer for any default that may occur.
The contract can also provide for the award of any attorney fees.
These provisions can be a two-edge sword even if you specify that
the other party is not able to recover his/her attorney fees. Many
states specify that one-sided attorney fee provisions are not
allowed and that both sides can recover their attorney fees.
Attorney fees are generally awarded to the "prevailing party" in a
dispute. If you do not win, you might be responsible for paying all
or a portion of the prevailing party's attorney fees.
Please remember that farmers may need to include unique terms and
conditions in their agreements. Please consult with your attorney
to determine what might be necessary for your agreement. In
addition, please consider the following "common sense" suggestions
as you go forward.
Before you sell or sign any contract, know your buyer. We live in
the information age and you will be surprised what you will find
when you "Google" a person or business (try it on yourself). Ask
for references and then call the references if you do not know the
reputation of your buyer. You can go one step further and ask for
To the extent possible, get a deposit up front. Better yet, get
the full purchase price paid in full before delivery. This is
particularly true for any trees that may be going out of country.
In difficult "buyer" markets it can be hard to request a deposit.
We find that growers who have great quality trees and customer
service have a better opportunity to receive deposits for their
trees. Again, the more you know about the buyer will help you
determine how important your deposit request may be.
Use your common sense and do what you say you will do. If you
contract to sell #1, noble fir trees that are five to six feet,
then deliver that type of tree.
When mistakes or problems occur, deal with them immediately. Make
sure that you listen and specifically identify the issue. If
necessary, repeat it back to the party with the complaint. Take
good notes and, if necessary, write a confirming letter. If
the issue is your error or mistake, then take the necessary steps
to resolve the issue in a professional manner. If the issue is the
responsibility of the buyer, do not be afraid to stand up for your
own rights, but do so in a professional manner.
In litigation the court interprets the terms and conditions of a
contract in light of the facts of the case. Even the best of
contracts may be interpreted in an unexpected manner. This is
particularly true in cases where the "facts" may be faulty.
Litigation can be difficult and expensive. When the court decides
a case, a third party is making a decision based upon his/her
judgment. Alternatively, you should try to negotiate a resolution
to any contractual problem that may exist. Mediation can be a good
option in some cases to resolve disputes. The great thing about
negotiations and mediation is that you participate in the ultimate
The key issue to remember is that you spend a great deal of time
and effort to grow your Christmas trees. When it comes time to sell
your trees, take the time and effort to protect your investment and
have a good written contract with a qualified buyer that you have
researched or know by reputation. If you do take the time and make
the effort, you increase significantly the likelihood that you will
have a good holiday celebration of your own.
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