Recordkeeping as a Risk Management Tool
Purchasing robust insurance, making strong governance decisions, and drafting effective, thorough rules and procedures are strong legal risk management tools. But all of these tools—insurance, governance, and market rules—are most effective when their underlying documentation is properly maintained and updated. Good recordkeeping provides the paper trail and the evidence a farmers market needs to prove its actions, should proof be needed. Relying on memory—let alone the memories of vendors, employees, and partners—is a much less reliable method for accurately recalling job descriptions, obligations, agreements, and other pertinent information.
Recordkeeping can also help a market through transitions. Many markets have staff who are involved part-time, board members who rotate every two years, or volunteers who arrive new each season. Recordkeeping can help bring people up to date on the market’s history and activities, and keep new people from having to recreate forms or get in touch with outgoing persons for information. The efficiencies generated are important themselves, and they can reduce the potential for miscommunications and misunderstandings that can lead to legal action, in a worst-case scenario.
If your market maintains records that include confidential information, such as social security numbers, be sure to have measures in place to protect this information. Consider encrypting electronic records and ensure that any paper records are securely stored.
This page discusses legacy binders, vendor agreements, leases and other host site agreements, documents that show vendors are complying with market rules, documents that help ensure and prove safety at the market, and documents that establish business or administrative information.What kind of risks does Recordkeeping help manage?
Types of Records Farmers Markets Should Consider Keeping
A legacy binder is a collection of files and documents, both current and historical, about the farmers market. Keeping files organized and in one place can help create an easy, go-to spot for finding answers about the market and for ensuring continuity during transitions. It can also serve as a record of where the market has been and how it has changed over the years. New vendors, management, or board members might have ideas or suggestions, and being able to look back and see what has been done before (and some reasoning as to why) can help provide important context for market decisions.
For some people, having an actual binder of these documents works, but consider also, or instead, creating a digital copy of the documents (using Dropbox, Google Drive, or another cloud service) so that they can be easily shared, stored, and updated.
When updating important documents, file the new ones with the old and include the date when the document was updated on a top corner (e.g., Updated November 2016) to help with historical reference. Below is a list of documents to keep in a legacy binder. This list isn’t exhaustive, nor will each item apply to every market—it’s just a starting place.
What to include in your legacy binder:
- Incorporation documents
- Staff and board member contacts, including past staff and board
- Staff and board member job descriptions
- Market insurance policies
- Lease agreements
- Market rules
- Vendor applications
- Other market policies: dog policy, severe weather policy, emergency protocols, etc.
- Passwords for websites, email accounts, social media accounts, etc.
- Marketing contacts: who to get in touch with, where, and when
- Membership and/or sponsorship materials
- Special event details/promotions
- Copies of annual tax returns
- Market metrics tracked on an annual basis (e.g., customer counts, revenue, etc.)
- SNAP Authorization paperwork
1) Vendor Agreements
Farmers markets should document that each vendor has read and understands the farmers market’s rules. Some farmers markets wish to ask each vendor to agree to follow each of the rules. The legal effect is the same whether vendors are asked to agree to comply or asked to agree that they read and understand the rules. Either way, the farmers market is legally stronger because it avoids being negligent in failing to establish rules or communicate rules that could prevent property damage, injuries, and other legal claims.
Farmers markets should also document that vendors have agreed to indemnify the farmers market for any harms the market suffers because of the vendor’s behavior. Although there are many templates and samples in existence, a legally enforceable agreement must be specific to exact activities and risks the farmers market and vendors engage in, and must accommodate the specific laws of the state in which the farmers market is located. More information is in the Vendor Agreements section of the Market Rules and Procedures page.
Some farmers markets request these agreements at the time the vendor applies for admission to the market. Others ask for them after the vendor is admitted. Getting an agreement that the rules have been read and understood can occur anytime. The best timing of an indemnification agreement may depend on state law and the nature of the indemnification.
2) Records showing vendor compliance
Many farmers markets have a variety of obligations that vendors are required to comply with. For example, a market might require specific insurance coverage or prohibit reselling of products. For many market owners or managers, no verification of compliance is necessary. They trust their vendors, and the vendors trust them. And, it’s simply easier for time- and cash-strapped organizations to wait for an issue to arise than to create more work for themselves. At the same time, documenting vendor compliance with rules can prevent more problems than it creates.
For markets that require vendors to carry insurance, requesting documentation of compliance can save the farmers market from bigger expenses down the road. If a market can reasonably verify that vendors have insurance and it collects copies of permits and licenses, it can lower the market’s potential liability by demonstrating that it has not negligently selected vendors. This risk management step may earn a reduced premium from an insurance company. It can also prevent cost increases in the future. If an incident occurs and a vendor does not have insurance, the farmers market may be the entity who is sued. A vendor without insurance may not be sued because the aggrieved party may believe they have no reasonable expectation of recovering from the vendor financially, even if they win in court.
Other market rules can be more difficult to verify, such as rules requiring that vendors sell only products they have made or grown. Unlike insurance, there is no standard documentation to be provided. Farmers markets address this in a wide variety of ways.
Some markets utilize a team of peer farmers to interview or tour other vendor’s farms or operations. This can help establish whether the business has the capacity to produce what they are selling. In many instances, the farmers market does not have to take every possible step to enforce rules—the legal benefits of recordkeeping can be earned with very modest and reasonable measures. A simple farm tour can be enough to weed out those who intend to re-sell product, for example. Photo evidence of every crop being harvested isn’t needed to protect the farmers market.
Even farmers markets that are well financed need ideas for efficiency. Here are a few ways farmers markets make rule compliance recordkeeping easier:
- Asking vendors to list the market as a certificate holder, as well as an additional insured, on their insurance policy ensures that the market will receive notification if the policy is cancelled or changed. This means the market owner/manager won’t have to ask for, file, and store yearly updates.
- Consider using management software or a digital storage option, like managemymarket.com, DropBox, or Google Drive. Some of these options are paid, and some are free. Even if the market decides not to collect insurance certificates and licenses, it may need a way for vendors to submit documentation that they read and understand market rules, for example. Online submission can make this easier than collecting paper.
In addition to keeping records related to vendor agreements and compliance, markets should ensure that rules and expectations are communicated to vendors on a regular basis. Here is a sample annual market-vendor communication checklist to get you started.
Host Site Agreements
When it comes to relationships with host sites, the most important record to keep is the one that gives permission to be on the site. This record can be one of the following:
- rental agreement
Each of these are ways to receive permission to be on someone else’s property. People generally use the word “lease” for an agreement lasting a significant length of time such as six months or a year. People tend to say “rental agreement” when they are referring to a month-to-month agreement. The naming conventions are not crucial from a legal perspective, so long as the terms of the relationship are known between the two parties involved.
Farmers markets should be aware of a third option, which is quite different from a lease or a rental agreement: a license. A lease or rental agreement is the right to use someone else’s property. A license is simply permission to use the property. The distinction is important because a right is stronger than a permission. When a business or person has permission to use a piece of land, that permission can be easily revoked. Rights are harder to revoke.
It can be difficult to determine whether the relationship is a lease/rental or whether it’s a license. The crucial detail is whether or not the market has the right to use the land or merely has permission. This is determined, in part, by whether the other party can easily revoke access or if they have to go through a longer, more formal process to remove the market. Many farmers markets won’t know whether they have a right or the permission to use the property. Many also will not know if their access to the land can easily be revoked or whether a specific process must be followed. Unfortunately, in that case, it’s unknown know whether the farmers market has a lease/rental agreement or a license. The market and the property owner/manager need to have a detailed conversation in advance about these issues so everyone knows where they stand.
The single most important thing is to get the lease, rental agreement, or license in writing. Having the agreement in writing can be necessary to enforce an agreement in court. But, before there is any need to go to court, a written agreement is essential to solving problems before they start.
A written agreement can spell out the market’s and the landlord’s expectations of each other on many issues. The lease agreement should state the amount of rent to be paid and the duration of the agreement, as well as define the circumstances under which the landlord may eject the market from the site, among other terms. For example, many landlords want the authority to evict a business from a site if the business or organization violates certain rules. The farmers market should know exactly when they might be evicted and the process that an eviction would follow.
Written agreements also help farmers markets sort out who is responsible for what on a huge variety of issues relating to traffic, parking, repairs, trash removal/disposal, and other site concerns. When people create verbal or informal agreements, they often don’t talk through these many contingencies. Of course, people don’t expect disagreements to happen, but they do. Having explicit agreement on these matters can help the market and site host avoid unnecessary confusion and conflict.
When negotiating a written agreement, here are a few things a market may want to consider:
- Stability of usage: A market will want assurance that they can use the property at the same date and time throughout the course of an entire season.
- Stability of site quality: For example, it would be ideal for a market not to have a construction project start midway through the market season, especially if it affects how much space is available for vendors. Consider asking the site host for no major changes to the site during the course of a market season.
- Stability from year to year: If the market is happy with its location and has a good relationship with the landlord, it should consider asking for a multi-year lease. This can keep its organizers from having to find a new site at the last minute.
- Protection for equipment: If the market stores equipment onsite, especially if it pays a rental fee for the space, it may be fair to ask that the site owner reimburse the market for any damage. Signs and tables are one thing, but EBT machines can be expensive to replace. The market could suggest that the landlord bring this up with their insurer to determine whether this would be covered in the event of any loss.
Written agreements are useful even if a market has a casual grant of permission to use a property with no guarantee and no fee. Even in informal situations, markets and landlords have expectations of each other. We need to know what they are, such as maintenance responsibilities and liability in the case of any accidents. This can keep a market from facing unexpected liability and provide the opportunity to prepare for liability that is expected.
Lease Agreements for Farmers Market Managers and Host Sites
One common form of host site agreement is a lease, giving the farmers market permission to use the site for a significant length of time (usually six months, a year, or more). Some host sites may present a market with a standard commercial lease filled with legal jargon. Other host sites may be much less formal, writing up a simple agreement with the farmers market. Whether you are reading through a standard lease or drafting an agreement from scratch, there are some basic elements to include and understand in any lease. Below we highlight terms you will likely encounter in a lease. We also identify key tips to consider during the process of writing or negotiating a lease. You can also find a sample farmers market lease here.
- Who signs the lease?
- When will the market use the location?
- Where is the location?
- How will the market pay for the lease?
- What are additional financial obligations in the lease?
- What happens if there is a dispute?
- Signing the lease
Who signs the lease?
A lease will typically start by listing the parties to the lease–the landlord and tenant.
The landlord, also called the lessor, is the person or entity responsible for renting the space. The landlord could be the property owner, the town, or a realtor. If the landlord is a business, the lease should identify the type of business entity it is (e.g., LLC, corporation, nonprofit, partnership, sole proprietorship). This information is relevant in determining the legal requirements that govern the business. The lease should include the landlord’s address. The address helps determine the landlord’s jurisdiction (the area in which a particular court or agency has the power to hear a case). Jurisdiction is important if you have a dispute. The jurisdiction or state of residency determines where you can file a complaint if you must sue the landlord to enforce the lease.
The tenant, also called the lessee, is the farmers market entity. Depending on the business structure of the farmers market, this would be a corporation, LLC, nonprofit, sole proprietor, partnership, etc. The lease should include the farmers market entity’s address and legal residency. Use the same address used for the entity registration or articles of incorporation. The address may be a P.O. box. If the farmers market is a sole proprietorship or partnership, list the market owner’s name(s), address, and state of residence. Again, this is useful for identifying jurisdiction.
The lease should identify who owns the site, and show that both parties have authority (the legal right) to enter into the agreement (lease) for the specific location. This is generally straightforward but could get complicated if the landlord is not the property owner, or if the land is publicly owned.
If the landlord is not the property owner, the lease needs to make it clear who owns the property and what relationship the landlord has to the owner. For example, the landlord may be a property management company or a tenant that is assigning (subletting) their rights to the farmers market.
- Municipal Land
If the market is renting from a town, city, or municipality, typically a town official will sign the lease. Sometimes the decision-makers are on a board, town council, or zoning commission. If this is the case, you may be able to get a copy of the minutes from their meeting when they determined that they would allow you to use the space for the market. Include the minutes as an appendix in the lease materials. Some public entities might not sign a lease, and use the minutes instead of a written lease agreement, especially if the market is using the space without paying rent.
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When will the market use the location?
Most farmers markets do not operate every day. Therefore the lease needs specific terms that describe the needs of a farmers market rather than using the form language from a standard commercial lease.
Term and Commencement
Commencement date refers to the dates that the tenant has the right to occupy the location, also known as the first day of the term. The term means the duration of the lease, from the beginning to the end. The term should be specific to your market schedule. For example, if your farmers market meets every Saturday for six months of the year, the lease could list the term specifically: “The market will meet every Saturday from 6 am to 3 pm starting on the second Saturday of May and ending on the second Saturday of November—totaling 23 days.” If the lease covers multiple years, it should note that: “Tenant leases the premises from November 1 - March 31 for the years 2018-2021.”
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Where is the location?
Leases typically use the term “premises” to mean the physical location of the site, including the boundaries and a description of the available space. The lease should include a description of the location and the specific address or clearly understood descriptors of the property if an address isn’t adequate. For example, if your market is in a park or parking lot, the lease should include details about what is available for the market’s use. The description is especially useful if the lease allows only partial use of the property. Visual maps can be beneficial and are often added as an appendix or exhibit attached at the end of a lease.
For premises that include an alternative location in the event of weather, the lease should define when the farmer market can change the location and the details about the substitute location. For example, if the farmer’s market is in the parking lot of a community center, the landlord may allow the market to move indoors in the case of inclement weather. If there is an alternative premises include the information about it in the lease.
Use of the Premises
If your location has unique requirements, the lease is where they should be defined. The lease should state that the tenant will use the location to operate a farmers market and describe how the farmers market will use the property. For example, if the farmers market is using the parking lot for the market, specify that you want to stop cars from entering the parking lot when the market is there.
In some instances, the landlord will use the space for something else on days the market is not operating. Make sure to explicitly include when the market needs the property and the conditions the market requires. For example, if the landlord uses the property during the week, and the market is on Saturdays, the property needs to be empty every Saturday before the market sets up. Specifying these requirements can be especially important for indoor markets that share space with other users.
Just as the farmers market has the right to define the way it will use the space, the landlord has the right to limit the market’s use of the property. Even if the market has the right to use, occupy, and set up for business at (or in) the location, it is possible that the lease could limit the ways you operate the farmers market. For example, the landlord could write into the lease the maximum number of stalls or occupants that would be able to set up or enter the space lawfully. For an indoor farmers market, the lease may limit the number of people allowed in the space at a given time to comply with occupancy limits.
In addition to potential occupancy limits, the lease can limit the times and activities at the location. The location could also include restrictions on the number of parking spaces and the amount of time guests could remain parked at the location. Or the lease may allow you to enter the property on Saturday for the market, but not Monday. Your landlord may rent the space to others during the time you are not using the property. If you want to be able to use the premises for things like board meetings or storage that happen outside of your regular market hours, this needs to be outlined clearly in the lease or amended later as new needs for use of the location arise.
Questions to ask when searching for a market location
- When can the farmers market access the space (what is the start date)? What hours and days can the market operate?
- How many vendors can fit in the space? Most market tents are either 8 x 8 or 10 x 10, and tables are often 5 or 6 feet long.
- Are there occupancy limits for the property?
- Is parking included in the lease? If so, how many spaces? And is the parking area identified in the location description?
- Is storage included in the lease? If so, what is the duration (just during the market season or during the off-season too) and what can (or cannot) be stored at the location?
- Where and when can signage be used for the market?
- Is there an alternative location available if there is bad weather on market day?
- Who else will be using the property? And how will others use the location?
- What are the cleanliness standards for the property? If the property is shared by multiple users, who is responsible for maintaining and reporting on the cleanliness standards?
- What are the safety standards? And who is responsible for the maintenance and upkeep of the property to ensure the safety of the vendors and customers that will come to the farmers market?
- Does your lease impose any content-related limitations on what can be sold at the market? For example, a farmers market may operate in the parking lot of a coffee shop, and the lease may prevent the market from selling coffee to limit competition with the commercial tenants.
- Are there any permit requirements, such as a change of use permit or the need for a fire inspection? Who is responsible for securing the permits--the landlord or the tenant?
Conditions and Care of the Premises
Find out if the landlord is offering the place “as is” or if they will work with the market to identify needed improvements, alterations, and regular maintenance for the premises.
If the location requires improvements and maintenance, the lease should state who will be responsible (landlord or tenant) and a timeline for any initial improvements. Many leases specify types of improvements that are the responsibility of each party or break down responsibility by the cost of the improvements (e.g., anything over $500 is the landlord’s responsibility). Beyond improvements, routine upkeep is likely needed so the premises can maintain safety standards. For example, if a farmers market is in a park, the lease could identify who is responsible for mowing the lawn.
The lease may also include a right for the landlord to enter the premises with reasonable notice to inspect the buildings and grounds. The lease will likely include language that puts the responsibility on the landlord to keep the premises reasonably safe. The lease could also contain language that requires the tenant to communicate with the landlord when maintenance is needed. Market day safety checklists are useful for tracking the conditions of the property and identifying maintenance needs; use a checklist to keep a record of repairs needed.
Most leases will also require the tenant to return the space in good condition at the end of the lease. If this is the case, document in writing and with photos the condition of the property before the lease begins, so you have a record at the end of the lease period.
Identify any needed improvements when you write the lease and designate who will be making the improvements before signing the lease.
- Walk the space with the landlord and agree to the needed improvements (if any) and the timeline for improvements.
- If the farmers market is going to agree to make improvements, find out if the market can deduct those expenses from the rent.
- Take pictures and keep track of the condition of the property before starting to use the space.
Does the Location Come With Additional Rights?
Sometimes the premises section will include additional rights that the tenant may have as a part of leasing the location. The lease may include access to electricity, the ability to leave signage in place, or storage. If there are additional rights, they may come with additional financial obligations (described in question 5 below).
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- If there is electricity, define the terms of the electricity use in the lease. Identify who is responsible for paying the electric bill (see other financial obligations below).
- If the market is allowed to use dumpsters, find out if there are disposal limits on the market’s trash, recycling, or compost.
- Are there public restrooms or other accommodations provided with the lease, and if so, who cleans them? Who pays for the water bill?
- Are you allowed to install signage or advertisements for the market on the premises? If so, are there size or location restrictions? Are the signs allowed to stay up permanently or seasonally, or are you restricted to certain days?
- If there is storage, describe the location and the size of the additional space with specificity. Also, identify whether there are limitations on what types of items can or cannot be kept in the storage space.
How will the market pay for the lease?
Base rent is a common lease term that means the amount paid in exchange for the use of the property. The base rent does not include utilities (described below). The base rent is either a lump sum (typically based on the property’s square footage) or a rate determined on a per day or per season basis. For some commercial leases, the base rent could include a percentage of the sales from a market. The percentage rate is not optimal for a farmers market because many farmers markets do not track sales–the vendors track their sales and are not required to report the sales to most markets.
Before signing the lease, find out if there are additional fees above the base rent. For example, other costs could include operating expenses for electricity, taxes, property management, waste removal, and parking. The additional financial obligations section below describes more of the additional utility costs for the property.
When you enter a lease, you will likely have to give the landlord a security deposit or provide a letter of credit. These measures offer the landlord assurance that the market will be able to pay the rent, or that you will at least have some part of the future rent paid in advance. Is a security deposit required for the market lease? Often, if there is a cash deposit, it is deposited into an interest-bearing escrow account. According to many state landlord and tenant laws, the tenant is entitled to receive the interest on the deposit. The lease should define the conditions required for a return of the deposit at the end of the lease.
The lease should identify when and where the rent is due, acceptable forms of payment, whether there are late fees, and how they are applied. Some landlords may charge a late fee with interest for late payments--the amount of the fees and when they can be applied varies based on state law. Some farmers markets have worked with landlords and towns to come up with contingencies for rent and payment plans for nascent markets, which are still unsure of their profits and earning cycles. It is important to identify in the lease what happens if there is an issue with the farmers market’s ability to pay on time or at all. This sample lease agreement offers an excellent example for this type of financial situation.
Consider sharing some of the market’s financial data with your landlord and discussing the property rental rates and seasonality of the market’s income. These may vary based on traffic flow and years of operation. If you are a very new market, the landlord might be willing to offer you low introductory rates that increase over time as the market gains customers. Do not sign a lease that you will not be able to pay. But if at any time during the lease, the market is no longer able to afford the rent, communicate this to the landlord early. The sooner you can address financial challenges with the landlord, the easier it will be for you to work out potential solutions that could keep the market in operation. The market and landlord have a shared interest in promoting the market so that the profits for the farmers and the landlord can have a chance of increasing business over time.
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What are additional financial obligations in the lease?
Utilities and Services
Often a location will come with access to some utilities and services, yet the type and amount will vary depending on the space. If the utilities are not included in the lease, try to get estimates on the amount that will be added to the cost of the rent before entering into the lease agreement.
When determining the market location and reviewing the lease, find out if the lease provides access to electricity. If so, have the landlord show you where you can access the outlets. Additionally, find out about the electrical load limits. You will want to know if the electricity is included in the rent or additional. If the market is responsible for the electric bill, find out where the meters are, how the utilities are metered and who keeps track of the electrical use. This is especially important if multiple parties use the property.
- Trash Removal
Will you need to pay for the removal of trash, compost, recycling, and other disposable materials? Find out the property owner’s expectations for the management and removal of trash, recycling, grease, and other waste materials before signing the lease.
- Restrooms and other accommodations
The location may provide access to facilities that use water and other resources. If there is a bathroom or kitchen in the space, is the market able to use them? Find out if the use of the facilities will increase the costs for utilities or maintenance. The farmers market might need to pay the water bill or a portion of the water use in addition to base rent.
If insurance is required, a lease should describe the type of insurance and the minimum requirements for the policy. For a market lease, the landlord may require commercial general liability (CGL) insurance at a minimum coverage level. The landlord may also require other types of insurance, including fire or flood coverage. Before you sign the lease, check on the insurance premiums and factor this amount into the cost of the lease.
If the insurance rates are burdensome, work with your landlord to compromise on coverage levels and terms that are reasonable for the size and frequency of your market.
Liability for the landlord and the tenant
Use the lease as a tool to assess risk and the cost of operating the business. If someone is injured at the farmers market, they could attempt to sue the farmers market and the landlord for the injury. The two parties would likely be sued together under the legal theory of joint and several liability, which means that each party could be held legally responsible for the whole injury, even if it was partly the other one’s fault.
Does the landlord include an indemnification clause in the lease? Indemnification means compensation for harm. When a lease includes an indemnification clause it is usually used assign the tenant legal responsibility for harms that occur on the property, even if the landlord was partially at fault. In indemnity clauses, you may come across the term hold harmless. If you see a provision in a lease that says “hold harmless,” the landlord is using this clause to absolve themselves of responsibility for all damages, injuries, or losses that may occur on the property. This could include damage, injuries, and losses caused by the landlord. In some states, it is illegal for a landlord to use this term, and often the states that allow for Hold Harmless clauses will not protect landlords from all civil or criminal violations.
If you see a hold harmless clause, speak to the landlord about removing the language before signing the lease. Form leases may still include hold harmless clauses, even though the exclusion of liability through a hold harmless clause is generally illegal and will not be upheld in court. The farmers market can limit its liability by keeping records of the property conditions and communication with the landlord. When you are creating the lease, show the landlord your market day safety checklist and revisit the timeline for maintenance, safety standards, and care for the property to ensure that you are on the same page about the care and conditions of the property.
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What happens if there is a dispute?
Many leases include clauses that define the process for tenants and landlords to terminate the lease if the agreement is not working for one or both parties. As a general rule, the landlord or tenant may not end the lease unilaterally, unless there is a violation of a provision in the lease.
The lease may recognize different circumstances that would cause the lease term to end. Early termination of the lease could result from failure to follow the law, natural disasters, financial problems, or the sale of the property.
- Violations of law or lease provisions:
The lease should identify the types of conduct and actions that would trigger a notice of violation (breach) or termination of the lease. Almost all commercial leases will include a clause that terminates the lease if the tenant engages in illegal activity.
- Natural reasons for termination:
Many leases include provisions that allow the landlord or tenant to end the lease if there are natural causes that cause long-term damage to the location. Examples of events that could cause long-term damage to property are floods, tornadoes, or trees falling; this can be called Force Majeure in some lease language.
- Financial reasons for termination:
If there are financial reasons to get out of the lease, one party may be required to compensate the other, either in payment of damages or by taking steps to mitigate the losses. The lease should outline the legal obligations and consequences that come about when ending a lease. It is important for the farmers market to pay attention to this in case the market struggles. Find out if you can work with your landlord to make changes to the lease that could better support the market. The earlier you can tell your landlord, the better. They may be able to help you by changing the payment terms if they know of your financial difficulties.
If there is a financial need to end the lease, it would be in the market’s best interest to have a clause in the lease that says that the tenant surrenders the premises “as is.” Surrendering the property “as is” means that the market will not be responsible for additional repairs and improvements at a time when the market lacks financial resources.
If there is a dispute that the landlord and tenant cannot settle themselves, the lease may include provisions that define the steps that the landlord and tenant must take to resolve the dispute. These measures may be appropriate if there is conflict or an impasse that prevents the parties from working together to address issues.
- Alternative Dispute Systems
Mediation and arbitration are two types of dispute resolution techniques that can be used to resolve conflict without going into the costly, formal court system. Many commercial leases will include a requirement to bring disputes to arbitration, a dispute resolution mechanism that allows the parties to work with a neutral third party out of the courts who will listen to both sides and then determine how to resolve the dispute. Arbitration clauses in leases mostly focus on disputes related to the lease. Mediation, while less common in commercial leases, may also be an option as a first step to talking through a negotiated settlement with a neutral third party. In mediation, it is often the parties that determine how they will resolve the dispute. There is a small but important distinction between mediation and arbitration regarding the amount of control the parties have over the results.
If the landlord has an arbitration agreement in the lease, ask if they have used this process to resolve disputes in the past. Use this as an opportunity to learn about how your landlord deals with conflict.
- Governing Law
If the dispute deals with legal questions and problems, there may be a need to bring the conflict to court. Many leases will include language that defines the venue (which court) and jurisdiction (which law) that governs the enforceability of the terms in the lease. This type of clause would be used to determine what court and local laws would apply to the dispute. The language of this clause would look like this: “The rights, obligations, and remedies of this lease shall be governed by and construed by the laws of the jurisdiction in which the premises is located.”
- Attorney fees
The lease may specify who will pay for the cost of hiring lawyers when there is a dispute. Payment of attorney fees depends on the nature of the conflict and the outcome of the case. Often, if the lease includes an attorney fees clause and the landlord prevails the tenant may be ordered to pay the landlord’s attorney fees. In some states, if there is a one-way attorney fees clause, it will be read as a two-way obligation, meaning that if the tenant prevails the landlord will be ordered to pay the tenant’s fees. How this clause operates depends on the governing laws of the state. Note: the attorney fees clause will only apply to legal disputes on the terms of the lease.
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Signing the lease
You and your landlord should sign the lease at the same time. If there are handwritten changes to the lease, make sure that you and your landlord initial the document next to each change. Both of you should keep copies of the signed and dated document.
Make sure that you understand the lease before you sign it.
Ask an attorney for help if you do not understand the lease.
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Records of Safety Procedures
Safety procedures are a perfect example of when it’s not enough to simply follow safety procedures—there need to be records that prove they were followed. Many businesses, markets included, write policies and procedures but never put them into action. A market should be able to show it follows safety procedures at each market event. Records, when consistently and regularly kept in the course of work, can be admitted as evidence in a courtroom. And, any claims that a market follows safety practices are much more believable when there’s something to show it. With those things in mind, here are ways farmers markets can use recordkeeping to reinforce their risk management.
- Require that the person using a market-day safety checklist actually carry a clipboard and date, check off, and sign that specific safety elements are in place as required. File these checklists on a regular basis so they can be located again, if needed. Read more and view samples of safety checklists here.
- Require that vendors perform and submit their own completed safety checklists for each market day. If this creates too much of a paperwork burden, consider providing vendors with a one-page summary of the most important items with checklists for setup and takedown on a laminated card for reference on each market day.
- Documentation is especially important in the case of an accident or emergency. Talk with the market’s insurance agent about an incident report form—a standardized form that records what happened and what actions were taken in response. The insurance company may require or prohibit specific actions as a term of coverage, and documentation that the market followed these rules is helpful. These records can also be helpful internally, in case protocols need to be changed to reduce the risk of similar incidents in the future.
- Example 1: Emergency Procedures for Farmers Markets, Michigan Farmers Market Association
- Example 2: Accident Report Form (Appendix to the Guide to Managing Risks and Liability at California Certified Farmers Markets, UC Davis)
Documents establishing business or administrative information
The variety and depth of business or administrative documents that might be kept is vast. It can be overwhelming to consider keeping every piece of paper used and a record of every communication made. Yet at the same time, all of it might be valuable for a range of contingencies, including situations when:
- an employee sues for discrimination, which could require production of emails or conversations;
- a tax audit occurs, requiring submission of expense receipts and checks cashed;
- a board member is sued for failure to uphold his or her fiduciary duty, leading to board meeting minutes being subpoenaed.
What can small businesses and nonprofits do to prioritize and streamline?
To begin, small businesses and nonprofits of all types are moving to online providers that automatically retain records. For example, email providers such as Gmail will archive emails, storage services such as Dropbox will save versions of documents, and phone services such as Google Voice will record calls placed or received. These services can alleviate the farmers market of some of the burden of recordkeeping.