TITLE 3

Agriculture

Cooperative Agricultural Associations or Corporations

CHAPTER 85. CORPORATION LAW FOR COOPERATIVE AGRICULTURAL ASSOCIATIONS

Subchapter IV. Marketing Contracts; Actions; Restraint of Trade and Monopoly


An association may engage in buying and selling agricultural products and supplies and take title thereto. An association may make and execute contracts with its stockholders and other patrons requiring them to sell all or any specified part of their agricultural products or specified commodities exclusively to or through the association or any facilities to be created by the association. An association shall be granted by any such contract the rights which its members individually have, arising out of the production, sale, handling or delivery of products or commodities covered by the contract. The contract shall specify a reasonable period in each year during which the association or any stockholder or patron so contracting with the association may terminate the contract. The association, as agent for a stockholder or other patron, may buy agricultural supplies for him or her and sell his or her agricultural or other kindred products.

41 Del. Laws, c. 132, § 10; 3 Del. C. 1953, § 8541; 70 Del. Laws, c. 186, § 1.;

Contracts with stockholders or other patrons may provide that the association may:

(1) Blend proceeds of sales in one or more or all markets, and equalize returns among all stockholders and other patrons in such markets;

(2) Establish pools and, in the case of milk, a base rating plan or any plan for production control;

(3) Collect the proceeds of the sales of such products or commodities direct from the buyer thereof, and this authority shall be coupled with an interest in favor of the association and the other patrons which is irrevocable by the stockholder or patron as long as the contract is in effect;

(4) Make, or permit the buyer to make, such deductions from the proceeds of the sales or products or commodities and the payment therefor to the association as are provided in the contract, and such authority shall be coupled with an interest in favor of the association and the other patrons which is irrevocable by the stockholder or patron as long as the contract is in effect.

41 Del. Laws, c. 132, § 10; 3 Del. C. 1953, § 8542.;

If stockholders and patrons contract a sale to an association, it shall be conclusively held that title to the products passes absolutely and unreservedly to the association at the time of delivery out of the possession of the stockholder or patron, or at any other time, expressly and definitely agreed in the contract. The contract may provide that the association may sell or resell the products delivered by its stockholders and other patrons, with or without taking title thereto, and pay over to its stockholders and patrons the resale price, after deducting all necessary overhead and other costs and expenses, interest, dividends on the preferred and common stock, and other proper reserves.

41 Del. Laws, c. 132, § 10; 3 Del. C. 1953, § 8543.;

(a) Where a contract provides that an association may collect the price of products or commodities sold through the association or facilities created by it, the association may maintain an action against any buyer of such products or commodities for the price, in its own name, without joining such stockholder or patron, with the same force and effect as if the association held title to the products or commodities and to the claim for the price thereof, and it shall not be a defense to any buyer to plead payment of the price to the stockholder or patron where the buyer has notice of the contract between the association and its stockholder or patron prior to the alleged payment.

(b) Where a contract provides that an association may make, or have the buyer make, a deduction from the proceeds of the sale of products or commodities sold through the association or facilities created by it, to be paid to the association, the association may maintain an action for the deduction, in its own name, without joining its stockholder or patron, with the same force and effect as if the association held title to the products or commodities and to the claim for the full price thereof, and it shall not be a defense to any buyer to plead payment of the price to the stockholder or patron where the buyer has notice of the contract between the association and its stockholder or patron prior to the alleged payment.

(c) Where a contract provides that an association may make, or have the buyer make, a deduction from the proceeds of the sale of products or commodities sold through the association or facilities created by it, to be paid to the association, the association shall have the right to maintain an action for the deduction in its own name without joining its stockholder or patron, with the same force and effect as if the association held title to the products or commodities or to the claim for the full price of the products or commodities, or to a claim in the amount of such deduction, and it shall not be a defense to a buyer to plead payment of all of the price of the products or commodities, including the deduction authorized to be made, to the stockholder or patron where such buyer has notice of the contract between the association and its stockholder or patron prior to the payment, or to plead that the effect of the provisions of this chapter constitute a partial assignment of the claim of the stockholder or patron.

41 Del. Laws, c. 132, § 10; 3 Del. C. 1953, § 8544.;

An association may join in a single suit any number of claims for the proceeds of products or commodities, or deductions therefrom, or any other claims arising from the sale, handling or delivery of such products or commodities, which its stockholders or patrons may have against any buyer, regardless of the fact that these claims may arise from the sale of products or commodities of different stockholders or patrons.

41 Del. Laws, c. 132, § 10; 3 Del. C. 1953, § 8545.;

An association organized under this chapter shall not be deemed to be a combination in restraint of trade, nor an illegal monopoly, nor an attempt to lessen competition or fix prices arbitrarily, or to create a combination or pool in violation of any law of this State, nor shall the marketing contracts between the association and its members, or any agreement authorized by this chapter, be so considered, nor shall the association be deemed to be a party to a combination in restraint of trade, or illegal monopoly, by reason of any agreement made with buyers of products or commodities sold to or through the association or facilities created by it, in accordance with this chapter.

41 Del. Laws, c. 132, § 10; 3 Del. C. 1953, § 8546.;