Legal Question in Construction Law in California

we are paying our farm labor up front management fees for next year I need a form that states we are paying up front for services and need some form of a guarantee


Asked on 12/03/09, 5:33 pm

1 Answer from Attorneys

Bryan Whipple Bryan R. R. Whipple, Attorney at Law

I think your question should be asked under business law; there are more LawGuru attorneys active in that area, and the subject matter seems to be more general business than construction. However, let me take a shot at an answer.

First, I think paying for farm management in advance is pretty risky, especially when your needs may be dependent upon weather, yields and markets. I have a small vineyard partly cared for by a management company I've used for years, and the possibility of paying in advance has never come up - nor would I want to try to negotiate such a deal. However, people's situations do differ. Have you asked your farm bureau or other trade group for any suggestions or form contracts they may have or know about?

There are two somewhat-overlapping kinds of guarantees you might want. One would be a guarantee of competent performance, and the other a financial guarantee in case of non-performance. A bond from a bonding company might handle the performance side of the problem. If the management company is large and reputable, it may be able to provide you with a performance bond.

On the financial side, a sufficient guarantee may end up involving a security agreement and collateral, and filing a UCC-1 if the collateral is personal property (such as the management company's receivables, machinery, etc.). There are certainly model security agreements in legal forms manuals, but these are designed as guides for lawyers in "drafting" agreements for clients, not something where the client can make a copy of a form and fill in the blanks.

Protecting yourself adequately by having the manager sign forms probably isn't going to be very safe, because without a third-party surety like a bonding company or security in the form of valuable collateral all you really have is the debtor's promises. Trust and understanding may work, but it's uncomfortable at best, and could be a disaster. I wouldn't do it without a third-party guarantee and/or an agreement backed by collateral and with conditions amounting to a default fully spelled out. Sounds like lawyer work to me.

Read more
Answered on 12/08/09, 7:13 pm


Related Questions & Answers

More Construction Law questions and answers in California