Public Act 93-0522
HB0264 Enrolled LRB093 06232 BDD 06343 b
AN ACT concerning agriculture.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 1. Short title. This Act may be cited as the
Agricultural Production Contract Code.
Section 5. Definitions. As used in this Act, unless the
context otherwise requires:
"Capital investment" means a purchase or lease of any of
the following:
(1) A structure used for producing or storing a
commodity required to be provided by the producer under
the terms of the production contract if the structure has
a useful life in excess of 3 years. This includes, but
is not limited to, swine farrowing buildings, grain
storage facilities, and manure storage structures.
(2) Machinery or equipment used for producing a
commodity required to be provided by the producer under
the terms of the production contract if the machinery has
a useful life in excess of 3 years. This includes, but
is not limited to, trucks, tractors, combines, wagons,
augers, and planters.
"Commodity" means livestock, raw milk, fruits,
vegetables, or a crop.
"Contract input" means a commodity or an organic or
synthetic substance or compound that is used to produce a
commodity, including but not limited to, livestock, plants,
agricultural seeds, semen or eggs for breeding livestock,
fertilizer, pesticides, or petroleum products.
"Contractor" means a person who offers, provides, or
enters into a production contract with a producer for the
production of commodities in this State by the producer.
"Crop" means a plant used for food, animal feed, fiber,
oil, pharmaceuticals, nutriceuticals, industrial uses, or
seed, including but not limited to, alfalfa, barley,
buckwheat, canola, corn, flax, forage, fruits, millet, oats,
popcorn, rye, sorghum, soybeans, sunflowers, tobacco,
vegetables, wheat, and grasses used for forage or silage.
"Livestock" includes, but is not limited to, beef cattle,
dairy cattle, poultry, sheep, or swine.
"Person" means an individual or entity, including but not
limited to, a sole proprietorship, a partnership, a
corporation, a cooperative, an association, a limited
liability company, an estate, or a trust.
"Produce" means to do any of the following:
(1) Provide feed or services relating to the care
and feeding of livestock. If the livestock is dairy
cattle, then "produce" includes milking the dairy cattle
and storing raw milk.
(2) Provide for planting, raising, harvesting,
identity preserving, or storing a crop.
"Produce" includes preparing the soil for planting and
also for nurturing the crop by the application of fertilizers
or soil conditioners, including those substances regulated
under the Illinois Fertilizer Act of 1961, or pesticides as
defined in the Illinois Pesticide Act.
"Producer" means a person who has been offered or who has
entered into a contract to produce a commodity. "Producer"
does not include a fertilizer or pesticide applicator, a feed
supplier, or a veterinarian, when acting in that capacity.
"Production contract" means: (1) Any written document
offered to or executed by a producer, under the provisions of
which (i) the producer would sell to a contractor, or the
contractor's designee, an identified commodity or commodities
and (ii) the contractor has, or exercises some control or
direction over, the production process; or (2) any written
agreement offered to or executed by a producer under the
provisions of which the producer would produce, care for, or
raise a commodity or commodities not owned by the producer,
using land, equipment, or facilities owned or leased by the
producer, in exchange for payment. For purposes of this
definition, control or direction over the production process
includes (i) the contractor's designation of special
commodity characteristics, such as those present in
value-enhanced grains, or specific genetics in livestock or
(ii) the contractor's designation of a production input, such
as a seed variety, to be used by the producer to fulfill the
production contract.
Section 10. Limited applicability. This Act shall not
apply to a production contract under the provisions of which
the commodity is to be delivered by the producer to the
contractor or the contractor's designee within 30 days after
the date of the production agreement.
Section 20. Readability of production contracts.
(a) A production contract must comply with all of the
following:
(1) It must be in a typeface at least as large as
10-point modern, one-point leaded.
(2) It must be divided and captioned by its various
sections, have an index of the major provisions of the
production contract and the pages on which they are
found, and use commonly-used and understood words and
terms, but may include technical or industry terms
customarily used and understood by producers in the
ordinary course of business.
(3) It must limit references to other sections or
provisions and, when incorporating a document, have a
copy of the document attached.
(4) It must have a Flesch scale analysis
readability score of at least 50.
(b) A contractor may include a provision in the index
required by Section 25 that the production contract being
offered meets the requirements of this Section as to
readability.
Section 25. Index. An index of the major portions of
the contract and the pages on which they are found must be
included with each production contract offered to a producer
that exceeds 2 pages in length. The index must contain
references for any of the following that are included in the
contract:
(1) The names of the parties to the contract.
(2) The definition sections of the contract.
(3) The provisions governing cancellation, renewal,
or amendment of the contract by either party.
(4) The sections outlining the duties or
obligations of each party.
(5) The compensation information.
(6) Any provisions subject to change in the
contract.
(7) Any special provisions relative to production
guidelines.
Section 30. Confidentiality clauses. A production
contract may include a confidentiality provision, but
communications with any of the following shall not be
considered a breach of any such provision: (i) a producer's
spouse; (ii) a producer's parents, siblings, and children of
the age of majority if these persons are partners,
shareholders, officers, or directors of the producer's
agricultural operations; (iii) accountants; (iv) attorneys;
(v) bankers; (vi) financial institutions; (vii) farm
managers; (viii) trusts or trust beneficiaries; or (ix) the
partners, officers, or directors of the producer's
agricultural operations. When communicating with these
persons, the producer must request each person to treat the
information as privileged and confidential.
Section 35. Special provisions. If a production
contract requires any special production or handling
guidelines required by the producer, these provisions must be
fully explained in the contract. These provisions include,
but are not limited to, disease protocols for livestock and
segregation or identity preservation for grain.
Section 40. Termination or alteration of contracts.
(a) A contractor may not provide, offer, or execute a
production contract that allows the contractor to
unilaterally terminate the contract unless (i) the
termination is the result of a legitimate force majeure as
applied to the contractor or (ii) the producer breaches a
material term of the contract or voluntarily abandons the
contractual relationship.
(b) A contractor may not alter the quality, quantity, or
delivery times of contract inputs provided to the producer,
unless agreed to by the producer.
(c) Any cancellation or termination provisions must
include specific causes for the cancellation or termination
and any circumstances under which the commodity produced
under the contract might be rejected in whole or part by the
contractor.
(d) Any circumstances in which the compensation to be
paid by a producer may be discounted or increased shall
include specific causes to be clearly and concisely stated.
Section 45. Investment requirements.
(a) This Section applies to all production contracts
that have capital investment requirements.
(b) Except as provided in subsection (c), a contractor
shall not take action to terminate or cancel a production
contract until the contractor has done the following:
(1) Provided the producer with written notice of
the intention to terminate or cancel at least 60 days
before the effective date of the termination or
cancellation.
(2) Reimbursed the contract producer for the value
of the remaining useful life of the capital investment
items. In calculating this reimbursement amount, the
contractor may take into account the producer's ability
to use the capital investments in other business
enterprises of the producer and the opportunity to recoup
the cost of the capital improvements by sale or lease.
(c) Exceptions. A contractor may terminate or cancel a
production contract without remedy as required in subsection
(b) if the basis for the termination or cancellation is any
of the following:
(1) A voluntary abandonment of the contractual
relationship by the producer. A complete failure of a
producer's performance under a production contract shall
be deemed to be abandonment.
(2) Failure of the producer to meet the specific
provisions of the contract and failure to remedy his or
her default.
(3) The conviction of a producer of an offense of
fraud or theft committed against the contractor.
Section 50. Enforcement; offenses; remedies. The
Attorney General is primarily responsible for enforcing this
Act.
A person who violates Section 20, 25, 30, or 35 commits a
business offense under the Code of Civil Procedure.
A producer may recover his or her actual damages for a
contractor's violation of Section 40 or 45 of this Act.
Section 55. Statute of limitations. A claim that a
production contract violates this Act must be filed within 4
years after the date on which the party alleging the
violation knew or should have known of the existence of the
violation.
Section 60. Conflict with the Uniform Commercial Code.
To the extent that any provision of this Act conflicts with
or is inconsistent with any provision of the Uniform
Commercial Code, the provision of this Act shall control.
Section 90. The Uniform Commercial Code is amended by
adding Section 1-104b as follows:
(810 ILCS 5/1-104b new)
Sec. 1-104b. Agriculture Production Contract Code. This
Act is subject to the provisions of the Agriculture
Production Contract Code.
Section 99. Effective date. This Act takes effect on
January 1, 2005.