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CREDIT-SALE CONTRACTS

CREDIT-SALE CONTRACTS. Lowell P. Bottrell Michael L. Gust ANDERSON, BOTTRELL, SANDEN & THOMPSON. What is a credit-sale contract?.

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CREDIT-SALE CONTRACTS

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  1. CREDIT-SALE CONTRACTS Lowell P. Bottrell Michael L. Gust ANDERSON, BOTTRELL, SANDEN & THOMPSON

  2. What is a credit-sale contract? • A written contract for the sale of grain pursuant to which the sale is to be paid or may be paid more than thirty days after the delivery or release of the grain for sale and which contains the notice provided in subsection 7 of section 60-02.1-14. N.D.C.C. § 60-02.1-01(2)

  3. N.D.C.C. § 60-02.1-01(2), by its very language, allows for split contracts. That is, part of a sale contract can be cash paid and the other portion paid more than 30 days after delivery. Only that portion to be paid after 30 days is credit and the language of § 60-02.1-14 must be included in the contract.

  4. So, what does § 60-02.1-14 require? • 1. Contract must be in writing. • 2. Contract must include: • A. Seller’s name and address. • B. Conditions of delivery. • C. Amount and kind of grain delivered. • D. Price per unit or basis of value. • E. Date payment is to be made. • F. Duration of credit-sale contract. • G. Notice in a clear and prominent manner that the sale is not protected by the bond coverage provided for in section 60-02.1-08.

  5. § 60-02.1-14 cont’d • Contract must be signed by both parties and executed in duplicate. • One copy must be delivered to the seller and one copy must be kept by grain buyer.

  6. May a cash sale contract be converted to a credit sale contract? Assumably yes. As long as the requirements of § 60-02.1-14 are met.

  7. Eligibility to receive reimbursement • A person is eligible to receive reimbursement from the credit-sale contract indemnity fund, if: • 1. After August 1, 2003, a person sold grain to a licensed warehouse or grain buyer in this state under the provisions of a credit-sale contract. • 2. The licensed warehouse or grain buyer becomes insolvent. • 3. The licensed warehouse or grain buyer, as a result of the insolvency, does not fully compensate the person in accordance with the credit-sale contract.

  8. Prior to disbursement of money from the indemnity fund, the North Dakota Public Service Commission must have been appointed as the trustee of the licensed warehouse or grain buyer. • N.D.C.C. § 60-10-05.

  9. Reimbursement limit: • The amount payable to any eligible person from the credit-sale contract indemnity fund for each insolvency may not exceed the lesser of 80% of the amount owed to that eligible person in accordance with all of that person’s unsatisfied credit-sale contracts or $280,000.00. N.D.C.C. § 60-10-06.

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