At the start of the New Century, the expression which was in vogue with young children at the time was “sharing is caring”.
It made perfect sense, as part of its logic was to encourage friendships and ultimately help good relations between individuals.
In a farming context, this makes perfect economic sense.
Renting machinery is costly and eats into the profits of the farmer, yet he has to rent in order to achieve his targets.
If he had the money to buy the lands, he would do so, but his profits will not allow him.
The older farmer may in fact own the lands the younger farmer is leasing.
This is where the older and younger, in both parties, combine their labour and machinery costs and efficiently operate both farms.
It is absolutely essential that a legally binding contractual agreement is drafted.
This may be by way of a labour and machinery sharing agreement, together with a joint machinery ownership agreement.
An agreement is a contract and a contract is a clear and unambiguous intention of both parties to enter in to a legally binding agreement, whereas both parties have a meeting of minds as to the terms and conditions upon which they wish to agree.
Most importantly, both parties should seek independent legal advice from a solicitor in these circumstances.
One of the typical terms of the joint venture sharing agreement is the manner in which both parties exchange machinery, the exchange is determined by way of ratio of work.
It may be for example, 1/3:2/3 as regards the amount of land owned by each party, and quite simply the costs are then shared on a similar basis.
A further example would be when one is repairing, there is no exchange of money as it effectively amounts to a barter system, after the initial purchase of the machinery.
Like any new business, running it effectively and efficiently is the key to success.
The joint ownership of machinery allows both parties to utilise the machinery more efficiently and still enjoy a full- time line of machinery in their possession.
It also helps the younger operators to get started with less capital tied up in the machinery.
The key to success is to agree upon when and how to use each piece of equipment. In the unlikely event of dispute, both parties can fall back on the legally binding sharing agreement.
Even though both parties have the best intentions going forward, and even with a meticulous plan, not all relationships work, especially when it comes to business. Trust is also a vital factor, especially between neighbours.
Nevertheless, the new farming machinery joint ventures and sharing agreements will not take from the trust nor impact on good relations.
It will simply act as a reminder that each party must honour their obligations to one another and further remind them that they are always protected by the law.
The same harmony that existed before making an appointment with your solicitor for the necessary legal advice on the proposed sharing agreement will exist after such advice is given and the express terms of the agreement finalised and put in writing.
I say this as legal advice is also a reminder that it is a business relationship despite the word sharing implying the element of good will and friendship.
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