Almost exactly a year ago, I wrote a blog discussing important checklists for producers entering livestock production contracts, which you can revisit here. This issue came to mind again when I learned of a recent lawsuit over a handshake deal between a livestock owner and contract grower. The owner claimed $85,000 in damages when several of the owner’s cattle became sick or died because the contract grower allegedly failed to provide proper care for the animals. Many cattle feeding contracts are done on a handshake and such deals work fine when everything goes as planned. However, such deals usually lack the specificity to cover responsibility when things do not go as planned and the parties find themselves mired in a subsequent lawsuit.
Therefore, I am dragging out the Iowa Department of Justice’s Livestock Production Contract Checklist again. I would like to emphasize Section C(3): Livestock Health, which asks several questions that can clarify responsibility for animals lost during a livestock production contract. For example:
Can you reject livestock you think are sick?
Who bears death loss risk while the livestock are at your facility, for failure of ventilation, heating, cooling, watering, or other equipment?
Who bears death loss risk while the livestock are at your facility due to extreme weather conditions?
Does your contract include a rebuttable presumption the contractor is responsible for death loss occurring soon after arrival because of unhealthy animals? and;
Who determines and pays for scheduled health care?
I would also like to emphasize Section E(8): “You should not rely on oral agreements or interpretations of the contract. Even if these issues are discussed in an oral custom feeding contract, you will likely find yourself arguing over the details of the discussion.”
The checklist provides several other sources of information on custom feeding contacts that you can check out if you have more questions.
Just remember, a handshake deal is good when it goes as planned but is fairly worthless when it doesn’t.