CO Code § 7-56-503 (2021)
2021 Colorado Code|Title 7 - Corporations and Associations|Article 56 - Cooperatives|Part 5 - Powers and Purposes: Application of Other Laws|§ 7-56-503. Remedies for Breach of Marketing or Purchasing Contract

  The bylaws or the marketing or purchasing contracts of an agricultural cooperative may fix as liquidated damages specific sums to be paid by a member to the cooperative upon the breach by the member of any provision of the marketing or purchasing contract regarding the sale, purchase, receipt, or delivery or withholding of products or other goods and may further provide that the member will pay all costs, premiums for bonds, expenses, and fees if any action is brought upon the contract by the cooperative. All such provisions shall be valid and enforceable in the courts of this state, and clauses providing for liquidated damages shall be enforceable as such and shall not be regarded as penalties.    In the event of any breach or threatened breach of a marketing or purchasing contract by a member, the cooperative shall be 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 and upon filing a sufficient bond and verified complaint showing the breach or threatened breach, the cooperative shall be entitled to a temporary restraining order and preliminary injunction against the member.    In any action upon a marketing contract, it shall be conclusively presumed that a landowner, landlord, or lessor is able to control the delivery of products or other goods produced on such landowner's, landlord's, or lessor's land by tenants or others whose tenancy or possession or work on such land or the terms of whose tenancy or possession or labor on such land was created or changed after execution by the landowner, landlord, or lessor of such marketing contract. The remedies provided in this section for nondelivery or breach shall lie and be enforceable against such landowner, landlord, or lessor in any such action upon a marketing contract.     History. Source: L. 96: Entire article R&RE, p. 510, § 1, effective July 1.    Editor's note:   This section is similar to former § 7-56-120 as it existed prior to 1996.   ANNOTATION   Analysis     I. GENERAL CONSIDERATION.    II. LIQUIDATED DAMAGES.    III. INJUNCTIONS AND SPECIFIC PERFORMANCE.    II. TRADE NAMES.    III. ASSUMED NAMES.     I. GENERAL CONSIDERATION.   Law reviews. For article, “One Year Review of Cases on Contracts”, see 33 Dicta 57 (1956).   Annotator's note: Since § 7-56-503 is similar to § 7-56-120 as it existed prior to the 1996 repeal and reenactment of this article, relevant cases construing that provision have been included in the annotations to this section.   II. LIQUIDATED DAMAGES.   This section provides that the bylaws or the marketing contract may fix as liquidated damages for the breach of marketing contracts specific sums to be paid by the members or stockholders to the association upon the breach of any of the provisions of the marketing contract regarding the sale, delivery, or withholding of products. Marvin v. Pueblo Dairymen's Coop., 131 Colo. 601 , 284 P.2d 238 (1955).   And the term “liquidated damages” indicates the amount which the contracting parties agree is to be in satisfaction on account of the breach, with the amount thus agreed upon being enforceable. Marvin v. Pueblo Dairymen's Coop., Inc., 131 Colo. 601 , 284 P.2d 238 (1955).   Thus, since the payment or collection of the amount of liquidated damages specified puts an end to all claims in connection therewith, the matter of the right to a restraining order or injunction would depend entirely upon the conditions of the marketing agreement. Marvin v. Pueblo Dairymen's Coop., 131 Colo. 601 , 284 P.2d 238 (1955).   III. INJUNCTIONS AND SPECIFIC PERFORMANCE.   Contract not invalid for permitting injunction or specific performance. A marketing contract drawn under the provisions of this article is not invalid because it permits an injunction or specific performance for the enforcement of its terms. Rifle Potato Growers' Coop. Ass'n v. Smith, 78 Colo. 171 , 240 P. 937 (1925).   If there is a conspiracy between a party to a marketing association contract and another to escape the obligations of the contract, then an injunction is properly granted against both of them. Monte Vista Potato Growers' Coop. Ass'n v. Bond, 80 Colo. 516 , 252 P. 813 (1927).