Penalty provisions in grain delivery contracts
Your grain delivery contract must include provisions for a penalty to be paid to you, the producer, if the licensed grain company has not accepted your grain during the delivery period defined in your contract. This protection applies only to grain deliveries of the kind and grade of grain specified in your contracts. It is required under the Canada Grain Regulations for contracts that contain a specified delivery period.
Penalty provisions
Penalty amounts and specific mechanisms of payment are not specified in the Canada Grain Regulations. This allows producers and licensed grain companies to negotiate transparent, flexible and balanced commercial agreements that set out the contractual obligations for both parties.
During contract negotiation
When you are negotiating a delivery contract that includes a defined period during which you must deliver grain, review your contract carefully to make sure it includes a penalty clause in the event of non-acceptance of your grain.
Contact the Canadian Grain Commission if the delivery contract does not include a penalty clause and the grain company does not agree to add one.
If your grain is not accepted
If the licensed grain company does not accept your grain within the defined delivery period:
- Attempt to resolve the issue with the grain company.
- Contact the Canadian Grain Commission if the licensed grain company does not agree with your interpretation of the penalty clause or does not agree to pay you the penalty specified in the contract.
At your written request, the Canadian Grain Commission may arbitrate the matter or refer the case to an arbitrator.
Contact us
For more information about penalty provisions in grain delivery contracts, contact Industry Services