Code Section Group

Food and Agricultural Code - FAC


  ( Division 20 enacted by Stats. 1967, Ch. 15. )

CHAPTER 1. Nonprofit Cooperative Associations [54001 - 54294]

  ( Chapter 1 enacted by Stats. 1967, Ch. 15. )

ARTICLE 10. Marketing Contracts [54261 - 54266]
  ( Article 10 enacted by Stats. 1967, Ch. 15. )


The association and its members may make and execute marketing contracts which require the members to sell, for any period of time, but not over 15 years, all or any specified part of any product or specified commodity exclusively to or through the association, or any facilities which are created by the association. If they contract a sale to the association, title to the product passes absolutely and unreservedly, except for recorded liens, to the association upon delivery or at any other specified time which is expressly and definitely agreed in the contract.

(Enacted by Stats. 1967, Ch. 15.)


The contract may provide that the association may sell or resell any product that is delivered by its members, with or without taking title to that product, and pay over to its members, the resale price, after deducting all of the following:

(a) Necessary selling, overhead, and other costs and expenses.

(b) Proper reserves for retiring stock, if any.

(c) Dividends not exceeding 8 percent per annum upon stock or membership capital.

(Amended by Stats. 1997, Ch. 46, Sec. 2. Effective January 1, 1998.)


Notwithstanding any provisions of the Civil Code, a contract which is entered into by a member or stockholder of an association which provides for the delivery to such association of any product which is produced or acquired by the member or stockholder, may be specifically enforced by the association to secure the delivery to it of such product.

(Enacted by Stats. 1967, Ch. 15.)


The bylaws or the marketing contract may fix, as liquidated damages, specific sums to be paid by the member or stockholder to the association upon the breach by him of any provision of the marketing contract regarding the sale or delivery or withholding of any product and may provide that the member will pay all costs, premiums for bonds, expenses, and fees, if any action is brought upon the contract by the association. Such provisions are valid and enforceable in the courts of this state. The clauses which provide for liquidated damages are enforceable as such and shall not be regarded as penalties.

(Enacted by Stats. 1967, Ch. 15.)


If there is a breach or threatened breach of such marketing contract by a member, the association 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 such an action and upon filing a verified complaint which shows the breach or threatened breach, and upon filing a sufficient bond, the association shall be entitled to a temporary restraining order and preliminary injunction against the member.

(Enacted by Stats. 1967, Ch. 15.)


In any action upon such marketing agreements, it shall be conclusively presumed that a landowner or landlord or lessor is able to control the delivery of any product which is produced on his 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, were created or changed after execution by the landowner, landlord, or lessor of such a marketing agreement. In such actions, the remedies for nondelivery or breach which are provided by this article shall lie and be enforceable against such landowner, landlord, or lessor.

(Enacted by Stats. 1967, Ch. 15.)

FACFood and Agricultural Code - FAC10