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Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

                            CHAPTER 470-H.F.No. 3534 
                  An act relating to agriculture; changing certain 
                  requirements and enforcement procedures for 
                  agricultural contracts; amending Minnesota Statutes 
                  1998, sections 17.90, subdivision 4, and by adding 
                  subdivisions; and 17.91; proposing coding for new law 
                  in Minnesota Statutes, chapter 17. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 1998, section 17.90, is 
        amended by adding a subdivision to read: 
           Subd. 1a.  [AGRICULTURAL CONTRACT.] "Agricultural contract" 
        means any written contract between a contractor and a producer. 
           Sec. 2.  Minnesota Statutes 1998, section 17.90, is amended 
        by adding a subdivision to read: 
           Subd. 3a.  [LEGIBLE TYPE.] "Legible type" means a typeface 
        at least as large as ten-point modern type, one-point leaded. 
           Sec. 3.  Minnesota Statutes 1998, section 17.90, 
        subdivision 4, is amended to read: 
           Subd. 4.  [PRODUCER.] "Producer" means a person who 
        produces or causes to be produced an agricultural commodity in a 
        quantity beyond the person's own family use and: 
           (1) is able to transfer title to another; or 
           (2) provides management, labor, machinery, facilities, or 
        any other production input for the production of an agricultural 
        commodity. 
           Sec. 4.  Minnesota Statutes 1998, section 17.91, is amended 
        to read: 
           17.91 [MEDIATION; ARBITRATION REQUIRED LANGUAGE.] 
           Subdivision 1.  [MEDIATION; ARBITRATION.] A contract for an 
        agricultural commodity between a contractor and a producer must 
        contain language providing for resolution of contract disputes 
        by either mediation or arbitration.  If there is a contract 
        dispute, either party may make a written request to the 
        commissioner for mediation or arbitration services as specified 
        in the contract, to facilitate resolution of the dispute. 
           Subd. 2.  [WRITTEN DISCLOSURE OF RISKS.] An agricultural 
        contract must be accompanied by a clear written disclosure 
        setting forth the nature of the material risks faced by the 
        producer if the producer enters into the contract.  The 
        statement must meet the plain language requirements of section 
        17.943.  The statement may be in the form of a written statement 
        or checklist and may be developed in cooperation with producers 
        or producer organizations.  A contractor may submit a sample 
        material risk disclosure statement to the commissioner for 
        examination.  If the commissioner approves of the statement or 
        fails to respond within 30 days of receipt of the statement, the 
        statement will be deemed to comply with this subdivision and 
        with the plain language requirements of section 17.943. 
           Sec. 5.  [17.941] [PRODUCER'S RIGHT TO REVIEW.] 
           A producer may cancel an agricultural contract by mailing a 
        written cancellation notice to the contractor within three 
        business days after the producer receives a copy of the signed 
        contract, or before a later cancellation deadline if a later 
        deadline is specified in the contract.  The producer's right to 
        cancel, the method by which the producer may cancel, and the 
        deadline for canceling the contract shall be clearly disclosed 
        in every agricultural contract. 
           Sec. 6.  [17.942] [COVER SHEET REQUIREMENTS.] 
           Subdivision 1.  [MANDATORY COVER PAGE.] An agricultural 
        contract entered into or substantively amended after January 1, 
        2001, must contain as the first page, or first page of text if 
        it is preceded by a title page or pages, a cover sheet as 
        provided in this section. 
           Subd. 2.  [REQUIREMENTS.] The cover sheet or sheets must 
        comply with section 17.943, and must contain the following: 
           (1) a brief statement that the document is a legal contract 
        between the contractor and the producer; 
           (2) the statement "READ YOUR CONTRACT CAREFULLY.  This 
        cover sheet provides only a brief summary of your contract.  
        This is not the contract and only the terms of the actual 
        contract are legally binding.  The contract itself sets forth, 
        in detail, the rights and obligations of both you and the 
        contractor.  IT IS THEREFORE IMPORTANT THAT YOU READ YOUR 
        CONTRACT CAREFULLY."; 
           (3) the written disclosure of material risks required by 
        section 17.91, subdivision 2; 
           (4) a statement detailing, in plain language, the 
        producer's right to review the contract as described in section 
        17.941; and 
           (5) an index of the major provisions of the contract and 
        the pages on which they are found, including: 
           (i) the names of all parties to the contract; 
           (ii) the definition sections of the contract; 
           (iii) the provisions governing cancellation, renewal, or 
        amendment of the contract by either party; 
           (iv) the duties or obligations of each party; and 
           (v) any provisions subject to change in the contract. 
           Sec. 7.  [17.943] [CONTRACT FORMAT.] 
           Subdivision 1.  [READABILITY.] An agricultural contract 
        must be in legible type, appropriately divided and captioned by 
        its various sections, and written in clear and coherent language 
        using words and grammar that are understandable by a person of 
        average intelligence, education, and experience within the 
        industry. 
           Subd. 2.  [EXCEPTIONS.] Subdivision 1 does not apply to 
        particular words, phrases, provisions, or forms of agreement 
        specifically required, recommended, or endorsed by a state or 
        federal statute, rule, or regulation. 
           Subd. 3.  [CUSTOMARILY USED TERMS.] An agricultural 
        contract may include technical terms to describe the services or 
        property which are the subject of the contract, if the terms are 
        customarily used by producers in the ordinary course of business 
        in connection with the services or property being described. 
           Sec. 8.  [17.944] [REVIEW BY COMMISSIONER.] 
           Subdivision 1.  [AGRICULTURAL CONTRACTS.] For purposes of 
        this section and section 17.943, "agricultural contract" 
        includes, where applicable, the cover sheet as defined in 
        section 17.942, and material risk disclosure statement required 
        by section 17.91, subdivision 2. 
           Subd. 2.  [PROCESS OF REVIEW.] A contractor may submit an 
        agricultural contract to the commissioner for review as to 
        whether it complies with section 17.943.  After reviewing the 
        contract, the commissioner shall: 
           (1) certify that the contract complies with section 17.943; 
           (2) decline to certify that the contract complies with 
        section 17.943 and note objections; 
           (3) decline to review the contract because the contract's 
        compliance with section 17.943 is subject to pending litigation; 
        or 
           (4) decline to review the contract because the contract is 
        not subject to section 17.943. 
           Subd. 3.  [FACTORS IN DETERMINING READABILITY.] In 
        determining whether a contract or cover sheet is readable within 
        the meaning of section 17.943, the commissioner shall consider 
        at least the following factors: 
           (1) the simplicity of the sentence structure; 
           (2) the extent to which commonly used and understood words 
        are employed; 
           (3) the extent to which esoteric legal terms are avoided; 
           (4) the extent to which references to other sections or 
        provisions of the contract are minimized; 
           (5) the Flesch scale analysis readability score as outlined 
        in section 72C.09; 
           (6) the extent to which clear definitions are used in the 
        text of the contract; and 
           (7) additional factors relevant to the contract being easy 
        to read and understand. 
           Subd. 4.  [PROCESS NOT REVIEWABLE.] Actions of the 
        commissioner under subdivision 1 are not subject to chapter 14 
        and are not appealable. 
           Subd. 5.  [LIMITED EFFECT OF CERTIFICATION.] A contract 
        certified under subdivision 1 is deemed to comply with section 
        17.943.  Certification of a contract under subdivision 1 does 
        not constitute an approval of the contract's legality or legal 
        effect. 
           If the commissioner certifies a contract or fails to 
        respond within 30 days of receipt of the contract, the 
        contractor will have complied with sections 17.91 and 17.943, 
        and the remedies stated in subdivisions 7 and 8 are not 
        available. 
           Subd. 6.  [REVIEW NOT REQUIRED.] Failure to submit a 
        contract to the commissioner for review under subdivision 1 does 
        not show a lack of good faith or raise a presumption that the 
        contract violates section 17.943. 
           Subd. 7.  [ENFORCEMENT REMEDIES.] A violation of section 
        17.943 is a violation subject to section 8.31, subdivision 1.  
        The remedies in section 8.31, subdivisions 3 and 3a, are limited 
        by section 17.9441. 
           Subd. 8.  [REFORMATION.] (a) In addition to the remedies 
        provided in section 8.31, a court reviewing an agricultural 
        contract may change the terms of the contract or limit a 
        provision to avoid an unfair result if it finds that: 
           (1) a material provision of the contract violates section 
        17.943; 
           (2) the violation caused the producer to be substantially 
        confused about any of the rights, obligations, or remedies of 
        the contract; and 
           (3) the violation has caused or is likely to cause 
        financial detriment to the producer. 
           (b) If the court reforms or limits a provision of a 
        contract, the court shall also make orders necessary to avoid 
        unjust enrichment.  Bringing a claim for relief under this 
        subdivision does not entitle a producer to withhold performance 
        of an otherwise valid contractual obligation.  No relief may be 
        granted under this subdivision unless the claim is brought 
        before the obligations of the contract have been fully performed.
           Sec. 9.  [17.9441] [LIMITS ON REMEDIES.] 
           Subdivision 1.  [PENALTIES.] In a proceeding in which civil 
        penalties are claimed from a party for a violation of section 
        17.943, it is a defense to the claim that the party made a good 
        faith and reasonable effort to comply with section 17.943. 
           Subd. 2.  [ATTORNEY'S FEES.] A party who has made a good 
        faith and reasonable effort to comply with section 17.943 may 
        not be assessed attorney's fees or costs of investigation in an 
        action for violating section 17.943. 
           Subd. 3.  [CLASS ACTION ATTORNEY'S FEES.] In a class action 
        or series of class actions that arise from the use by a 
        contractor of an agricultural contract found to violate section 
        17.943, the amount of attorney's fees and costs of investigation 
        assessed against that contractor and in favor of the class or 
        classes may not exceed $10,000. 
           Subd. 4.  [LIMITS ON PRODUCER ACTIONS.] Violation of 
        section 17.943 is not a defense to a claim arising from a 
        producer's breach of an agricultural contract.  A producer may 
        recover actual damages caused by a violation of section 17.943 
        only if the violation caused the producer to not understand the 
        rights, obligations, or remedies of the contract. 
           Subd. 5.  [STATUTE OF LIMITATIONS.] A claim that an 
        agricultural contract violates section 17.943 must be raised 
        within six years of the date the contract is executed by the 
        producer. 
           Sec. 10.  [17.9442] [APPLICABILITY OF CONTRACT 
        REQUIREMENTS.] 
           The requirements for the written disclosure of material 
        risks under section 17.91, subdivision 2; the three-day review 
        period under section 17.941; the cover sheet requirement under 
        section 17.942; and the contract readability requirements under 
        section 17.943, subdivision 1, do not apply to contracts which 
        provide for: 
           (1) the sale and purchase of a fixed amount of a commodity 
        for delivery at a set price; 
           (2) price-later grain contracts; 
           (3) contracts agreed to between a processor and an 
        accredited bargaining organization under sections 17.691 to 
        17.703; 
           (4) future contracts which involve the sale or purchase of 
        a standardized quantity of a commodity for future delivery on a 
        regulated commodity exchange; 
           (5) agricultural marketing contracts between a capital 
        stock cooperative and its members under section 308A.205; or 
           (6) occasional sales between persons who produce or cause 
        to be produced food, feed, or fiber in a quantity beyond their 
        own family use. 
           Sec. 11.  [17.9443] [WAIVER OF CONTRACT PROVISIONS IS 
        VOID.] 
           Any provision of an agricultural contract which waives or 
        attempts to waive any provision of sections 17.90 to 17.97 is 
        void. 
           Sec. 12.  [EFFECTIVE DATE.] 
           Sections 1 to 11 are effective on January 1, 2001, and 
        apply to agricultural contracts entered into or substantively 
        amended after that date. 
           Presented to the governor May 11, 2000 
           Signed by the governor May 15, 2000, 10:52 a.m.