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.