203.15 - CREDIT-SALE CONTRACTS.
203.15 CREDIT-SALE CONTRACTS.
A grain dealer shall not purchase grain by a credit-sale contract
except as provided in this section.
1. The grain dealer shall be licensed pursuant to section 203.3.
All of the following shall apply to a grain dealer required to be
licensed under that section who purchases grain by credit-sale
contract:
a. The grain dealer shall give written notice to the
department prior to engaging in the purchase of grain by credit-sale
contract. The notice shall contain information required by the
department.
b. All credit-sale contract forms in the possession of the
grain dealer shall have been permanently and consecutively numbered
at the time of printing of the forms. The grain dealer shall
maintain an accurate record of all credit-sale contract forms and
numbers obtained by that dealer. The record shall include the
disposition of each numbered form, whether by execution, destruction,
or otherwise.
c. The grain dealer who purchases grain by credit-sale
contract shall maintain records as required by the department in
compliance with this section.
2. In addition to other information as may be required, a
credit-sale contract shall contain or provide for all of the
following:
a. The seller's name and address.
b. The conditions of delivery.
c. The amount and kind of grain delivered.
d. The price per bushel or basis of value.
e. The date payment is to be made.
f. The duration of the credit-sale contract, which shall not
exceed twelve months from the date the contract is executed.
3. Title to all grain sold by a credit-sale contract is in the
purchasing grain dealer as of the time the contract is executed,
unless the contract provides otherwise. The contract must be signed
and dated by both parties and executed in duplicate. One copy shall
be retained by the grain dealer and one copy shall be delivered to
the seller. Upon revocation, termination, or cancellation of the
grain dealer's license, the payment date for all credit-sale
contracts shall be advanced to a date not later than thirty days
after the effective date of the revocation, termination, or
cancellation, and the purchase price for all unpriced grain shall be
determined as of the effective date of revocation, termination, or
cancellation in accordance with all other provisions of the contract.
However, if the business of the grain dealer is sold to another
licensed grain dealer, credit-sale contracts may be assigned to the
purchaser of the business.
4. a. A grain dealer shall not purchase grain on credit-sale
contract during any time period in which the grain dealer fails to
maintain fifty cents of net worth for each outstanding bushel of
grain purchased under credit. The grain dealer may maintain a
deficiency bond or an irrevocable letter of credit in the amount of
two thousand dollars for each one thousand dollars or fraction
thereof of deficiency in net worth.
b. A grain dealer who is also a warehouse operator licensed
by the department under chapter 203C or the United States department
of agriculture under the United States Warehouse Act, 7 U.S.C. § 241
et seq., and who does not have a sufficient quantity or quality of
grain to satisfy the warehouse operator's obligations based on an
examination by the department or the United States department of
agriculture shall not purchase grain on credit-sale contract to
correct the shortage of grain.
c. (1) A grain dealer must meet at least either of the
following conditions:
(a) The grain dealer's last financial statement required to be
submitted to the department pursuant to section 203.3 is accompanied
by an unqualified opinion based upon an audit performed by a
certified public accountant licensed in this state.
(b) The grain dealer files a bond with the department in the
amount of one hundred thousand dollars payable to the department.
(2) (a) The bond filed with the department under this paragraph
shall be used to indemnify sellers for losses resulting from a breach
of a credit-sale contract as provided by rules adopted by the
department. The rules shall include but are not limited to
procedures and criteria for providing notice, filing claims, valuing
losses, and paying claims. The bond provided in this paragraph shall
be in addition to any other bond required in this chapter.
(b) The bond shall not be canceled by the issuer on less than
ninety days' notice by certified mail to the department and the
principal. However, if an adequate replacement bond is filed with
the department, the department may authorize the cancellation of the
original bond before the end of the ninety-day period.
(c) If an adequate replacement bond is not received by the
department within sixty days of the issuance of the notice of
cancellation, the department shall automatically suspend the grain
dealer's license. The department shall cause an inspection of the
licensed grain dealer immediately at the end of the sixty-day period.
If a replacement bond is not filed within another thirty days
following the suspension, the grain dealer license shall be
automatically revoked.
(3) When a license is revoked, the department shall provide
notice of the revocation by ordinary mail to the last known address
of each holder of an outstanding credit-sale contract and all known
sellers.
5. The department may adopt rules to suspend the right of a grain
dealer to purchase grain by credit-sale contract based on any of the
following conditions:
a. The grain dealer who is also a warehouse operator licensed
by the department under chapter 203C or the United States department
of agriculture under the United States Warehouse Act, 7 U.S.C. § 241
et seq., does not have a sufficient quantity or quality of grain to
satisfy the warehouse operator's obligations based on an examination
by the department or the United States department of agriculture.
b. The grain dealer who is also a warehouse operator licensed
by the department under chapter 203C or the United States department
of agriculture under the United States Warehouse Act, 7 U.S.C. § 241
et seq., issues back to the grain dealer a warehouse receipt for
purposes of providing collateral, if the grain which is the subject
of the warehouse receipt was purchased on credit and is unpaid for by
the grain dealer.
c. The grain dealer fails to maintain requirements relating
to net worth or fails to maintain a ratio of current assets to
current liabilities, as required in section 203.3.
d. The grain dealer violates this section.
e. The grain dealer's total liabilities are greater than
seventy-five percent of the grain dealer's total assets.
f. The grain dealer has made payment by use of a check or
electronic funds transfer, and a financial institution refuses
payment because of insufficient funds in a grain dealer's account.
g. The department discovers that a grain dealer has delayed
payment for grain purchased since the department last inspected the
grain dealer pursuant to section 203.9.
6. A grain dealer who purchases grain by credit-sale contract
shall obtain from the seller a signed acknowledgment stating that the
seller has received notice that grain purchased by credit-sale
contract is not protected by the grain depositors and sellers
indemnity fund. The form for the acknowledgment shall be prescribed
by the department, and the licensed grain dealer and the seller shall
each be provided a copy. Section History: Early Form
[C71, 73, 75, 77, § 543.17; C79, 81, § 542.8, 543.17; 81 Acts, ch
180, § 12] Section History: Recent Form
C83, § 542.15
85 Acts, ch 234, § 3; 86 Acts, ch 1152, § 9; 87 Acts, ch 147, §4;
89 Acts, ch 143, §403; 92 Acts, ch 1239, §63, 64
C93, § 203.15
99 Acts, ch 106, §7; 2003 Acts, ch 69, §8--11; 2008 Acts, ch 1083,
§6, 7; 2009 Acts, ch 41, §80; 2009 Acts, ch 133, §212
Referred to in § 203.3, 203D.1