Contract Basics

Getting started

Click on the video icon to hear a forestry professional explain the purpose of having a timber contract in place.

No two timber sale contracts are alike. The amount of definition and elaboration in the contract depends on the needs of both the buyer and the seller. The agreement does not have to be of great detail or length, but should express the expectations, wishes, and responsibilities of each party. Many timber buyers have their preferred form and this contract is usually written to protect the buyer. It may or may not protect the seller. Consequently, buyers and sellers should negotiate specific contract terms.

A typical timber sale contract usually contains the following:

• A description of the timber to be sold (estimated volume and species)

• Which timber will and will not be cut

• The selling price (either lump sum or by unit)

• Terms of payment

• The location and boundaries of the sale

• Time allowed to complete the logging operation

• Clause which indicates that the consulting forester is the landowner's agent in the sale.

Additional features may also be included in the contract. These include:

• Property damage penalties and liabilities

• Subcontracting

• Procedures for settling disputes

• Clauses for contract extensions or termination

Handshake agreements and buying timber on shares jeopardize the landowner's control of the timber sale, trees, and property. Gentlemen's agreements do not have legal status. Do not allow a second party to dictate the terms of your assets. Your trees and property are your responsibility, and you as the seller should be the one to dictate the terms.

The seller should include anything of importance pertaining to the timber sale and the protection of property in the contract. However, any seller-oriented contract stipulation will usually add cost to the buyer and reduce the selling price of the timber. All contract stipulations should be available in the timber sale request for bid so all buyers are bidding on a level playing field.

Before selling timber, competitive bids should be invited from a number of potential buyers where several mills or dealers are competing for wood. In competitive markets, studies have shown that the actual bid amount increases according to the number of bidders.