Read the fine print of equipment purchase contracts: lawyer


Although not a common practice for most farmers, a lawyer is urging more farmers to consider consulting their legal advisor prior to purchasing pricey farm equipment.

This advice comes after one Saskatchewan farm lost their legal battle and appeal against an ag dealership. In this specific case, James and Merrylyne Coward claimed the dealership they bought a sprayer from didn’t honour the return policy on a unit the couple claims was “underpowered.” The disagreement left the farm out of pocket by over $140,000.

This dispute dates back to May 2010, when the farm traded in a sprayer worth around $172,000 and were left owing around $156,000 on a new unit. When the Cowards had the sprayer delivered, James Coward felt as though the equipment was “underpowered,” and says he told the Kramer sales representative about it the day after it arrived in their yard.

A service test was conducted on the equipment a few days after, and a comparable sprayer was brought out to make sure the Cowards’ sprayer was up-to-speed. However, the Cowards still believed the piece of equipment sold to them was not up-to-par.

A representative from the manufacturer — AGCO — came out in June of that year to conduct further tests, in which the equipment company concluded the sprayer worked as designed.

The Cowards continued to not use the sprayer after these conclusions, and it was then they consulted their lawyer, who sent a letter to Kramer Ltd. rejecting the contract and asking for the Cowards’ money back.

It was already too late, according to Brian Kaliel, senior council for Miller Thomson, a law firm based in Edmonton, AB. He says the Cowards voided their chance of using provisions within the Saskatchewan Agricultural Implements Act (SAIA) because they consulted with their lawyer only after they had contacted the dealership to inquire about a refund.

Kaliel points out the Act, which dates back to 1915, has two parts in which this legal decision is focused. One being whether an alleged breach of the statutory warranty that new farm equipment must “perform well the work for which it was intended” should be assessed on a subjective or objective standard.

The other is the provisions of the Act which give farmers the right to declare void any contract which contains “illegal” provisions that contravene the Act, such as blank lines left unfilled in the contract document, for example. If the Cowards would have noted this part of the act to the dealership before anything else, chances are they would have been able to get their money back, Kaliel says. But as they went to the dealership first, without using the SAIA in their favour, that’s when the Act worked against the Cowards.

“Because they did that, the court held that it would be inconsistent for them (the Cowards) to, on one hand, say that the act applied and take advantage of a section of the Act, and then on the other hand, say ‘well, no, this contract is void,'” Kaliel says.

He adds it’s crucial to meticulously look over every contract you sign, whether it be for $30 or $300,000.

“The sales contract that they used is a form that’s mandated by the SAIA; there’s actually a form of contract attached to the act, and it had a number of blanks in it,” Kaliel says. “What they neglected to fill in — both the dealer and the Cowards’ — was the horsepower of the sprayer.”

He anotes as other provinces have similar acts in place, so it’s best to read them prior to making your purchase.

The Cowards’ ended up selling the sprayer, reporting a loss of more than $140,000, as the judge ruled in favour of the dealership and manufacturer in the case, which Kaliel says is precedent-setting in agricultural law.

Listen to Brian Kaliel’s analysis of the sprayer case, and what to look for when signing on the dotted line:

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