View Market Risks View All Risk Management Tools

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, 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

Legacy Binders

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
  • Bylaws
  • 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

Vendor Records

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:

  • lease
  • rental agreement
  • license

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.

Determining Type of Record

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.

A Written Agreement

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.

What to Include in the Agreement

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.

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.

Peer examples:

Business Records

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.

Farmers Market Legal Toolkit