Protecting Farmers in a Drought
Heatwaves and droughts are not picky about who they affect. A drive through rural Southern Alberta, and you will see farms that have lost significant portions of their crops. This year's drought has some farmers in a position where they may not deliver on their contractual obligations. Fortunately, there may be legal relief through a force majeure clause or the legal concept known as “Frustration of Contract”.
Force majeure clauses or legal Frustration of Contract can offer protection when producers face events not in their control. Hail, early frost, prolonged rain, and drought are examples of events farmers can not control and can affect the quality of their product.
Farmers who pre-sell a portion or all their crops can include a force majeure clause with the purchaser. The clause will outline terms where the farmer would not be responsible for the quality or quantity of the pre-sold product when forces outside the producer's control have affected the crop's development, like drought. The farmer would need to show measures used to mitigate the effects of the event on its ability to meet contractual obligations. The wording of a force majeure clause determines the outcome of any legal decision and could include suspension of commitments during the event to termination of the agreement.
Frustration of Contract is a legal concept that farmers without a force majeure clause may look to protect against events out of their control. Like force majeure clauses, the Frustration of Contract may protect a producer when they cannot meet their contractual obligation due to forces outside their control. Unlike force majeure clauses, establishing frustration relieves all parties from all their obligations under the contract.
As difficult as this growing season has been for farmers, relief may be a phone call away. The lawyer team at North & Company LLP Law Offices understand agriculture's importance to Southern Alberta and are ready to assist farm operators through this challenging time. For more information about force majeure clauses or legal Frustration of Contracts, visit north-co.com or call 403-328-7781.