- Hello everyone that's joining us tonight,
Mark Cannella, UVM extension.
And we are going to wait around for about a minute or two
and see if we get a few more people into the lobby
and then we'll start.
All right, looks like we're ready to go.
Again, Mark Cannella here. University of Vermont extension.
Glad to have you.
Glad to have you join us for another one
of our Acer Webinar series.
So tonight's topic binding contracts and legal agreements.
I'll let you know, to be honest,
this is new territory for me.
This is something that I feel is important to discuss,
and I'm looking forward to sharing with you
some of the topics that I've gotten into in my research
and also hoping for a good conversation.
So definitely encouraging folks
to ask questions as we go.
And we're gonna have, I think, a quite a bit of time
for Q and A.
A little bit of housekeeping here,
if you're new to Teams,
know that there is a chat bucket,
chat bubble up in the top ribbon.
It's going to look like, you know,
a little cartoon bubble,
keep that open if you can.
Cause I think we'll have questions coming in
and definitely encourage you all
to type some things in.
Also gonna actually going to try out a live polling today
and see if we can get that feature to work
with our webinar software.
Another bit of housekeeping too,
we do have closed captioning that's occurring right now.
So if you look in that chat window,
you'll see a caption link,
which you can actually see typing out real time,
which is always pretty amazing.
So if that helps you read a little bit, go for it
and that's there in the chat window.
I think what we'll do as always,
I'll present for a period of time,
people will be muted.
Ask questions, Mark Isselhardt, our UVM Maple specialist
is also here tonight and he will chime in
and read some questions out of the chat window
when I take some breaks.
And then at a certain period,
we'll just unlock people's microphone for general Q and A.
So tonight's presentation, really, you know,
my goal is to give and provide some background
on these forms of legal agreements,
specifically the concept of binding contracts.
I'm not a licensed attorney,
I'm not a legal professional,
so this will be general and really going to come
from the lens of me as a business educator,
as a business advisor looking at some
of the different features of these different agreements.
And specifically, we're going to look at generalizations
for what we think a good sap, sale and purchase agreement,
could look like.
This is a direction we think our industry is headed,
as the industry grows.
And so we'll kind of dive in
and it's going to be fair game for some thoughts
and some questions as well.
Many of you have been to our website, www.maplemanager.org.
I want to give you a heads up that we are working
with legal professionals
on the sap, purchase and sale agreement.
We're also working with a boiler,
working with them for a boilerplate template
on a Syrup, purchase and sales agreement.
So those agreements aren't ready yet.
We had hoped to have them available to share tonight,
but they should be forthcoming in the next couple months.
And then back to the Q and A,
I'd like to really encourage you all,
that if you do have questions or considerations,
the spoiler is my last slide, basically, as you know,
what could go wrong with these agreements
between business parties.
So, if you do have questions,
anything you you chime in with tonight
is actually going to help us quite a bit,
as we build out a small team of producers and lawyers
to draft these boilerplates and make them available.
But as always Maplemanager.org.
We've got a couple other resources.
We've got business planning tools.
We do have an Ask the Team, if you've got questions,
you can submit things right online there.
I mentioned the legal resources.
We did Sugar house lease and sugar bush lease templates
about a little over a year ago.
And our Forestry team is also building out
more forestry resources in the next couple months.
So definitely check that out.
Looking ahead to the webinars coming up.
Today's the 29th, binding contracts and legal agreements.
We've got two more scheduled so far.
It's possible we may see a couple more sessions come in
for November.
But on October 13th, we've got Dr. Anthony D'Amato
from University of Vermont
that's going to give a presentation
on maple forests and carbon,
which really should be fascinating.
And then later in the month on Wednesday, October 27th,
I'll be back with attorney Jess Phelps here in Vermont.
And we're going to have a presentation
on Northeast forest land tax programs,
specifically looking at some of the tax abatement programs
in Vermont, New York, Maine, and possibly New Hampshire
to provide an overview,
definitely for people
that are considering getting into sugar
or considering getting into forest land ownership
at a scale where the taxes are going to be something
that's on their mind.
A few more resources, we always want to make sure people
get to check out.
Www.mapleresearch.org, a growing archive of current
and historical literature
that's hit everything from industry publications
to more technical or academic journals,
highly encourage you to check that out.
University of Vermont Proctor Maple YouTube channel
has a growing number of videos.
I encourage you to check that out.
And then as always UVM Extension maple program at large,
Mark will hard us on tonight and he does a great job
and he's been updating everything from new video links
and new statistics.
I think, especially as we approach
the conference season here,
we'll start to see more offerings
for sessions that are coming up.
So contracts in everyday life, let's get going.
You know, I think it's fair to start
and say that this session is to get us thinking
about formal legal agreements.
But it's not to say that we're trying to encourage you all
to get things in writing and signed by a lawyer.
However, though, you know, I guess as I said earlier,
I think as the industry grows,
we recognize that there's going
to be the opportunity for more players.
There's certainly the opportunity for more,
I won't say more risk.
There's certainly an opportunity for more specialization
for people to decide, hey, I want to produce sap
and hey, I want to produce, or I want to process syrup.
And we think as the community grows,
there's going to be people that are gonna evaluate
the risk and their consequences
and say, we need to have a little bit more protection.
So really this session today,
isn't so much about just the legal contract,
but also the concept of a business to business relationship
and very straight forward.
What are the things that we look for in those relationships?
And what's the attention we can put on those relationships
as they form to make sure that both parties
are really taken care of in an equitable way.
So with contracts, you know, honestly,
we're less concerned about the ones that get fulfilled
and contracts and especially business
or purchase contracts do get fulfilled on a daily basis.
And they're never written down, but we buy things.
We transact things regularly and often it works out.
But the ones we're concerned about,
the ones where we want to put our attention on
is the agreements that could create major consequences
if they're not completed
and if they're not fulfilled.
So really I hate to be worst case scenario,
but this is risk management.
So we have to kind of have that thought process
of what could go wrong.
And then let's think about if there's ways we do feel like
we want to or need to be protected.
So with that, I'm gonna stop here.
This is going to be our first try for a little live polling
with the Microsoft Teams format.
I'm going to give it a shot here.
I'm gonna open up a poll.
And I think you're going to see it on your screen
or in your chat window.
If it works, it works.
It doesn't work.
Well, that'll be a disappointment.
If you get a chance and if you see it,
first question is how well do you know this topic?
Binding contracts, legal agreements.
Do you feel like extremely well,
just a little or not at all?
And you should be able to click a button and submit it.
And I can see it in the chat window,
but we've only got three responses.
So let's let it go for a second.
Oh, I'm going to X out.
And I don't know if it's going to terminate the poll.
So if you've got an answer and you want to get it in,
you've got about two seconds to go here.
All right, hopefully you got in there and I can see it, 14%.
We've probably got one or two people
that really know things really well,
and well you can help with the Q and A,
because I put myself in that,
just a little category here
and we've got a few people
that don't think they know much about it at all.
So that's a good start.
And since it worked me to try one more here.
Next question, how much do you need to understand contracts?
Are any of you looking for formal business agreements now,
maybe you just learning for learning sake
and maybe you'll need it in the future.
And maybe you just don't know.
So let's give another chance there at the poll
and see what we get for our group.
All right, and Mark, if I could just pick on you,
is that showing up okay,
and do you see that in the chat window, the results?
- [Mark] Yeah, it looks good, Mark.
- Okay, good.
So it worked.
Well thanks everyone for playing along there.
And it's always helpful to know as we do these programs,
we are always trying to consider
when to give people their mics and their videos.
And this live polling is this feature
that we'd like to use more in classes
and well, it's nice to know when IT works.
So how much do you need to understand contracts?
Well, quite a bit of you,
but if you are ready to do something now
and people were thinking about it, so that is great.
Let's hopefully share some information
and share your situations if you're comfortable,
when we get to Q and A.
So reasons to prepare a contract.
Well, is it possible,
could it be possible that someone could fail
to remember the agreed upon terms
if it was a handshake or a verbal agreement?
Could be totally unintentional,
but let's be honest if there's some sort of duress,
some sort of unfortunate condition
and someone doesn't remember the terms of that,
that could be problematic
and certainly could raise a concern
for the business relationship.
Balancing risk appropriately
between buyer and seller parties.
This is something we do all the time with business planning.
I do it all the time with transfer and succession planning,
especially when there's a senior business owner
or a parent and a younger generation son or daughter
that's getting involved in the business.
People are trying to understand
if someone's got more risk on them
and if we can have a relationship that smooths this out.
So there's certainly a reason there to prepare a contract.
If there's a reason that one person feels
like they've got more of the risk
or potentially someone's got more of the power
and don't feel that that's comfortable.
Last reason here, a shortlist of reasons
to prepare a contract is the basics of the legal terms
that I will be probably ill-prepared
to explain too much tonight,
but the very important legal terms
that would identify the remedies if the contract is broken,
breached or unfulfilled.
And again, this doesn't necessarily mean
that everyone's going to like the consequences,
but the agreement in advance of this is how we're going
to deal with it.
Whether it's a penalty or it's whether we say
this is going to be the process,
the moderation or the mediation process
to handle the resolution.
Those are things that can be discussed in advance.
So when something goes wrong, we've got a format.
And I can say this from working with some business conflicts
between partnerships and a family LLCs
that do have operating agreements set up.
There is a lot of boilerplate
in a legal operating agreement
that says, this is how we deal with problems.
And when those situations get tense
and people are feeling hurt or threatened.
Boy, it's really nice to have something to lean back on
and say, oh, this is the boilerplate.
This is the process.
This is the list of things we're going to go through.
Let's go back to that general relationship,
whether it's a handshake or whether it's a written format
that you're going to pursue, you know,
what's the general due diligence
as you're building business relationships?
And these are just a few,
you might have some of your own here,
but familiarity between the buyer and the seller.
Everyone wants to be aware of who they're dealing with.
Some of the big things to look for financially,
revenue problems or credit problems.
Is there any reason to think that the person
or the business that you're engaging with in this agreement
could have issues?
On the buyer side, we certainly want to know
if the buyer is going to have revenue in hand
to make payments.
Credit is certainly relevant,
especially for a syrup processor that is going
to have a lot of upfront costs before the syrup is sold.
Are they going to need advanced credit
to pay their suppliers for everything from glass jugs?
In this situation tonight,
the concept of maybe buying sap and advance.
And that goes both ways as well
for the processor may be concerned,
does the supplier in fact have the capacity
to get this product to them as planned and as needed?
And reliability in general,
asking around and understanding if people tend to do
what they say they're going to do
and how they conduct themselves,
hopefully in a professional manner.
Some general due diligence there.
And then just this conversation,
or this thought about leverage.
Identifying who has the power.
Power could come in different ways,
certainly from a business format.
I'd say honestly, having financing,
having capital or having wealth
is definitely one source of power.
It insulates a person or a party
from the risks or the fallout.
Another prospect for leverage here is options.
And as we work through the scenario of sap sales,
sap buying and the same thing could go for syrup buying,
finished syrup sale or sale or buying.
Someone who has options can obviously navigate
and find someone else to replace the source
or the destination of where that product is going.
Someone with limited options
is gonna have a little less leverage.
And that's going to factor
into who's possibly bearing the risk
and who may want to take some steps to cover themselves.
So as always here, this idea of leverage and consequences,
if something's not met, if it falls through.
Little bit of legal background here,
I'm gonna emphasize little again
from an extension farm specialist
or farm business specialist.
There is this concept of statute of frauds,
it's been adopted over the centuries really.
Dates back over a hundred years plus.
Generally most states have adopted some form
of a statute of frauds.
And I think this is really key
and what I understand is that the state's determination
is gonna help you understand
when these legal agreements are binding
and what criteria may need to be met
for them to be binding.
In general, and this comes up with a question
of the handshake deal.
And a handshake could be a perfectly legitimate contract
between two parties, but the question is,
is it legally binding and enforceable?
A lot of the states will have a statute of frauds
that says anything over $500 as a transaction
does need to be in writing.
And I don't want to say that that's in every state,
but I want to encourage you to look further into that
if it's related to you, this concept of over $500,
maybe a criteria in your locale.
Statutes of frauds also generally cover real estate sales.
And if any of you have bought a home,
you certainly have gone through the paperwork
and signed things in triplicate
and know that that there's a large paper requirement there.
Also the concept of a contract that requires more than
one year to fulfill.
So as we go through the process of thinking maple sap,
maple syrup, or anything else in the maple world,
the duration of the contract going over one year
could certainly indicate whether it does need
to be in writing to be enforceable.
Well, the things that I think are worth noting,
the UCC, Universal Commercial Code,
is a great reference.
In general, a lot of definitions and terms
and processes for business relationships,
business transactions that are going
to be referenced quite a bit,
either in a formal legal agreement
or in the background to get there.
Something of not also,
the Perishable Agricultural Commodities Act,
maybe not noteworthy in the sense that I looked it up.
This is a pretty clear legal policy that was instituted
to protect primarily fresh fruit and vegetable
because of its perishable product.
And it does provide certain protections
in the sense that the buyers and the sellers
need to be aware of the perishability
and the fact that certain parties need to do certain things
to make sure that that product can be attended to
without it spoiling or going bad.
I think this is highly related to maple sap,
but this is an agreement that was basically set up
for fresh vegetables and fruit.
And a number of other specialty products have been
identified as covered.
And I found just in general research,
maple sap is not covered.
I don't know if that's something to pursue or not,
but it's certainly a reference point for what could go wrong
and it is worth checking.
So now let's get to the reality for you.
Handshake deals, verbal agreements are commonplace,
and we're not trying to diminish them at all.
Let's take this as an educational venture of what we really
need to discuss between the parties.
And then at that point,
really have the reckoning
in saying, how much risk do you face
and how much can you tolerate?
Everyone on this call probably has a different level
of risk tolerance.
Some from personality and some from just your position
where your business is.
Maybe it's more or less established.
Again, back to credit and finance,
how much risk can you bear without it being too painful?
And this a decision you're all going
to have to make independently
and with your business relationships.
But, that magnitude of risk is something
that is going to be a factor here.
And then back again to that risk sharing and risk shifting,
if you're in a partnership or engaging in one where you feel
like you want to balance it out,
I have mentioned already the possibility there
with contracts.
So let's look at some essential elements of a contract here.
Couple more boilerplates,
and then we're gonna kind of flush through this concept
of a sap sale and purchase agreement
and see if we've hit some of the considerations.
So five essential elements of a contract.
Number one, all parties have the mental capacity
to enter into the contract.
I'm sure that could be disputed
and I'm sure it will be in the future,
but the general essential element is there that we want
to know who we're dealing with
and know that everyone's of sound mind to enter into it.
Number two, all parties have an idea of the nature
or purpose of the contract.
This is pretty basic from what I read,
but if you're talking about selling sap,
you need to specify, we're talking about selling sap.
We're not talking about selling syrup in a barrel.
And so being specific so that both parties are firmly
understanding what it is we're talking about here.
And three more here.
Number three, so an offer to enter a contract must exist,
gotta be clearly offered.
And then number four, there has to be a clear acceptance
of an offer.
And from what I understand a clear acceptance
does not mean there needs to be the absence of a deferral.
There needs to be a clear acceptance of the contract.
And then number five, the contract,
as we'll see in a little bit,
we'll certainly have what they call consideration.
A promise to do something
and/or the promise to exchange something
to be specified in the relationship.
So boilerplate essentials to entering into a contract.
Next, I'm going to look at four slightly different forms
of contracts, very general, very satellite view here.
Really, I think to provide an understanding
that these can be done a couple of different ways,
and the ways that they're done
do have some different implications.
In a few minutes,
we'll dive into the concept
of a purchase and sales agreement,
and we'll look at different features and elements
that we've decided so far,
we think here at UVM are relevant.
So I'm going to hold that one,
but just know that this concept
of a purchase and sale agreement,
the idea of two parties saying,
hey, we're going to do business
and here's the specifics of that business.
We'll look at that in a minute.
The second example here is a production contract.
This is something that we probably,
for better or worse are familiar
with hearing about poultry contracts let's say.
There is the potential to develop a binding contract,
a binding agreement between two parties.
And in the essence of a production contract,
it's really notable
that the producer may actually have no legal title
to their crop.
The agreement needs to be established in advance
of the production process.
But once that agreement is set in this form of contract,
the crop is actually considered bailment.
I don't don't know what that mean,
but I would say it's more of like the crop is in custody,
but it's not so much owned by the producer
because the contract has already established
that the ownership really goes to the end buyer
or the processor.
I think this is actually quite common with grain elevators
or situations where a commodity like a cereal,
grain or corn is shipped over and delivered to a location.
It's held there, but it's not actually owned by the person
that has the drying facility or the silo.
It's still owned by the farmer.
It's just transitioning through.
So we've got a purchase and sale agreement separate
from a production contract.
A couple other here that may be on the fringes,
but we're noticing or noting,
the concept of an independent contractor.
Well, I think we all hire independent contractors,
whether they're formally,
formally set up in paperwork or not could, could depend,
but tubing installation is something we know is occurring
quite readily around our industry.
And there's other contract services that anyone might need
for their business that's not specific to the syrup itself.
I think a current or a specific point here
for an independent contractor
is this is where you can get into an agreement
where the agreement may actually require performance
of a special function
or particular production method per se,
could be prescribed
in an independent contractor relationship.
Looking at something a little different here,
a personal service contract,
I guess another flavor here for a relationship.
And this is one that really focuses on the service.
So an example that I think is possible here,
looking less at the product output.
So let's say less about a purchase and sale agreement
that's specific to the volume of sap coming
off a sugar bush,
and going to somebody else's tank.
This could be a situation where perhaps a landowner
has a sugar bush,
the relationship isn't really set up
on the provision of sap.
It may be the provision of maintaining the woods
or running the system, borderline here,
whether you've got an employee relationship or not.
But I think there are definitely certain service contracts
that could relate to forest management and stewardship
that's not necessarily related to the transaction
of say sap or syrup.
So there's four very basic agreement formats, just, I think,
to make people aware that your relationship may be different
in different type of agreement may need to be set up.
So now I think for the next few minutes here,
we're gonna look at really the draft
of the maple sap purchase and sales agreement.
I'm going to lay out some of the different features that,
for myself and conversations with a few sugar makers
and some business specialists, what we think is relevant.
And then at that point, I think maybe in 10 or 15 minutes,
open it up for some real Q and A,
and some additions for sure.
I also want to thank some of our colleagues
down in West Virginia.
A couple years ago, I actually got a basic template
in West Virginia.
They were already starting
to look at binding contract templates
for maple and other tree syrups.
And so we took some of the information from them,
and I think we're going to look to add to it
with our template coming out of UVM.
But thanks to those down in West Virginia that shared some
of that foundational work.
So what are we looking for?
General goals here.
Let's start general.
Well, if I'm a sap seller, I'm looking for timely payment,
whichever time we agree to, but timely payment.
And if I'm a sap buyer, what am I looking for?
I'm going to be looking for performance expectations
to be met.
In a minute here, we'll dive more
into those performance expectations.
But in general, people want to get
what they're supposed to get out of the agreement
when they want it.
I think I've got seven or eight key features here
of a sap purchase and sale agreement.
I'll work through them in chunks,
and we'll go into specific.
So we're going to want to make sure the agreement identifies
the parties, certainly always want legal entity names.
We're going to need to define the product.
Remember the essentials of the contract here,
make it clear if we're talking about sap,
we're talking about sap.
I'll go through quickly.
And then we'll dive in more specifically.
Contract type, we've got a couple of different options
for contract types that are worth considering.
Contract duration, terms of renewal
and then the performance criteria.
This is going to get into the specific
of what that product needs to look like,
or what shape it needs to be in.
What else do we want to see in this agreement?
We want to have some, some specifics on price,
either clearly stated or clear reference to where it would
be found and where it might change, or when it might change.
Next, we're going to want
to have different data requirements.
If there's an inspection or receiving process
that needs to be built into the agreement.
And then finally, terms of payment.
And then this big bucket of legal details.
Now, tonight, I'll be clear.
I'm not an attorney,
so I really can't get into the specifics
of all the legal details.
We could talk about them,
but these are certainly essential.
So tonight what I'd like to do is go through
in a little more specificity these five here,
and then let's call out some questions we have
or things we're not sure of.
And we'll certainly attend to those in templates.
But, let's look at the ones we can talk most about
and see where we go.
So let's define the product first.
Are we talking raw sap?
Are we talking concentrate?
These are things that are pretty basic,
but need to be spelled out.
I think the concept of delivery
from what I understand would be very well worth
getting right on the front in the product exchange,
but this could come up again in the details
of the performance expectation.
So, define the product is generally from what I've seen,
and I've read a lot of winery and grape contracts
in the past couple of weeks.
This section does not need to be very long,
just needs to be really clear.
What are we dealing with?
What's the business at hand?
The contract type, this is something to think about here.
And I think this goes to the nature
of who you are and kind of what the parties
each need and what their options are.
There is an option, and this is again common
in the winery and grape industry
to have a coverage sales agreement for the whole acres,
and in this case the whole number of taps.
In the winery world,
it could say here's a particular acreage
or a particular parcel, a particular subset of vines,
but the assumption is the full production from the producer
would be transferred to the buyer.
That's one way the agreement could be established.
Another way an agreement could be established
would be based on volume.
And I think what this lends itself to
is the conversation or the potential
that the processor could have capacity limitations
at any point in the process.
So it is common.
And we've seen this in other industries
for a volume-based contract to stipulate
that there's a certain number of,
in this case, we're saying sap, a certain number of gallons.
It could be delivered potentially in a day,
potentially in a week.
There's a potential cap on the amount of gallons
that could be delivered over the season.
And what I want to note here also is just kind
of the boundaries on the season.
Because we've got, I know sap producers in different regions
have different capacity to produce sap.
We've also got the processor consideration on
where they're at in their season.
And at what point they decide that they're no longer
in production of finished maple syrup.
So those are two good considerations there.
And I think you can think about them in different ways
if you're a buyer or your seller,
if you want to move the whole production,
or if there needs to be some,
some more specificity to make sure that that flow of goods
is going to be timed right,
especially with production capacity in a sugar house.
So some performance criteria here.
I'm going to give you a few here that are subjective,
possibly qualitative.
And then we'll look at some
that are maybe a little bit more quantitative,
which I think is really going to be a good source
of conversation in a moment.
So freshness.
I think we all know that Naples sap
needs to be the most freshness and the utmost quality.
How that's evaluated and measured
would need to be stipulated,
would need to be clear between parties.
Odors, cloudiness, sliminess, funkiness, buddiness,
I think we've heard these terms thrown around.
These are all things that need to be factored in.
Contamination or the absence of contamination,
really important for us to think about
how would we identify that
and how would both parties agree.
In a minute here, we'll get to the record section
and the data preparation.
But freshness has gotta be super, super high on the list.
And both parties need to understand what that means.
And I think have a collective understanding
of when it's not going to be met.
Here's some measureables.
I think we're clear that this is already happening.
This is data collection that's happening
between sap buyers and sellers.
Possible temperature upon delivery could be relevant,
especially if we're talking about concentrate.
We know that this becomes more perishable
as we start to concentrate into higher sugars.
And especially if we start to transport things,
as we know from the milk industry and cheese makers,
the idea of agitation, certainly as a factor with milk,
I'm not so sure if it's going to be a factor with sap,
but temperature is on people's mind.
Sugar content and Brix level is definitely a measurable
that's going to factor into possibly performance criteria
or possibly when the buyer is no longer interested.
If the saps sugar content drops below a certain level.
And of course the volume of delivery.
So how many gallons are delivered
is going to be something that's easily measurable
and something that's going to easily be tracked.
So the next performance criteria potentially,
depending on what the relationship is for sap is,
who's going to manage delivery.
Is this a situation where the buyer has the capacity
and has the trucking to go around and collect sap,
certainly could impact prices,
or is it a situation where the seller is responsible
to get that sap delivered?
And I'm sure you've all heard it.
And I've heard everything from delivering on,
behind tractors, delivering informal trucks
and some adjacent land owners
that have the capacity to pump and pump their sap
over the hill or down the terrain to the buyer.
So there's all going to be options here,
and I think it could be specified
and will certainly have an impact on possibly the pricing
and how that part of the relationship goes.
I think a couple of notables here for delivery,
pumping and tanks.
I think you can all imagine the different bottlenecks,
the potential of equipment working or not working.
The potential of tank storage being there
or being over full.
And so these are factors that I'd encourage to be included.
I've only got a few more slides here.
So I just want to remind you if you've got questions,
feel free to type them into the chat.
We'll go through them in a few minutes.
And then we'll also probably be able to open up the mics
for Q and A in a couple more slides here.
So performance criteria delivery.
Okay, data and inspection.
So another basic to contracts and basic
to business to business relationship
is establishing a receiving procedure,
obviously establishing the paperwork
that would be transferred upon receipt.
So who would receive it
and when it's receiving time appropriate, inappropriate?
What's the inspection process?
And then definitely in any formal contract,
there will be some clarity on how the rejection
would be dealt out
and what the timing of the rejection would be
if the product, again, didn't meet the performance criteria.
So these are really now we get to the point of
what if this situation is not working.
The baseline contract hopefully has spelled out these steps,
so someone can understand, oh, if it's not,
it's not going to meet the test.
I'm going to know at this point
versus maybe weeks down the road
and managing that part of the unfortunate situation.
Some basic data and records, right?
Proof of delivery, date and time, we mentioned Brix.
We mentioned volume,
just a question volume in the tank, volume via the meter.
Is there any major loss via the pump process
and the tubing process?
I don't know if it's consequential or not,
but something to think about.
And again, that qualitative assessment,
I'm not exactly sure how that's going to be done
as a non-maple specialist, just as a business person.
So I'd love to get people's feedback when we talk about
what are the ways
that we can collectively understand the vocabulary
for that qualitative assessment of freshness
or the nature of the sap.
So moving on from data and inspection,
just now pricing and payment.
Again, you could stipulate a price in a binding contract.
You can also stipulate a reference point, which is fair.
So on the right-hand side,
you can see an example of a card that we produce at UVM here
with a basic sap price value based on sugar content
and based on market price.
So I think this is something that can be discussed.
What is the market price reference,
couple of different options out there.
If you're not familiar,
Cornell has been publishing sap price tables for years.
UVM, we've now got a couple posted
or one posted at maplemanager.org.
I've also seen a few others online.
So there are reference points
that do the quantitative math between the market price,
the sweetness of the sap
and then how much value and syrup there could be there.
Generally, what we've seen in a sap sales agreement
is regional in nature.
Anywhere from 50% to 70% can go to the sap seller.
And that's 50% of the final syrup value
going through those calculations.
And then deciding the percentage that goes
to the sap seller.
In more competitive maple regions like Northern Vermont,
we certainly see 65%.
Sometimes you hear 70% goes to the seller.
And I think that's a function
of very specialized processing facilities
where they really have their production costs
and their variable costs are lower.
And the input is going to be where they put their money
in other regions.
Definitely we see, and we've seen this from survey work,
more 50% sap share to the seller.
Another factor here is grade and price.
Remember the sap seller,
once that sap comes out, it goes out of your hands.
And it goes into the hands of the processor.
Now you're actually out of control of what the final grade
of the syrup will be.
In some cases, the grade will dictate the price.
And that is a feature that I think is relevant
in some agreements.
If there's an ability to know in advance that the processor
is going to be getting paid a different price
for different grades of syrup
that may need to be featured into the,
or factored into the pricing.
And I understand that could be tough to predict
given the nuances of syrup processing
and also the factor of sap quality.
But again, let's try to figure this out
and discuss it with your parties ahead of time.
So if a disagreement were to occur,
we at least have some familiarity with what the thinking is.
Okay, finally here for our specifics,
without getting into the real legalese here.
Timing, what are you looking for?
Are you looking for cash on delivery?
Can you realistically expect cash on delivery?
If you're a sap seller,
you're looking for payment
at the end of the production season.
And let's face it, if you're a processor,
are you looking to pay someone right when you've collected
all the sap and made the syrup,
or are you hoping to maybe have some leeway there
and pay people for sap
at some point later when that inventory is getting sold?
These are things that are definitely worth considering,
and whether it's sap or finished syrup.
I think we need to understand the inventory lag time
with the processor and the seller is potentially significant
and both parties are going to want
to work that out well in advance
and hopefully find some agreement.
So I honestly could not get into the specifics tonight
on some of those legal details of the breaches.
And I will just say that
when we get our templates more formalized,
we're going to have a lot more information there.
It doesn't mean we can't talk about it,
but I'm going to stop there with some of the things
that were at least within my wheelhouse.
And at this point,
really like to open it up for conversation.
We can in a second unlock you so you can ask some questions
out loud, and if you've got anything you'd prefer to type,
definitely type into the chat box,
I'm going to leave it to you.
I think you can all think of a few things
that could go wrong that I didn't mention.
So, if you've got some ideas of what could go wrong
or what things you may want to protect yourself from,
I'll wait and please chime in.
- [Mark] Everyone should be able to unmute at this point.
- Great, thanks Mark.
So if you want to unmute yourself, you can do it.
You just manually go up to the top ribbon
and hoping to see some questions.
And also just some conversation here.
Cause it looks like almost half of you
would like to get into some legal agreements.
- [Mark] While people are thinking about their questions,
Mark, I'll just jump in.
It was great, I really,
so things you just don't think about, you know,
especially with something as traditional as maple,
where there's a long, long history of handshake deals,
you know, one thing that I think the maple industry
is a little behind in is the instrumentation for measuring,
especially when you talk about like a sap purchase.
There is not a established requirement
for using a certified meter for measuring gallons of sap.
A lot of people will use something as inaccurate
as how full is their 500 gallon poly tank
that, you know, is a nominally 500 gallon tank.
Some people will just eyeball it.
Some people will use a flow meter,
but they can have a pretty high error rate.
So I think in a sap only contract,
it might be good to explicitly state.
How are you going to define how many gallons
are changing hands?
And the same goes for sap concentration, you know.
In Vermont, sap hydrometers
are actually individually numbered.
They are traceable to a standard
that assuming it went through the state of Vermont lab,
it's not true for hydro, for syrup hydrometer.
So there's definitely some issues there with defining
what the product being exchanged is.
And it would probably be good have that in, you know,
in a contract.
Alright, anyone else have questions or comments?
Oh, I see.
I see in the chat.
Yeah, April we've actually updated the sugar bush lease.
It's on maplemanager.org.
I can actually put a link in the chat,
well I did earlier for maple manager.
But if you go there the first time,
you might have to go through a very minor survey.
It's like a very, take you a minute to do,
and then you'll be able to have access to that new updated
sugar bush lease as well as the guide
to kind of explain the parts.
- [April] Perfect, I think that if I can make a comment.
I would really like to comment on something
that has impacted us in a big way.
And it's something that you don't ever expect.
It's, without having these legal agreements in place,
if there is a death in the family,
it's ridiculously hard to fix things.
So the more agreements that there are,
that are in place for any landowner,
whether you're young or old,
I can only encourage people to do it
so that they don't end up in court
for as long as we've been there.
- Yeah, April, I appreciate you making that comment
and my heart goes out to you.
Cause it sounds like it's from personal experience.
And I think that is the difficult reality
of obviously doing a program like this
and thinking about this is that we certainly hope
that things go well and that no one has any problems.
And eight out of ten times in relationships
things can go well, but it's those two out of ten,
when something goes wrong and often very unexpected,
it's very helpful and often necessary to have something
to refer to and say, this is how we deal with it.
And I don't actually, going back to the lease,
you mentioned the old version from UVM extension
and Larry, Maya.
I have to re-look at that to see what we added,
but I could tell you,
I'm pretty sure we added quite a bit to the lease template.
And we also annotated some different features
and the, you know, a common feature in a lease agreement
would be the assignment to errors.
And if you know, boilerplate legal document would spell out
and should be discussed, you know,
how the relationship transfers
if a certain member passes away, if there's a divorce,
if there's a disability.
Yeah, tough situation, tough enough already
to be in those situations
and even more difficult to have court dealings
to resolve them.
- [April] I would not encourage anybody
to alter these boilerplates
and consider them gospel until they had been gone over
by an attorney.
Because there's too many things that people can change.
One single word,
it doesn't seem that important can change everything.
- Yeah agreed, agreed.
Yep, good reminder and we try to indicate
that these are educational resources.
And like we said,
we're getting you to think about these things,
but you've got everyone on this call and when it pulls,
these templates has their own legwork to do,
to not just get them completed,
but to understand really what it means.
Thanks April.
Mark, you mentioned instrumentation which was great.
I mean, who else has situations feel free,
you know, maybe share in the chat box,
something that hasn't happened to you
or something that you could consider going wrong
for somebody else.
We'd certainly appreciate it
because we're going to be working with attorneys
to draft new templates.
And as always the templates we've seen
from 10 or 15 years ago
just don't feel like they've got enough guts in them.
So we want to step them up
and make sure people can see the different features.
I can fill the air.
Well, you know, certainly chime in if someone wants
to say anything,
but if you're typing one thing,
I'll note from looking at the contract law
and contract guidance,
when you get into the idea of a breach of contract,
I think it's good to recognize that
there really isn't an intention for the contract
to penalize the person that didn't deliver.
The person that left the agreement unfulfilled.
So it's not necessarily to create a consequence
or a penalty, but it's often the essence is
to make the person who was injured whole again.
So if in a case where there's a syrup processor that did not
receive all the sap, they were hoping to get,
we're not going to penalize the sap producer
to show them they did something wrong,
but there is a process ideally to look to see what was
missed by the syrup processor,
by not receiving that input and then putting the magnitude
on that to make them whole again.
So I guess,
just to kind of a way to think about it
as that not to be adversarial or a slap on the wrist,
it's really to make sure that the person that,
again has the risk can find a way
to bring themselves to whole.
- You know, Mark, we focused mostly on,
on talking about sap purchases and April brought up the idea
of a sugar bush lease.
And you did have a point about tubing installers.
You know, there are definitely plenty of stories
of people hiring someone to do an installation
with essentially a, I guess,
of what the tap count is going to be.
And no one's going to go and do a hundred percent survey
of how many tappable trees and then do the installation.
So it's got to be an estimate,
but I could see room in a contract so that, you know,
you're within some reasonable amount of the estimate.
And so it's not way under, way over.
And even which trees are getting taps, being really,
really clear about what that minimum size is.
Not only from a production standpoint,
because it's such a linear relationship between tree size
and yield.
You don't want to pay for 20,000 taps,
but only functionally have 10,000 taps worth
of conductive wood that's being tapped into.
But also just, you know,
if you're in an agreement like current use in Vermont
or some other tax abatement program
or certified organic
where you're legally bound
to a standard of a minimum tapping,
you want to make sure you're not paying for something
that is going to put you at risk
of violating that agreement.
- Yeah, agreed.
And you hit the forestry side.
I was also thinking about just other regulations
and you all probably know your domains,
know well enough to know
if you have water quality situations like we do in Vermont,
potentially wetlands or protected land features
that could be impacted by something
like a tubing installation.
Then we get into the sticky situation of who's liable.
Is the land owner liable
and/or is it the installer that's liable?
Certainly no one wants to go there,
but it's good to lay that type type of worst case scenario
out ahead of time.
- [April] Has there been any change in the new contract
from the old one?
Larry Maya put together to the new one
that you guys are working on that addresses waste
and tubing garbage and that kind of stuff
being left in the woods?
- Yeah, great question.
I don't know if that was covered
in the prior sugar bush lease,
but I do know that we annotated that,
Mark, you can chime in here.
I'm pretty clear that we annotated,
I don't know if we provided boilerplate language,
but we certainly talked a lot about that feature of cleanup
and disposal in our conversations.
Pretty sure it's in there.
Looks like Mark's scanning.
- Yeah, I'm just going to try to look at it.
Off the top of my head, I can't remember,
but I believe there is some sort of performance about
not leaving debris, but I would have to, I'd have to look,
look back and make sure.
- Yeah, that's a great point.
- And April that's a really good point
because by some estimates taking tubing out
and disposing that either in landfill
or if you're lucky enough to be near where tubing
is able to be recycled,
that can cost almost as much as the installation
in the first place.
So, it's not an insignificant cost taking tubing out.
- [April] Even just the drops being left on the ground
and just general trash being left there
by people working in the woods.
And that kind of thing, if you're a landowner,
you know, it's something that should be addressed
in a contract like that,
what the expectation is.
The other major suggestion that I have is it's very helpful
if you do accomplish one of these agreements
and they're signed, to file them with the town clerk,
they should be filed with the town clerk anyway.
But if something bad happens,
having these lease agreements
so that everybody understands what the transition is,
it's extremely important.
- Yeah, that's a good point.
April, I was able to find the language we have.
So it's the one thing I can tell you is it's much longer.
So the new sugar bush lease agreement,
it was 12 pages.
And we do have a segment it's in section five
that says the leasee shall keep the ground free
of scrap tubing, wire or other trash
throughout the lease period.
And she'll set no fires upon the premises.
And there's also a section about complying
with federal, state and local laws,
regulations and ordinances,
which references the use value of pay appraisal program
in Vermont, wetlands rules, that sort of thing.
And you might, if you're in a different state,
you would probably want to swap out your state
or municipal regulations there.
- I got a kind of question in the chat there,
is there a link to the sample contract?
And just to be clear,
we're kind of talking about a couple of different project.
Well, a couple of different legal documents.
We can put the link back in for the sugar bush lease.
And we also have a sugar house.
I believe it's at least I can't remember if it's a license,
we've got two agreements that are already published online
for sugar bush, and sugar house.
And then this, these templates for binding contracts,
which would be a sap purchase and sale agreement
has not been developed yet.
So that will go to maplemanager.org,
probably December, maybe January at the latest.
And then we'll also be looking at a syrup purchase and sale
contract template as well.
So those are not yet posted.
- So I just dropped a link to the sugar bush lease.
That's the,
the one with annotations.
- Have any more questions or comments
before we wrap up tonight?
Okay, well I'm reading that one.
I'll read it out loud.
Good question here.
Are there any state laws that would ensure
that the land owner would not be responsible
for cleaning up the sugar operation
if the operation ceases?
I am not exactly sure what the state laws are, but this is,
well, it just make a segue here.
We've been working on contracts for water quality
in relation to Vermont water quality standards
on livestock farms and hayfields.
And this is something I'd have to look up from our drafts
there, but we did go down this road of liability
and indemnification of who was going to end up,
especially if there's a breach of state law,
who would be responsible.
I could probably,
I might be able to find that link in a second here.
It's not specific to maple.
So I'm going to find that.
Mark, do you have any comments on the cleaning
if there's any state regulations?
I'm going to guess no,
I think it's going to be a unfortunate situation
for the land owner and then potentially a liability
of the property were to transition necessarily.
Not necessarily breaking the law,
but a potential liability on the property value
if there's a whole bunch of garbage there, without a doubt.
- [April] I think that you would be talking
about a civil suit in that event.
If there was stuff left there the only option
would be more likely than not a civil suit
against the renter
for the expenses of getting rid of it.
But you would still have to deal with getting rid of it.
They wouldn't come back and do that.
If you guys want any input on things that could go wrong,
I'm your girl.
- All right awesome.
April, if that's you,
if you could email,
my email is listed all over our literature,
if you could email me,
we'd love to get your input
because we're going to be drafting templates
and going through that, you know,
I like to call it the pre-mortem unfortunately,
you know what could go wrong?
Let's figure it out before it happens
and then factor that in.
- [April] Hey, if I could save somebody else,
boatloads of money, I'm in.
- That's great.
I'm sorry you're in a position to share that much knowledge,
but certainly, well, sir,
we're certainly in a position to help spread the word.
So we--
- [April] It's a learning experience.
And you know, like I said,
it's literally irresponsible for a landowner with a business
like that, especially in the business of maple,
in the business of any agriculture.
It's literally irresponsible not to have some kind of a plan
and to have things put into legal terms.
Because if they're not there,
the aggravation that it causes is it's irreparable damage.
- I'll just chime in here, back to John.
You had a question.
I'm not finding that,
but I do have some documentation on that,
potentially that situation as relates to water quality.
If you want to send me an email, I'd be glad to send you it,
it probably just take me 10 minutes to find that old slide
and old document.
So, I'm just going to put my email
in the chat box and send me a note and I can get back to you
probably before bedtime on that.
Well, folks.
- I think we're yeah, eight o'clock.
- All right. Well,
thanks a lot for thanks a lot for joining us tonight.
Like I said,
we're going to be working on this project
and we will have a sample templates forthcoming later
on this winter, talked a little bit about the sugar bush
and sugar house leases.
Those are available as well.
We are going to have some lawyers working with us.
So there is an Ask the Team function on that website.
If you do have a specific question you didn't want to ask
tonight, it can come into us confidentially through that,
Ask the Team module on the maplemanager.org website.
And if we get any good ones there,
I think we've got some legal services
that we can tap into to at least get a,
try to get you an answer that's better than it depends.
Hopefully we'll get you something a little more specific
than that.
So feel free to use that.
So with that, I hope you all have a good evening.
Check out two more webinars later in October here,
before we wrap up our series.
Thanks a lot for coming.
- Good night everyone.