Many of these contracts for the trading of grain and feed are entered into over the telephone with written confirmation to follow. Disputes can arise over whether the written confirmation matches the oral agreement reached by the parties. A farmer who fails to object to a written confirmation of a trade has accepted the terms contained in the written confirmation even if the terms are contrary to the parties' oral agreement. The enforceability of hybrid cash contracts and the duties and liabilities of the parties are controlled by state and federal laws. A number of states have specific statutes governing deferred payment or deferred price contracts between grain dealers and producers.
Some states mandate that agricultural contracts contain arbitration or mediation clauses.
The controversy centers around the legality of so-called flex HTAs that allow farmers to roll the delivery date of crops to sometime in the future in order to sell a current crop in the spot market at a favorable price. Unfortunately, because of hedging by grain dealers and market fluctuations, when a farmer is asked for physical delivery of a crop on the date stated in the roll forward agreement, the farmer may face huge losses. To avoid losses, some farmers have refused to deliver their crops. Grain dealers have sued farmers under HTA contracts alleging breach and seeking specific performance and money damages. The typical farm property policy covers the farm dwelling - as long as it s mainly used as a residence.