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Common contract mistakes made by ag tech companies

Contributed by Todd Janzen Published on 01 October 2018
tractor equipment illustration

I review and draft a lot of contracts. Many of these agreements are in the ag technology space, which presents unique drafting challenges.

First and foremost, the subject matter of these agreements – personal information, data collection, license grants – is often foreign to the farmers and agribusinesses. But there are other problems as well, which this post will address.

In their agreements, many companies confuse “personal information” with “ag data.” This is a problem. How companies collect, use and share “personal information” is generally regulated by state statutes (or by the GDPR for EU citizens). Ag data collection is not regulated for the most part, since personal information definitions do not usually extend into ag data. Companies that comingle these terms, even though often well-intentioned, are making a large segment of their cloud platform subject to regulation when otherwise it would not be.

And this leads to another problem – the failure to define what “ag data” is being collected in contracts. The ag tech industry has come a long way in the past few years to address this problem. Many companies understand this. Every ag data transparent company gets it, since this is the first step to certification. If you are not defining what data you are collecting, the rest of your contracts may be junk, as far as ag data goes.

Another problem I see is that companies cut and paste forms from competitors. Unfortunately, I find it is most common to copy large-company forms because people assume that “a large publicly traded company must know what it is doing.” The older I get, the more I realize this is not true. Large companies are great at doing things the way they’ve always been done, but that also means that tech contracts can inherit lots of old verbiage from their ancestors. Is this what your modern, disruptive, ag tech company deserves? No. Spend the time and money, and create unique contracts for your product.

Tech companies often think user agreements are not that important – no one reads them anyway. This mentality instructs their lawyers to draft lengthy, lopsided, overly complex agreements that no one understands. This is shortsighted. Most people do not read contracts until something goes wrong, and then they are furious when the contract does not confirm what the salesman told them or what they thought was fair. Tech contracts should be written in concise, simple terms that users can understand.

Polls have shown that “trust” is one of farmers’ biggest concerns with new ag tech platforms. In spite of trust issues, farmers have still embraced new platforms, but this is because farmers, by nature, are willing to experiment on the farm. However, companies should not confuse experimentation with established trust. John Deere has spent over 175 years building trust with its customers – Deere can afford to take a different approach with farmers than a new ag tech startup. One way to build trust is to demonstrate that ag tech contracts are well thought-out, fair and drafted with the farmer in mind.

The solution to all of these problems is simple. Any ag tech platform that collects ag data should have a clear, concise ag data use policy for its users. Some companies have done this – sadly, others have not. But like deferred maintenance on farm equipment, contract shortcuts sooner or later will come home to roost.

Make sure your ag tech provider has a clear ag data use policy.  end mark

Todd Janzen writes the Janzen Ag Law Blog. This article originally appeared on the Janzen Ag Law Blog. Click here to view the original article.

PHOTO: Illustration by staff.

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