Beef is raised in three phases before it is processed: calves are raised on pasture and range land, as feeder cattle they feed on pasture, crop residue, and range land, and finally they go to feedlots, where they are fattened for slaughter. Feeder contracts are a type of futures contract based on young cattle that are sent to feedlots in preparation for slaughter. The Chicago Mercantile Exchange first introduced a feeder cattle contract in 1971.
It is important make sure the agreement is clear as to whether a bailment or an actual sale of the animals is intended. In order to constitute a bailment and not a sale, a fattening or raising agreement should provide that the owner agrees to provide the animals involved to the feeder with the owner retaining title to the animals, and the feeder or raiser is to feed or raise them for sale as the owner deems proper. This form is a sample of a sale rather than a bailment.
A Texas Purchase and Maintenance Agreement for Cattle — Feeder Contract is a legally binding document that outlines the terms and conditions of the purchase and maintenance of cattle between a buyer and a seller. This agreement is commonly used in the agricultural industry, specifically for the feeder cattle market in Texas. The primary purpose of this agreement is to provide clarity and protection for both parties involved in the transaction. It covers various aspects related to the purchase and upkeep of feeder cattle, ensuring that all parties understand their responsibilities and obligations. The key components typically included in a Texas Purchase and Maintenance Agreement for Cattle — Feeder Contract are: 1. Parties Involved: The agreement begins by clearly identifying the buyer (purchaser) and the seller (vendor) of the cattle. Their legal names, addresses, and contact information are usually provided. 2. Purchase Details: This section of the contract describes the specific terms of the cattle purchase, including the quantity, breed, age, weight, and gender of the animals being sold. It may also outline any specific quality requirements or certifications desired by the buyer. 3. Purchase Price and Payment Terms: The agreement establishes the agreed-upon purchase price per head or lump sum, as well as any payment terms, such as the payment due date, method of payment, and any applicable deposit requirements. 4. Delivery Terms: This section outlines the agreed-upon delivery date and location of the cattle. It may also detail any transportation arrangements, responsibilities, and costs associated with delivering the cattle to the buyer. 5. Maintenance and Care: The contract specifies the obligations of the seller regarding the maintenance and care of the cattle until the agreed-upon delivery date. This typically includes providing proper nutrition, healthcare, and shelter to ensure the cattle's well-being. 6. Inspection and Warranty: The agreement may include provisions for the buyer to inspect the cattle before accepting delivery. It may also outline any warranties provided by the seller regarding the health, quality, or specific attributes of the cattle. 7. Risk of Loss and Indemnity: This section defines who bears the risk of loss or damage to the cattle during the maintenance period. It may also establish obligations for insurance coverage and indemnification between the buyer and the seller. 8. Default and Termination: The contract should include provisions for default or termination, including any penalties or consequences for non-compliance by either party. It may also outline dispute resolution methods, such as arbitration or mediation. Types of Texas Purchase and Maintenance Agreement for Cattle — Feeder Contracts: 1. Standard Feeder Contract: This is the most common type of agreement used in the feeder cattle market, encompassing the purchase and maintenance terms outlined above. 2. Customized Feeder Contract: Sometimes, buyers and sellers may negotiate specific terms that deviate from the standard contract. These customized agreements may include additional provisions or altered terms to suit the needs of the involved parties. In conclusion, a Texas Purchase and Maintenance Agreement for Cattle — Feeder Contract is a crucial document in the cattle industry, facilitating the purchase and maintenance of feeder cattle. It establishes clear expectations, responsibilities, and protections for both the buyer and seller, ensuring a fair and successful transaction.
