Shropshire Farming Talk: The importance of having a written agreement
As we rapidly make our way towards spring (weather permitting), many landowners are assessing their agreements for the forthcoming year.
We tend to receive questions of a similar ilk each year such as ‘what are rents doing?’, ‘how much is annual grazing this year?’ and the dreaded one ‘do I need to bother with a
written agreement?’
A solicitor once told me many years ago that if something is agreed, document it.
This certainly rings true for agricultural agreements, as a written document ensures that each party is aware of their responsibilities which helps to prevent future disagreements or misunderstandings.
Historically many arrangements, especially those of an annual nature, have been done by a handshake over the gate which ultimately poses risks to both parties, particularly if it inadvertently defaults to another type of agreement.
There are many different forms of agreement, from Farm Business Tenancies to annual grazing or cropping licences and share farming or contracting farming agreements, plus many more.
One type of agreement does not suit all and individual requirements need to be carefully considered.
The landowner’s tax position will probably be one of the primary considerations when evaluating which type of agreement is best suited and it is likely that a conversation with the landowner’s accountant at an early stage will save both time, and potentially money, further down the line.
There have also been numerous recent changes to the wider agricultural sector. Sustainable Farming Incentive was released last year, Biodiversity Net Gain on new developments is soon to be implemented and the calculation of your businesses carbon footprint is now being widely carried out.
These are just three elements which are unlikely to have been discussed in a ‘handshake’ agreement. However, within a written agreement it should be clear as to what each party can claim for, therefore negating any assumptions anyone may have made.
When considering the type of agreement, my one bit of advice is to always seek professional guidance to ensure both parties are protected and there is a clear understanding of what is expected from the outset.
Dan Bowden is a Partner of Barbers Rural
