Did you know about the Farm Machinery and Equipment Act?
- Details
- Published on Monday, July 6, 2015
By Lynn Gilmore, Ellen McPherson and Darran Bond
Farm Business Management Team (MAFRD)
The Farm Machinery and Equipment Act is not well known among farmers, but has many valuable benefits to them. The act, which is administered and enforced by the Manitoba Farm Industry Board (MFIB), protects farmers when they buy or lease farm machinery or farm equipment in Manitoba, by governing purchase, delivery and repair. It is important to remember that this act only applies to the purchase of new machinery and equipment.
When you buy new equipment, the dealer should provide a copy of the act, detailing purchaser rights. The dealer is required to deliver new machinery and equipment to farmers on time, and is also responsible for timely and reliable repair service to the machinery and equipment. The act also specifies the procedures that must be followed by lenders if a farmer defaults on a loan to purchase equipment that is governed by the act.
New machinery and equipment that has a value greater than $1,000 and that is used in production of food for off-farm consumption, is covered under the act. Exclusions include cars, trucks, snowmobiles, all-terrain vehicles and trailers, as well as machinery that is used or has been purchased at an auction, estate sale, receivership sale or bankruptcy.
If the new equipment cannot be delivered on time, the dealer must forewarn the buyer five days ahead of the delivery date set out in the contract. The buyer then has two options: cancel the contract, or agree to take late delivery of the purchased equipment. If the buyer decides to take late delivery, the dealer is required to loan replacement equipment or pay for the rental of equipment to replace the machinery ordered. However, the dealer does not have to provide for replacement equipment if the reason for late delivery is beyond their control or the control of the manufacturer. The dealer also has the option to cancel the contract if they cannot deliver the machinery or equipment on time, provided the buyer is given notice 15 days prior to the agreed delivery date. If this happens, the dealer must provide a refund on all payments provided.
Warranty
The act allows a trial period intended to determine if equipment performs as stated in the contract, or as normally intended. This trial period can be either of:
• 50 hours for new machinery equipped with an hour meter
• 10 consecutive days starting on the first day of use for machinery with no hour meter
If the machinery does not function properly within these time limitations, the buyer must notify the dealer, either by sending a registered letter or by hand delivering a notice.
The dealer then has seven days to repair the machinery or equipment. If the dealer fails to correct the problem in the seven-day period, the buyer must then send or deliver a notice that cancels the contract. This cancellation notice must be sent within three days after the expiry of the seven-day correction period.
Failing to send any notice within the specified times will result in the loss of the option to cancel the contract. For example, waiting to discuss with a lawyer or MFIB before sending notice, or waiting it out to see if the dealer will fix it and then going to a lawyer or MFIB loses the 10 day trial period benefits.
Warranty coverage is outlined in three categories: tractors; combines; and all other equipment (milking equipment, feed processing, hay handling, etc.). Warranty begins the day the farm equipment is delivered to the farmyard and only applies to the original purchase. Tractors are covered for a minimum of 1,500 hours or two years, whichever comes first. Combines are covered for a minimum of 300 hours or two years, whichever comes first. For all other equipment, warranty is guaranteed for 12 months. Dealers cannot attempt to limit their liability by making agreements with farmers that differ from the minimum warranties set out by the Farm Machinery and Equipment Act. However, a farmer can waive the labour and/or transportation portion of the warranty. The waiver must be stipulated in the contract.
The repair parts to be covered under warranty are specified in the act. The replacement parts must have warranty for one year or until the original warranty expires, to minimum hours and duration set out for new purchases. If transportation is required, it is covered to a maximum of 50 miles from the dealer’s repair shop. Transportation only applies if the machinery cannot be driven or delivered by the farmer, due to its condition.
Some parts are excluded from the act and other parts are subject only to the warranty of the manufacturer. Repair work resulting from normal wear and tear or due to negligent operation is also excluded from the act.
The act requires a dealer to make replacement parts available to the original buyer for 10 years after the machinery is purchased. When replacement parts are requested, they must be available at the dealership within 14 days of ordering them. If parts are ordered on an emergency basis, they must be on hand at the dealership within 72 hours. It is important to note time allowances excluded from these timelines, which are Saturdays, Sundays, holidays, and circumstances that are beyond the dealer’s control. Purchased repair parts must have a warranty against defective workmanship or materials for 90 days from the first day of use in the first season of use. The act does not control the price of the purchased repair parts.
Repossession protection
If a loan for machinery or equipment covered under the act is in default, the lender must file an application with the MFIB in order to proceed with repossession. A copy of the application must be sent to the farmer. The MFIB will then request the farmer contact them within seven days, and will make a decision based on the information provided by both parties. Their decision is legally binding; however it can be appealed to the Court of Queen’s Bench.
If the equipment if either properly repossessed or voluntarily surrendered, the lender cannot pursue further legal actions to make up for any shortfalls that occur when the equipment is sold. However, the farmer no longer has any rights to the equipment. If the lender makes money on the sale after it has been repossessed, that is their money.
A lien on equipment means that the buyer gets possession and use of it, but the lien holder (bank, credit union, or dealer) keeps title until payment is complete. The act states the lien must be specified in a lien note, as part of a Conditional Sales Contract.
