(a) A cooperative and its patron member or patron may make and execute a marketing contract, requiring the patron member or patron to sell a specified portion of the patron member’s or patron’s agricultural product or specified commodity produced from a certain area exclusively to or through the cooperative or facility established by the cooperative.

Attorney's Note

Under the Tennessee Code, punishments for crimes depend on the classification. In the case of this section:
ClassPrisonFine
class B misdemeanorup to 6 monthsup to $500
For details, see Tenn. Code § 40-35-111

Terms Used In Tennessee Code 43-38-114

  • Bylaws: means a written agreement described in §. See Tennessee Code 43-38-103
  • Complaint: A written statement by the plaintiff stating the wrongs allegedly committed by the defendant.
  • Contract: A legal written agreement that becomes binding when signed.
  • Cooperative: means an association organized under this title conducting business on a cooperative plan as provided under this chapter. See Tennessee Code 43-38-103
  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
  • Injunction: An order of the court prohibiting (or compelling) the performance of a specific act to prevent irreparable damage or injury.
  • Lien: A claim against real or personal property in satisfaction of a debt.
  • Member: means a person or entity reflected on the books of the cooperative as the owner of governance rights of a membership interest of the cooperative and includes patron and nonpatron members. See Tennessee Code 43-38-103
  • Patron: means a person or entity who conducts patronage business with the cooperative. See Tennessee Code 43-38-103
  • Patron member: means a member holding a patron membership interest. See Tennessee Code 43-38-103
  • Person: includes a corporation, firm, company or association. See Tennessee Code 1-3-105
  • State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
  • Temporary restraining order: Prohibits a person from an action that is likely to cause irreparable harm. This differs from an injunction in that it may be granted immediately, without notice to the opposing party, and without a hearing. It is intended to last only until a hearing can be held.
  • Termination: means the end of a cooperative's existence as a legal entity and occurs when the articles of termination are filed with the secretary of state under §. See Tennessee Code 43-38-103
  • written: includes printing, typewriting, engraving, lithography, and any other mode of representing words and letters. See Tennessee Code 1-3-105
(b) If a sale is contracted to the cooperative, the sale shall transfer title to the product absolutely, except for a recorded lien or security interest, to the cooperative on delivery of the product or at another specified time if expressly provided in the contract. The contract may allow the cooperative to sell or resell the product of its patron member or patron with or without taking title to the product, and to pay the resale price to the patron member or patron, after deducting all necessary selling, overhead and other costs and expenses, including other proper reserves and interest.
(c) A single term of a marketing contract shall not exceed ten (10) years, but a marketing contract may be made self-renewing for periods not exceeding five (5) years each, subject to the right of either party to terminate by giving written notice of the termination during a period of the current term as specified in the contract.
(d) The bylaws or the marketing contract, or both, may set a specific sum as liquidated damages to be paid by the patron member or patron to the cooperative for breach of any provision of the marketing contract regarding the sale or delivery or withholding of a product and may provide that the member or patron shall pay the costs, premiums for bonds, expenses and fees if an action is brought on the contract by the cooperative. The remedies for breach of contract are valid and enforceable in the courts of this state. The provisions shall be enforced as liquidated damages and are not to be considered or regarded as a penalty.
(e) If there is a breach or threatened breach of a marketing contract by a patron member or patron, the cooperative is entitled to an injunction to prevent the further breach of the contract and to a decree of specific performance of the contract. Pending the adjudication of the action after filing a certified complaint showing the breach or threatened breach and filing a sufficient bond, the cooperative is entitled to a temporary restraining order and preliminary injunction against the patron member or patron.
(f) Any person who knowingly induces or attempts to induce any member or patron of a cooperative organized under this chapter to breach a marketing contract with the cooperative, or who maliciously and knowingly spreads false reports about the finances or management of the finances, shall be guilty of a Class B misdemeanor and subject to a fine only of not more than five hundred dollars ($500), for each such offense; provided however, that this section shall not apply to a bona fide creditor of such cooperative, or the agent or attorney of any such bona fide creditor, endeavoring to make collections of the indebtedness.
(g) In addition to the penalty provided in subsection (f), the person, corporation or other entity may be liable to the cooperative for civil damages for any violation of subsection (f). Each violation shall constitute a separate offense and is subject to the penalties in this subsection (g) and subsection (f).
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