Contracting: A Primer for Land Managers

At a minimum, a good contract will contain the following:

  • Where. A detailed map that identifies the perimeter of the contract area and any areas within the overall area that should remain ungrazed. The land manager should clearly flag these exclusion areas before the contract begins and, if possible, before site visits with potential service providers.
  • Time Frame. The service provider will determine the timing for achieving vegetation management goals only after a site visit. Contract duration will depend on weather, climate, condition of target plants, time of year, and desired outcomes. If multiple grazing passes are required, notification procedures should be worked out before the service provider returns for successive passes.
  • Up-Front Charges. Nonrefundable setup and delivery fees are often specified in the grazing contract. For large contracts, a service provider may want one third of the total annual contract up front to help defray project capital costs.
  • Payment Schedule. Payment schedules are essential and should include set dates and explicit details of work completed. The land manager should inform the service provider about turnaround time on invoices – 10 days, 30 days, etc. Cash flow is critical to all operators. Late penalties are standard. Prompt payments keep grazing service providers happy and working hard to meet landscape goals. Slow or missed payments will aggravate the relationship.
  • Indemnity Clause or Bonding. These requirements vary by state. If indemnity clauses or bonds are employed, the work to be accomplished should be clearly defined in the contract. This may include height, percentage of target plant remaining, level of suppression, or other specific vegetation condition. Such conditions or measures may not be possible to ascertain until after a season has shown how the target plants are responding.
  • Insurance. All service providers should carry liability insurance and list the land manager as an additional insured. Amounts will vary by service provider (some carry as much as $2-3 million) but liability insurance should be a mandatory component of any contract. Service providers must also carry workers compensation insurance on all employees. A performance bond can be used but is not required by law.
  • Natural Disasters. Disasters happen and can radically change the conditions of a contract overnight. These events can be covered in a contract with a ‘Force Majeur’ clause. However, goals can still be achieved after the dust has settled, even if it’s a year later, as long as parties are reasonable and work together.

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