34-2,111. Grain purchase contracts with delayed payment or delayed pricing; required provisions; standby letter of credit, posted notice.
34-2,111
34-2,111. Grain purchase contracts with delayed payment or delayedpricing; required provisions; standby letter of credit, posted notice.(a) Whenever a public warehouseman offers to purchase grain pursuant toa grain purchase contract whichincludes provision for deferred paymentor delayed pricing of the grain,the public warehouseman shall inform the seller that such grain purchasecontract is a voluntary extension of credit and is not protected by thesurety bond or letter of credit, pursuant to K.S.A. 34-229, and amendmentsthereto, of the public warehouseman.
(b) Each grain purchase contract which contains a provision for deferredpayment ordelayed pricing, or bothsuch provisions, shall be in writing and shall include the followingstatement: "THIS CONTRACTCONSTITUTES A VOLUNTARY EXTENSION OF CREDIT BY THE SELLER TO THE PUBLICWAREHOUSEMAN AND IS NOT PROTECTED BY THE SURETY BOND OR LETTER OF CREDITOF THE PUBLICWAREHOUSEMAN." The statement shall be prominently displayed in capitalletters which are at least as large as 10-point type and shall be followedby a signature line which has the following statement in parentheses under theline:"Must be signed by seller." Such statements and signature line shall beframed in a box and placed on the first page of the grain purchase contractas a part thereof so that it stands out from the other provisions ofthe grain purchase contract.
(c) If a public warehouseman has entered into a written grain purchasecontract with a seller that produced the grain and if such grain purchasecontract provides for either deferred payment or delayed pricing, or both,then, upon demand of the seller made after delivery of such grain to thepublic warehouseman, the public warehouseman shall cause a financialinstitution to issue to the seller a standby letter of credit in the amount ofthe unpaid balance under the grain purchase contract at the time suchdemand is made. Each public warehouseman who offers to enter into such agrain purchase contract with any seller that produced the grain shall posta sign providing public notice of the availability of such standby letter of credit.
(d) As used in this section:
(1) "Deferred payment" means any payment to be made under theterms of a grain purchase contract after delivery of the grain to thepublic warehouseman;
(2) "delayed pricing" means any method of pricing grain under theterms of a grain purchase contract after such grain has been delivered tothe public warehouseman;
(3) "financial institution" means any institution whose deposits,shares or accounts are insured by a federal agency or banks forcooperatives created under title III of the farm credit act of 1971;
(4) "standby letter of credit" means aletter of credit withinthe meaning of K.S.A. 84-5-103(1)(a), and amendments thereto, which, by its terms:
(A) Is irrevocable;
(B) is nontransferable;
(C) names the seller that produced the grain as beneficiary;
(D) shall not expire earlier than 60 days after the final payment isdue under the terms of the underlying grain purchase contract; and
(E) cannot be drawn upon by the beneficiary in the absence of adefault in payment under the terms of the underlying grain purchase contract;
(5) "unpaid balance" means that portionof the purchase price,together with interest thereon, if any, remaining unpaid to the sellerunder the terms of a grain purchase contract at the time the seller makesdemand as provided in this section. Where the grain purchase contractprovides for delayed pricing and the price has not been established at thetime demand is made by the seller, then, for the purposes of this sectiononly, the unpaid balance shall be determined as though the price had beenestablished at the time of the closing of the relevant futures market onthe last trading day before demand is made by the seller under this section.
(e) As used in this section, the words and phrasesdefined in K.S.A.34-223, and amendments thereto, shall have the meanings ascribed to them inthat statute.
(f) This sectionshall be construed as supplemental to the statutes contained in article 2of chapter 34 of the Kansas Statutes Annotated, and amendments thereto.
History: L. 1985, ch. 137, § 1;L. 1985, ch. 138, § 1;L. 1986, ch. 154, § 1;L. 2000, ch. 30, § 8; Mar. 30.