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4) The kind, quantity and quality of grain to be delivered by the seller to the 

 buyer, including the numerical grade and moisture, as well as the location and 

 method by which grade, quality and quantity will be determined. Impor- 

 tantly, do not reference grain from specinc acreage being grown by the 

 producer. Courts have freed farmers from their contractual obligations in 

 cases where the buyer has agreed to buy crops grown on designated land and 

 the crop later is damaged or destroyed. 



In addition, if the grain buyer's company is financing the farmer's inputs, 

 make certain any financing documents — such as security agreements and 

 financing documents, which often contain specific references to designated 

 land ~ are completely separate from the purchase of grain from the farmer. 



5) Premiums and discounts, if any, applicable to grain not meeting the contract 

 grade and quality. 



6) A provision that requires the grain delivered to be of "merchantable quality" 

 such that it complies with applicable tolerances and regulatory limits issued 

 by the Environmental Protection Agency and Food and Drug Administration. 



7) The location and time period for making delivery. If alternate delivery 

 points are specified in the contract, consider utilizing the following policy: if 

 the alternate delivery location is for the buyer's convenience, the increased 

 freight charges become the responsibility of the buyer. If the alternate 

 delivery location is for the seller's convenience, the increased freight charges 

 become the responsibility of the seller. 



8) The purchase price to be paid for the grain. 



9) Payment terms applicable to the contract 



10) Settlement provisions applicable for underdeliveries of grain. 



1 1) Procedures applicable if the buyer is notified of the existence of liens on the 

 grain to be delivered by the producer. As will be discussed later in this memo- 

 randum, make certain your purchase contract reflects the change regarding 

 liens made by Congress when it enacted the so-called "Clear-Title Lien Law" 

 as Section 1324 of the Food Security Act of 1985 (7 U.S. Code Section 1631). 



12) The buyer's right to delay the delivery period. As included in the Sample 

 Grain Purchase Contract, this provision is an alternative to - and has several 

 advantages over - a "force majeure clause" as will be discussed later in this 

 section of the memorandum. 



