INSIGHT - Edition Ten - Winter 2021 online - Flipbook - Page 16
TIME TO PHASE OUT
GENTLEMEN’S AGREEMENTS
Lizzie Hall looks into the demise of the Gentlemen’s
Agreement and the necessity for comprehensive
contracts in today’s changing agricultural landscape.
The term “gentlemen’s agreement” gets used reasonably regularly in the rural sector compared to other industries. A
“gentlemen’s agreement” can be defined as an agreement or understanding, not written down, which is based upon the trust
of all parties. Should the parties disagree, a “gentlemen’s agreement” may hold very little value in resolving disputes, parties
may disagree with the practicalities of what was originally verbally agreed, or a landowner may have inadvertently given a
stronger agreement to a tenant than anticipated.
Given the period of change that the agricultural sector
is currently facing, it is more important than ever for a
landowner or an occupier of land to record the terms of
any agreement in a written format. Such agreements should
look to comprehensively cover the terms agreed by the
parties to ensure there is a formal contract in place to assist
with amicably resolving any future disagreement.
We regularly encounter agreements in the agricultural
sector including, but not limited to, Farm Business Tenancies
(FBTs), Grazing, Cropping or other Licences, Contract
Farming Agreements, Residential Tenancies or Commercial
Business Tenancies. All of these agreements are governed
by different forms of statute, with differing terms being of
importance, whether that is compliance checks relevant to
residential tenancies or security of tenure which can be of
particular importance when considering farm or commercial
tenancies. What is key across all agreements is that they
should be properly drafted by a professional, in writing and
signed by all parties, ideally before occupation starts. For
both parties this provides clarity on the terms of occupation,
responsibilities for looking after property, and clarity on the
level of security of tenure provided by the agreement.
The format of written agreements will alter depending on
the type of property and situation at hand. If you are looking
to document a previously agreed “gentlemen’s agreement”
it is also key to consider the current situation and whether
any security may already have been provided to a tenant,
albeit that nothing has been documented in writing.
By way of example, the two main forms of agreement for
the letting of farms and land are FBTs and Grazing Licences.
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An FBT grants exclusive possession to the tenant to use the
land or farm for primarily or wholly agricultural purposes
for an agreed period. The tenant will be eligible to apply
for Basic Payment Scheme (BPS) and is responsible for the
management of the holding.
A Grazing Licence, however, is often created for short term
occupation and importantly, the grazier does not have
exclusive possession of the land. Grazing Licences therefore
provide the Licensor with more control, for example the
ability to claim grant and subsidies whilst also being
responsible for other management tasks such as fencing
and applying fertiliser.
The two types of agreements also have different capital
taxation benefits. It is therefore important to take
advice to ensure the right agreement is chosen for your
situation. youngsRPS can give tailored advice on what
types of agreement are suitable for your scenario and
help to negotiate and prepare comprehensive agreement
documents to suitably protect you and your asset.
Lizzie joined youngsRPS in 2017 whilst studying
a master’s degree at HarperAdams University,
graduating in 2019.Lizzie works from our
Sedgefield and Northallerton offices helping
clients with a range of professional matters
including compensation,grant/subsidy,landlord
and tenant matters,purchase and sale and
valuation advice.
Contact:elizabeth.hall@youngsrps.com