Ag Law News

Drafting Embryo Transfer Contracts for Livestock Producers

By Cari Rincker, Esq.

The livestock industry is notoriously trustworthy, oftentimes doing business with a handshake. All parties involved with embryo transfers should consider memorializing the terms of the agreement in writing to clearly define the terms of the agreement and obligations of both parties. Below are some suggested issues that should be included in contracts dealing with embryo transfers to better assist agriculture attorneys.

Recipient Agreement. Livestock producers who are selling embryo transfer recipient should make sure that the following terms are included in the written contract: (1) sale/rental price of recipient; (2) payment terms including penalties for late payments; (3) instructions for receipt of embryos; (4) embryo transfer fees; 
(5) dates/procedures/costs associated with pregnancy checks (e.g., palpation, ultrasound); (6) duration that recipient will stay under the care of owner and any daily boarding/maintenance fees (e.g., feed, pasture); (7) if necessary, reimbursement for routine veterinary care and transportation; (8) limitation of liability for congenital birth defects or reasonable birthing difficulties; and, (9) if appropriate, security on the embryo transfer progeny and the assignment of necessary registration papers. Furthermore, the recipient owner may request additional fees for genetic testing or marketing services.

Breeder Agreement. On the other hand, breeders should make sure that the recipient owner agrees to bear the burden that the recipient is (1) in good health and obtains necessary vaccinations; (2) within the appropriate age range; (3) has an acceptable body condition score; (4) if appropriate, a certain breed or color pattern (e.g., solid black/red hided); and, (5) is structurally sound. The breeder may want to hold the recipient owner liable for gross negligence or intentional misconduct relating to the care of the recipient and the progeny including birthing complications and require that the recipient owner use best management practices. If the recipient owner will be raising the progeny until weaning and retaining ownership of the recipient, the breeder may want to list special management terms (e.g., early weaning, vaccinations, creep feeding, DNA testing).

Flush Agreement. If a livestock breeder is purchasing a flush from another owner, the breeder may want to memorialize a minimum number of transferable embryos from the flush (e.g., five embryos) and the date/procedures for the receipt of the flush. Additionally, this breeder would also want to make sure that that flush is guaranteed to be what was ordered (e.g., free of certain genetic defects, use of sexed semen) and note liquidated damages in case of an error. Conversely, the owner who will be flushing the embryos will want to enumerate the payment terms including shipping expenses and ensure that he/she is not responsible for the transfer of the embryos to the recipient or birthing problems that may occur.

General Considerations. There are also some general considerations that the parties should consider such as the name and contact information of the parties (including any corporate business entity), choice of law, and attorneys’ fees for the prevailing party in a dispute. The contract should also be binding on the heirs, successors and assigns. Additionally, some parties wish to have an arbitration clause or a forum selection clause. Some livestock producers may also require credit card information to be used as security for late payment. Finally, each party should agree to comply with all federal, state, and local laws including livestock animal cruelty laws.

There has been an increase in disputes arising from embryo transfer transactions. Because the culture of the livestock industry is to do business with a handshake, it difficult for a producer to see the benefit of having a professionally drafted embryo transfer agreement. He/she views a written contract with another producer as a lack of trust; instead, agriculture attorneys should advise livestock producers that it is a sound business practice. It is important that agriculture attorneys properly counsel livestock producers on the potential liability of these transactions and the issues that should be memorialized.