141 



Under this Trade Rule, the buyer has three options. Two of those options may 

 be applicable: 



A "Buy ing-in" for the account of the seller after notifying the seller to complete 

 the contract. 



A Canceling - again after notifying the seller ~ the defaulted portion of the 

 contract at a fair market value based on the close of the market the next business day. 



In such circumstances, the buyer can match the contract cancellation time with 

 the marketplace at that time to determine monetary damages to assess, rather than 

 matching a particular purchase of grain from a producer with a specific grain mer- 

 chandising or hedge transaction. 



There are other cases in which the producer's remarks concerning performing 

 on the basis of the contract are more ambiguous than outright refusal to deliver the 

 grain. In these instances, Secion 2-609 of the UCC may provide some relief to the 

 buyer. This section authorizes a party with "reasonable grounds for insecurity" to 

 "demand adequate assurance of due performance." If the other party (the seller) fails 

 to provide "adequate assurance of performance" within a "reasonable time not ex- 

 ceeding thirty days," such failure constitutes "repudiation of the contract." Whether 

 there is "reasonable grounds for insecurity" is a factual question. Again, if the 

 contract is subject to the NGFA Trade Rules, Grain Trade Rule 10 may be 

 applicable. 



Of course, it always is advisable to consult with legal counsel when contract 

 performance problems arise so that you don't overreact of underreact. 



Some Final Thoughts 



While the contents of the enclosed NGFA Sample Grain Purchase Contract and 

 Sample Grain Purchase Confirmation Memorandum are important, they do not 

 replace good management practices. 



First and foremost, know your seller/customer. There is no substimte for 

 knowing the performance track record of the person(s) from whom your company 

 is buying grain. 



Second, there are times when grain firms need to be tough and firm in defense 

 of their rights in dealing with producers. But even more frequently, there is a need 

 to be reasonable and conciliatory, as well. 



Further, being honest and straightforward in dealings with producers and others 

 can go a long way toward discouraging damaging actions by parties who believe, 

 rightly or wrongly, that they have been deceived or misled. Customers who believe 

 they have been deceived or misled can be extremely potent adversaries. Often they 



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