Understanding the Sample Timber Sale Contract, page 2
Purchasers may not agree to provide a performance
bond unless it is to be held by a consulting forester or
an objective third party such as an escrow agent. The
Seller's remedies in the event of a breach are not just
limited to routine contract damages. Other penalties
or remedies may be pursued if the Seller so chooses.
Contract breach: A very serious decision Deciding
that the Purchaser has breached a timber sale
contract
should not be made lightly or over trivial matters.
Contract breach is a very serious step
that can have ramifications for you and the Purchaser
well beyond this one event. Reputation is critical to a
timber harvester’s livelihood and to your ability
to
sell
or resell your timber.
You may be sued: It is that important. Breach should
truly be the final straw. Intermediate steps might
include visiting with the Purchaser to hash out
differences, having a third party intervene, or
shutting the sale down temporarily.
12-14. Products to be removed
Specifications for how trees are marked or designated
for harvesting are explained (for example, "trees
marked with orange paint," or "all trees within a red
marked boundary"). Be certain that your property
boundaries are well marked and/or designated, and
understood by the Purchaser. If the boundary has not
been formally surveyed, you should meet with the
adjoining landowners to agree on the location of the
property boundary.
The Seller retains sole control over the timber and
other wood products (e.g., woody biomass) until
payment is made. Timber cannot be removed from
the property until paid for or payment has been
arranged.
15-21. Sale type, scaling, hauling, and payments
There are many ways to sell timber. Each affects at
what point ownership of cut products moves from
the Seller to the Purchaser and who reaps the benefit
of product sort and grade. This section defines under
what conditions cut products may be removed from
the property, how and by whom the cut products are
to be measured, and when the Seller receives
payment.
Scaling procedures include on-site and mill scales.
The Seller should be aware that while some mills
are willing to send mill slips to the Seller, others are
not.
Prior to signing the contract, seek the advice of a tax
specialist to determine whether income may
be
treated
as a capital gain or regular income. Spreading
the payment over two years may minimize your tax
liability in any single year.
The Timber Products Table (#17) summarizes the
type and volume of timber expected from the harvest
and the price the Purchaser agrees to pay by
unit.
This
information is important in all sales, even lump
sum sales where the price per unit information can be
used for damages or contract adjustments, if
necessary.
In some cases, the term, mixed hardwoods, is used to
describe products to be removed. Mixed hardwoods
are small quantities of hardwood tree species of low
relative value or not in sufficient quantity to be
marketed in separate species categories. High-value
species or products should be identified separately,
even if the volume is small. In general, the use of
mixed hardwoods should be restricted to pulp and/or
woody biomass.
In some cases (e.g., woody biomass), wood fiber may
be sold by weight or by cord. These situations may
require conversions between volume and weight
measures. Specifying the conversion factors in the
contract is recommended.
22-34. Utilization and operations
Detail any timber and site protection measures here.
Be specific about erosion control, weather,
disease
and
insect prevention, timing, equipment use (such as
width or size limitations, use of a forwarder
rather
than
a skidder, horses, etc.), operations during
hunting seasons or other constraints you or your
foresters consider necessary.
What is reasonable?
Throughout the Sample Timber Sale Contract there are
references to actions being “reasonable.” In legal terms,
reasonable means fair, proper, just, moderate, and suitable
under the circumstances. The basic question to ask is: Would
an outside observer familiar with harvest practices feel the
action was adequate and satisfactory?
If you’ve never harvested timber before or visited a logging
site, it is important that you learn about and understand
normal logging practices and their impact. Either
visit
logging
sites or hire a consultant forester to help you
determine if your expectations of post-harvest conditions are
“reasonable.”