Force Majeure – Is “Swine Flu” and/or Mandatory COOL An Excuse For Non-Performance Under a Hog Production Contract?
A significant trend in the hog industry over the past couple of decades has been the increasing rate at which hog production occurs via contract. These contracts generally provide for the raising of hogs with the farmer supplying the facilities and labor and the integrator supplying the hogs, feed and other supplies. The integrator generally retains title to the hogs with the contract generally establishing the amount paid to the farmer by the quantity and quality of the final product. Many of these contracts are forms drafted by the integrator, with no terms negotiated by the parties. One common provision in a hog production contract is known as a “force majeure” provision. Under such a provision, a contracting party is not liable for damages due to the delay or failure to perform under the contract because of an event that is beyond the party’s control under the contract. Performance is excused until it becomes possible for the party to perform under the contract. But, does “Swine Flu” or the recently implemented mandatory country-of-origin (MCOOL) regulations constitute an event covered by a force majeure provision that would excuse a contracting party’s performance. Recently, some hog integrators have claimed that they do, and have attempted to either terminate or renegotiate contracts with farmer-growers.
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