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AIC and NFU underline importance of understanding contract obligations

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With the current marketing year experiencing price movements of the magnitude seen during 2007/8, AIC and the NFU are keen to stress the importance of understanding all contractual obligations, whether you are a buyer or seller.

Starting with movement of high priced contracts from 2008 against a depressed market in early 2010, the 2010 calendar year has seen significant variation between the top and bottom throwing up a range of challenges.

The latest of these has been the impact of snow and ice on collection and delivery arrangements and both AIC and the NFU are taking this opportunity to remind all contracting parties of their obligations.

“Over the past few years, both organisations have worked hard to ensure all parties have a better understanding of their obligations” said Paul Rooke, AICs Head of Policy. That work has shown dividends in reducing the number of people who believe they can gain financial benefit by either walking away from or seeking to frustrate a contract.

The impact of recent snow and ice has meant that force majeure may apply in some parts of the country. This means contract life, including the collection period, is extended due to events beyond the control of either contracted party.

Market volatility over the past three years has shown that prices can fall just as quickly as they rise and buyers can be as reluctant to move grain as sellers. “The market at 80 per tonne looks very different from that at 180”, comments Guy Gagen, Chief Arable Adviser at the NFU. “We look for everyone, buyer and seller alike, to honour their contractual commitments.

While disputes will occur from time to time they are both time consuming and costly, whatever the outcome. Both AIC and the NFU are founding supporters of the Cereals Sellers Checklist and urge its use from the outset. This will minimise the risk of later errors or misunderstandings and, as part of best practice in marketing, the right grain to the right market for the right price.

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