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Other Factors to Consider 



When it comes to the area of law that concerns the treatment of producers as 

 merchants, it is important to emphasize these additional points: 



A Generally, the party that benefits by defining the other party as a merchant 

 has the burden of proving the "merchant character" of the other party; 



A If there are factual questions or inferences to resolve about whether the other 

 party is a merchant, it may be a jury that determines whether the party is a merchant 

 for a particular product. If the facts are clear, the decision concerning whether the 

 farmer is a merchant is a question of law that will be determined by the court 



A A person may be a merchant for some purposes but not for others. 



A Even in states where farmers consistently have been considered to be "mer- 

 chants," future case law can change that interpretation. Relying upon the merchant 

 status of a farmer in all circumstances can be dangerous since the occasional seller 

 of grain, the retired farmer and the "gentleman farmer" may claim they should not 

 be categorized as "merchants" even in those states that normally consider producers 

 to be merchants. 



A If parties use confirmation memoranda, they should consider sending such to 

 producers by certified mail to ensure a record of the sending of such memoranda. 



A Most importantly, even if a farmer is deemed to be a merchant, under the UCC 

 he or she has 10 days after the confirmation memorandum is received to object 

 to its contents. 



Given these considerations, even grain companies operating in states where 

 producers generally are considered to be merchants should strongly consider 

 utilizing written grain purchase contracts signed and executed by both parties 

 instead of confirmation memoranda. The reason is that Signed contracts make 

 irrelevant the question of whether the farmer is or is not a merchant 



If the grain firm still opts to utilize confirmation memoranda to establish the 

 contractual terms with producers, consider developing a master grain-trading 

 agreement that each producer signs at the start of the merchandising year before oral 

 telephone contracts are entered into between the grain buyer and the producer. A 

 copy of the grain company's confirmation memorandum that will be used for future 

 transactions can be attached to this master agreement The producer, by signjng the 

 "master grain-trading agreement," thus could agree up front to the fact that he or she 

 is a "merchant" and is bound by oral agreements upon which a confirmation 

 memorandum is received. Importantly, however, the "10-day rule" under the UCC 

 still would apply that allows the producer to object to each oral sale - a rule that 

 could be avoided by having each transaction covered by a signed contract 



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