SECTIONS 56271-56283 - California Statutes

FOOD AND AGRICULTURAL CODE

SECTION 56271-56283

56271. Every commission merchant, that receives any farm product
for sale as a commission merchant, shall promptly make and keep a
correct record which shows in detail all of the following with
reference to the handling, sale, or storage of such farm product:
(a) The name and address of the consignor.
(b) The date it was received.
(c) The condition and quantity upon arrival.
(d) Date of such sale for the account of the consignor.
(e) The price for which it was sold.
(f) An itemized statement of the charges to be paid by the
consignor in connection with the sale. Any services rendered for
which charges are made, if not filed with the director, shall be
charged at cost if not covered by a written contract. Cost-supporting
data shall be available for verification.
(g) The names and addresses of all purchasers if the commission
merchant has any financial interest in the business of the
purchasers, or if the purchasers have any financial interest in the
business of the commission merchant, directly or indirectly, as
holder of the other's corporate stock, as copartner, as lender or
borrower of money to or from the other, or otherwise. Such interest
shall be noted in such records following the name of any such
purchaser.
(h) A lot number or other identifying mark for each consignment,
which number or mark shall appear on every sales tag and every other
essential record which is needed to identify each consignment from
receipt through final sale. When requested by the consignor, as
provided by Section 56281, a lot number shall appear on each
individual farm product container. When containers are on pallets,
then only the exposed containers shall be marked. When stamping or
otherwise identifying each container is impractical due to the type
of packaging, the container need not be marked.
(i) Any claim which has been or may be filed by the commission
merchant against any person for overcharges or for damages which
result from the injury or deterioration of such farm product by the
act, neglect, or failure of such person. Such records shall be open
to the inspection of the director and the consignor of the farm
product for whom such claim is made.

56272. When requested by his consignors, a commission merchant
shall, before the close of the next business day following such
request, transmit to the consignor a true written report of the
quantity sold and the selling price.

56273. The full amount which is realized from the sales, including
all collections, overcharges, and damages, less the agreed commission
and other charges, together with a complete account of sales, as
provided in Section 56273.1, shall be remitted to the consignor
within 10 days after receipt of the moneys by the commission
merchant, unless otherwise agreed in writing.

56273.1. (a) For purposes of this chapter, an account of sales
shall be deemed complete if it consists of all of the following
information:
(1) The date of shipment.
(2) The terms of the original sale concerning where and when title
passes.
(3) The commodity, variety, size, and grade.
(4) The quantity shipped.
(5) The quantity disposed of in a manner other than sale by the
buyer, if applicable.
(6) The original selling price.
(7) The adjusted selling price, if applicable.
(8) The reason for adjustment, if applicable.
(9) Any inspection certificate required to be obtained as stated
in Section 56280.
(10) Amounts billed and collected from the buyer for services
rendered to the buyer by the commission merchant.
(11) The gross and net returns received from the buyer.
(12) Any authorized commission merchant charges.
(13) Any additional amounts paid to the consignor by the
commission merchant to support the original price.
(14) The net amount due the consignor.
(b) The consignor and the commission merchant may agree on the
documentation necessary to support the information required by
subdivision (a). The agreements shall be made, in writing, prior to
the shipping season of the particular farm product.

56274. In the account, the names and addresses of purchasers need
not be given. Where a commission merchant has entered into a contract
with two or more producers or consignors which contract provides
that the returns for farm products sold for the account of such
producers or consignors shall be pooled on a definite basis as to
size or grade, or both, during a certain period of time, then a
commission merchant shall obtain the written consent of the
consignors and shall be required to render an account of sales,
showing the net average pool return on each size or grade, or both,
from sales made and shall keep a correct record of such sales,
showing in detail all information as required in Section 56271.

56275. Every licensee operating as a commission merchant shall
retain a copy of all records which cover each transaction, which copy
shall at all times be available for, and open to, the confidential
inspection of the director, consignor, or the authorized
representative of either.

56276. If there is any dispute or disagreement between a consignor
and a commission merchant which arises at the time of delivery as to
condition, quality, grade, pack, quantity, or weight of any lot,
shipment, or consignment of any farm product, the department shall
furnish, upon the payment of a reasonable fee for it by the
requesting party, a certificate which establishes the condition,
quality, grade, pack, quantity, or weight of such lot, shipment, or
consignment.

56277. Such certificate is prima facie evidence of the truth of the
statements contained therein. The presumption established by this
section is a presumption affecting the burden of proof, but it does
not apply in a criminal action.

56278. Proof of any sale of any farm product which is made by a
commission merchant for less than the current market price to any
person with whom he has any financial connection, directly or
indirectly as owner of its corporate stock, as copartner, or
otherwise, or any sale out of which such commission merchant
receives, directly or indirectly, any portion of the purchase price,
except the commission which is named in the licensee's application or
in a specific contract with the consignor, establishes a rebuttable
presumption of fraud within the meaning of this chapter. This
presumption is a presumption affecting the burden of proof.

56279. The burden of proof shall be upon the commission merchant to
prove the correctness of any accounting required to be performed by
the commission merchant pursuant to this chapter as to any
transaction which may be questioned.

56280. (a) A commission merchant shall notify each consignor with
whom he or she does business of this section. The notice shall be
given in writing prior to the shipping season of the particular farm
product.
(b) No charge shall be made against a consignor's account for a
downward price adjustment or a reduction in quantity of farm products
delivered due to a breach of contract, unless the commission
merchant has, in his or her files, a federal-state inspection
certificate, issued pursuant to the United States Agricultural
Marketing Act of 1946, (7 U.S.C. 1621, et seq.), indicating the type
and the extent of the substandard condition of the lot involved in
the breach of contract, thereby supporting the amount charged against
the consignor's account. The commission merchant need not obtain a
federal-state inspection certificate unless the lot involved is of a
substandard condition.
(c) Notwithstanding Section 56281, this section does not preclude
a consignor from agreeing to a downward price adjustment or a
reduction in the quantity of farm products delivered and waiving the
right to inspection when the agreement was made prior to the shipping
season of the particular farm product and was in writing.
(d) The federal-state inspection certificate may be substituted by
a private third-party inspection, based on the standards prescribed
under the United States Agricultural Marketing Act of 1946, if the
director determines, to his or her satisfaction, that a federal-state
inspection certificate could not reasonably be obtained. If the
director determines, to his or her satisfaction, that neither a
federal-state inspection certificate nor private, third-party
inspection, can be reasonably obtained, a signed statement of two or
more disinterested, or otherwise independent parties, who have
sufficient knowledge, acquired through education or experience, to
evaluate the farm product involved, may be used as substitute for the
federal-state certificate or third-party inspection, in order to
make a statement as to the quality and condition of the lot of farm
product at the time of inspection.
(e) Where the condition of the lot is not substandard but for
other reasons, including a decline in market demand, there is a
downward price adjustment, the commission merchant shall affirm, in
writing, that the lot was at least of standard quality at the time of
sale. The affirmation shall be attached to, or made part of, the
records of the consignment.
(f) As used in this section, "lot" means the farm product
identified by the procedure set forth in subdivision (h) of Section
56271.

56280.5. Any agreement waiving any right guaranteed by this chapter
shall set forth in exact language the provision of this code being
waived. Upon request by the secretary, the commission merchant shall
make the agreement available for inspection. Any agreement that does
not comply with this section, or that is not made available to the
secretary for inspection upon the secretary's request, is void.

56281. A commission merchant shall notify each consignor with whom
he or she does business of the provisions affecting the consignor
that are contained in Sections 56271, 56272, 56273, 56280, 56282, and
56351, and this section. The notice shall be given in writing prior
to the shipping season of the particular farm product. The notice
shall include a form whereby the consignor may request notice of any
adjustment by the commission merchant. The form shall also include a
provision whereby the consignor may request that lot numbers be
affixed on each individual farm product container as provided in
subdivision (h) of Section 56271. Each commission merchant shall keep
the records necessary to prove that the notices were given to each
consignor in accordance with this section. A licensee operating as a
commission merchant shall notify the consignor of any adjustment on a
transaction, and provide reasons for the adjustment, within 48
hours.
If the commission merchant is unable to contact the consignor by
telephone or in person, the notification shall be immediately
provided by mail.

56282. (a) Pursuant to this chapter, upon the verified complaint of
the consignor, the secretary may disallow to a commission merchant,
all or part of, any adjustment charged back to any consignor
similarly situated, if the secretary determines that there is
insufficient justification of the condition or circumstances
requiring the adjustment.
(b) In determining whether there is insufficient justification for
an adjustment, the secretary shall first determine if any waivers or
agreements have been entered into pursuant to this chapter. If a
waiver or agreement has been entered into and the secretary
determines that the waiver or agreement complies with Section 56280.5
and does not otherwise violate this chapter, the secretary's inquiry
in determining this adjustment shall be governed by the terms and
conditions of the waiver or agreement.
(c) If there is no waiver or agreement, or if the waiver or
agreement violates this chapter, as determined by the secretary, in
determining whether there is insufficient justification for an
adjustment, the secretary shall consider, among other things, the
following:
(1) The certificate issued pursuant to Section 56280 or 56351 does
not support breach of contract.
(2) The perishability of the farm product involved and the timely
issuance of the certificate pursuant to Section 56280 or 56352.
(3) Market reports or other market evidence does not support a
downward price adjustment in accordance with Section 56279.

56283. Every commission merchant who receives any farm product for
sale on consignment shall exercise reasonable care and diligence in
disposing of the product in a fair and reasonable manner.