Grain Contract Terms
As with many legal contracts, grain contracts will contain a vast amount of language that is not easily understood by someone without experience dealing with them. However, it is important that a farmer read the contract so as to try and understand how different circumstances will be handled. For example, under the UCC, a seller is excused from timely delivery if performance is not possible due to unexpected circumstances. However, farmers are generally not excused for drought, floods, etc. Court cases have found that the farmer will be excused only if the contract called for the crop to be grown on a certain farm. Sometimes, contracts will include a “Force Majeure” clause, which essentially frees a party from liability or obligation when an extraordinary event or circumstance beyond the control of the parties.
Interestingly, some grain contracts give the buyer the ability to be excused from performance or declare a “Force Majeure”, but specifically say that the farmer cannot. How is that for fair? There are other such terms and conditions that can be included in grain contracts that give the buyer more rights than the seller. As such, it is very important to carefully review the terms and conditions contained in grain contracts.
Dispute Resolution for Grain Contracts
Almost all grain contracts call for disputes to be handled by the NGFA’s board of arbitrators. This means any dispute will be determined by an arbitration board, and its results are binding. So, instead of settling differences in the farmer’s county court, or the elevator’s county court, the dispute will go through the NGFA, located in Washington, D.C. The NGFA has its own set of trade rules and arbitration rules, so the farmer will need to find specialized legal counsel that handles these matters.
As a farmer, John Schwarz understands the importance of having grain contracts that are fair for the Indiana farmer. As an attorney, he has experience handling disputes that arise with grain contracts. He also understands the technicalities associated with grain contracts and is familiar with the NGFA Arbitration System.