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Farm equipment purchases protected under provincial legislation

The Farm Machinery and Equipment Act requires dealers to deliver on time and back what they sell

The Farm Machinery and Equipment Act is not well known among farmers, but has many valuable benefits.

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. This act only applies to the purchase of new machinery and equipment.

When new equipment is purchased, 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.

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.

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.

The repair parts to be covered under warranty are specified in 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, not including weekends, holidays or due to circumstances that are beyond the dealer’s control.

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. The decision is legally binding; however, it can be appealed to the Court of Queen’s Bench.

If the equipment is 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.

Other protection

The act provides protection to farmers signing contracts for machinery and equipment. It states that contracts signed by buyers do not become legally binding until the dealer signs it and delivers it to the buyer, either in person or by registered mail.

This part of the act does not apply to buyers who have paid the full purchase price and taken delivery of the equipment. It also states that the contract must be fully explained to the buyer, if they cannot understand the language in which it is written. A standard contract should include the serial number of equipment purchased, value of equipment purchased, market and trade-in value, borrowing costs, sales terms (including amounts and dates of payments) and a delivery and waiver agreement.

For questions about the Farm Machinery and Equipment Act and how it applies to specific situations, contact the Manitoba Farm Industry Board:

812 – 401 York Avenue
Winnipeg, Man. R3C 0P8
Phone: 204-945-3856
Toll free: 1-800-282-8069

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