Office of the Revisor of Statutes
Minnesota Session Laws - 2000, Regular Session
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.
Official Publication of the State of Minnesota
Revisor of Statutes