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NFU expert insight: What makes a good or bad dairy contract?

The NFU recently submitted its response to Defra’s consultation on the regulation of dairy contracts and is now waiting for the outcome of the consultation. In the meantime, as we continue to talk to members about their views on contracts, the NFU's chief legal adviser Nina Winter provides an insight gained over years reviewing dairy contracts.

She writes:

A question I’m asked a lot by farmers is: 'What makes a dairy contract a good contract, or a bad contract?' I’ve reviewed a lot of dairy contracts over the years and in my experience most dairy contracts are a game of two halves; most contain some good terms, and most contain some bad terms. Overall, some are certainly worse than others, but generally speaking I’m yet to find a contract that doesn’t have a bad term lurking in it somewhere. With a bit of luck, the effect of that bad term will never be felt by the farmer, but it’s always better to make sure that your contract is as good as it can be, should the worst happen.

In this article I’m going to flag some excellent dairy contract terms that I’ve seen. I’ll cover plenty of bad terms that I’ve seen. And then I’ll tell you about the downright ugly terms that sadly can still be found in some contracts today. I’ll explain what the clause says, and why (in my view) it’s a good or bad term.

I’m going to do this anonymously, to save the blushes of the people who drafted these contracts (some of whom certainly should be blushing). But rest assured that whoever you supply your milk to, you’re guaranteed to find some of these gems buried away in the small print.

It's also worth saying that my views on what’s good and bad are based purely on the objective legal effect of the term. Whether a term is good or bad for your individual business may well be a different question.

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