Terms of Engagement - Lessor of Milk Quota

1 INSTRUCTION
1.1 We are advising you in relation to the proposed milk quota lease and these terms govern the relationship between us. You should be aware that the proposed transaction will not be contractually binding until all parties have signed the relevant transaction documentation. Unless you use the Guaranteed Price System , in which case a binding contract will be made when we accept the lessee's offer at the Guaranteed Price specified by you.
1.2 Quota will not normally be marketed unless the Form of Instruction has been returned to us fully completed and signed. You warrant to us that all information provided will be full and accurate. You must also complete, sign and return all documents sent to you within the timescale indicated in our correspondence.
1.3 We reserve the right to decline to market any quota at any stage during the course of a transaction.
1.4 If the Form of Instruction is completed showing that the price of the quota is to be market price at our discretion we will endeavour to achieve a price per litre which in our opinion reflects the market price reasonably obtainable at the date at which verbal agreement between both parties is achieved.
1.5 Our explanatory notes (which are attached) set out the procedures we will follow as agents on your behalf.
1.6 Upon receipt of the Form of Instruction and Letter of Authority and until such time as the available quota has been transferred subject to contract, you will receive a copy of the Milk Quota Bulletin on a regular basis.
1.7 Please note that we will not be able to secure a lease for you until the Letter of Authority is returned to us duly signed and dated or you have signed and returned the transfer documentation we send to you.

2 EXTENT OF OUR AGENCY
2.1 We will provide the following services to you:

Advise you on a proposed transaction and whether the transfer should be a permanent or temporary transfer, with or without land;
Provide and complete the documentation to effect the transaction;
Hold the transaction monies in a client's stakeholder account until the Rural Payments Agency have notified the parties that the transaction has been registered;
Lodge the appropriate forms with the Rural Payments Agency;

3 MARKETING
3.1 Our approval must be obtained in advance for any joint agency arrangement for the marketing of quota. Failure to notify a joint agency to us may result in our immediately ceasing to act in the marketing of the quota.
3.2 The quota will be sold by private treaty unless otherwise agreed with you.

4 CHARGES
4.1 Our charges are assessed on a percentage basis the basic rate being 5.00%. Rates can vary according to the volume placed with us and transferred. In the event the volume actually transferred by Bruton Knowles is less than the volume initially placed we reserve the right to adjust the commission rate as we consider appropriate and where there is an adjustment to be made we will notify you in writing before the transaction becomes legally binding.
4.2 The commissions are subject to a minimum overall fee to deal with an instruction of Ł175 plus VAT.
4.3 The service includes marketing the quota and undertaking the paperwork necessary to effect the transfers including notification to your purchaser group. Charges subject to the paragraph below, if we fail to effect the lease of the quota we will make no charge.
4.4 In the event of your withdrawing instructions before exchange occurs, the transaction having already been agreed, subject to contract, either verbally or in writing for any reason we reserve the right to charge at our discretion an administration fee not exceeding Ł200 plus VAT, or Ł200 plus VAT per transaction whichever is the higher.
4.5 Ancillary work undertaken by us in connection with transactions (for example correspondence or other dealings with third parties such as Landlords, Banks, the Agricultural Mortgage Corporation etc) will be charged at the rate of Ł80 per hour plus VAT irrespective of whether or not the quota is transferred.
4.6 VAT at the applicable rate will be added to our charges unless zero rating or an exemption applies. Our fees will normally be deducted from the lease proceeds but all our fees are payable within one month. We reserve the right to charge interest for late payment at the rate of 2% above the base rate from time to time of Lloyds Bank plc.

5 TAX AND VAT
5.1 The tax implications of quota transfers need to be carefully considered. Whilst we will give general assistance we are not lawyers or accountants. We advise that an accountant or solicitor should be consulted who is familiar with milk quotas and your particular circumstances.
5.2 We operate a self-billing system for VAT and therefore undertake to output tax invoices on behalf of registered vendors. You must not issue any invoices directly to quota lessees introduced by this Firm. If you are not registered for VAT you must make this clear when returning the Form of Instruction. We must be notified immediately if a VAT registration number is cancelled or, if a new number is issued for any reason.

6 PAYMENT BY LESSEE
6.1 For transfers by private treaty we normally impose a 10 day time limit for payment although this is dependent on market circumstances. The lease remains subject to contract until such time as payment has been received and cleared and all agreements have been signed by or on behalf of both parties and all interested parties.
6.2 The return of the Rural Payments Agency's transfer form duly signed will be taken as being confirmation that you wish to proceed, subject to any contrary instruction in writing.
6.3 You must inform us immediately when you receive written notification from the Rural Payments Agency that the lease of the quota has been registered. The lease price, the VAT (if applicable) and interest earned on the stakeholder account will then be released to you less our commission plus VAT. We will send you an appropriate VAT invoice in respect of our commission.

7 INTEREST
The rate at which interest is accrued to you will be either at the rate from time to time prevailing at Lloyds Bank plc or at the rate of interest payable on our client's bank call account from time to time as you specify on the Form of Instructions. Since the Bank Call Account option involves us in substantially more administrative work we will make an additional charge per transaction. If this option is exercised the charge is Ł50 plus VAT.

8 LIMITED LIABILITY
We shall not be liable for:

Losses arising as a result of incorrect or misleading information that you have given us;
Losses resulting from the inappropriateness of the contractual documentation as we recommend that you take independent legal advice on these;
Loss of profits, or other consequential economic or indirect losses howsoever arising;
Claims arising from failure or delay in dealing with the transaction if due to circumstances beyond our reasonable control.

9 RURAL PAYMENTS AGENCY
The quota lease will not be effective until registered with the Rural Payments Agency. Although our Explanatory Notes give some guidance on how long it is likely to take the Intervention Board to process the application, we have no control over their processing procedures. We also cannot take responsibility for any change in Rural Payments Agency or DEFRA policy once the transaction has become legally binding nor in respect of any changes to the Regulations governing transfers after this time.

10 MISCELLANEOUS POINTS
10.1 The information and advice that we provide you, whether written or oral, is provided to you for your own sole use and shall not be made available or disclosed to any third party without our prior written consent.
10.2 We are acting for you as the lessor of the quota only. We will provide you with the details of the lessee but give no warranty or assurance that the information provided is correct or that the lessee will comply with the terms of the transaction.
10.3 You shall indemnify us in respect of all actions demands claims liabilities or other losses (including costs) suffered by or made against us and arising out of this transaction through no fault of our own.
10.4 We reserve the right to record all telephone conversations without notice and to provide copies of the recordings to any third parties at our discretion.
10.5 This agreement (together with the Explanatory Notes) sets out the entire agreement between us and replaces any other arrangements understandings or representations made between us.
10.6 This agreement shall be governed by English law and shall be subject to the jurisdiction of the English courts.

11 FINANCE
You are notified that we may offer transferees the opportunity to arrange finance for quota transactions through third party financial institutions.

Notice
Any prospective or actual lessor of milk quota should consider taking appropriate legal advice in respect of the transaction.
Bruton Knowles NQE, Bisley House, Green Farm Business Park, Bristol Road, Gloucester, GL2 4LY.

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