Contract
Performance Protection
A reputable logging contractor has a business incentive to satisfy their
customers, so they are motivated to fulfill your interests as a landowner
in a logging contract. However, a logging contractor is also motivated
by interests that might compete with your interests, such as maximum efficiency
of the logging operation as well as a desire to keep a constant flow of
work. Therefore, any timber harvest operation should include a contract
with well-defined specifications of expected performance as well as solid
mechanisms for enforcing those expectations.
If
your harvesting experience happens to go awry, contract specifications
will become meaningless if you don’t have tools present in the contract
to ensure your ability to enforce protection of your interests. The most
common tool for enforcing contract specifications is the requirement of
a performance bond prior to harvesting. Performance bonds are usually
calculated as a percentage of the estimated value of the stumpage being
sold, but a landowner should ensure that any performance bond collected
is sufficient to protect their interests. Most important, a landowner
should never allow a problematic harvest to proceed beyond the point where
the performance bond in hand cannot cover any exposure to risk. A solid
harvesting contract will also outline the details for default and termination
of a contract and the ultimate fate of the performance bond under a defaulted
contract as well as details for the collection of any fines imposed for
failure of a contractor to comply with contract specifications. In order
to maintain a legally binding contract under all circumstances, foreseen
and unforeseen, it is also critical to outline within the original contract
specifications how a contract can be amended if necessary.
If there is any doubt about the importance of a strong contract and performance bond, just ask Tom and Mary DeWitt. In 1992, the DeWitts needed some timber salvaged that had blown down in a heavy windstorm. The contractor inappropriately operated heavy equipment on some wet soils, which caused some excessive rutting. However, the contractor finished up quickly and left. The DeWitts contend that without a strong contract and cash performance bond they may not have been successful at “yanking” that contractor back onto their property to repair the damage and restore the site.