Agents Eye Column – November

19th November 2012

Be Careful What You Sign It May Not Be What You Think It Is – Handshake Deals Are Long Gone

Farmers in particular are very trusting people and as a result are great people to work with, but there are plenty of examples where this trust is often abused which inevitable leads to conflict. I know many people who stand by a handshake and expect the other person to be honourable, but unfortunately, the world we live in at present has forgotten that element of trust and its often not until this has been broken that people realise that in today’s market, evidence is key.

A recent job has reminded my how important it is to fully comprehend the nature of a written document and the implications of signing. We have particularly seen this in the renewables market which has opened up the doors for development companies to spring into life and get land tied up under option agreements. Whilst they all pretend to be the best, most credible and backed by some water tight funder, their models purely work on generating income from reaching certain milestones and they, in fact, have very little loyalty or respect for the landowner.

One such company, who has been vocal in the agricultural press hard over the last 6 months, has been getting landowners to sign up exclusivity agreements/heads of terms which are, in their minds, legally binding. This is extremely dangerous and the case in mind is involving lawyers and claims of losses through breach of contract. I cannot stress enough, how important it is that you never sign any documentation without having professional advice from people who are experience in such matters. Advice that if it is wrong, is backed up by professional indemnity. Most readers would be alarmed at the company who I refer to above and does not paint a very good picture for the renewables market. But it was always going to be inevitable that developers seek to exploit this opportunity at the expense of the landowners. I would only say that if you were interested in such a scheme but were unable to fund the development, there are plenty of other options/funders out there rather than accepting the terms of the suit from London.

Litigation through the courts is not a pleasant procedure and you’ll find that neither party is ever seen as a “winner”; in fact and its sad to say, the only benefactors are the professional’s involved. It’s so important that you understand such costs and risks before embarking on such a route and perhaps it’s better to try and seek mediation beforehand. We are advocates of such methods, and 9 out of 10 times, a solution is reached without recourse to the courts. This applies to any dispute, e.g. divorce, partnership dissolution, negligence advice etc and what is vital is to fully understand the legal background and advice, facts of the case and often values of the assets. In the agricultural world, it is often the land and property assets which are the underlying cause of the dispute and understanding the true value is critical in helping solve the problems.