Grain Journal - January/February 2009 - (Page 106) Counterparty Risk MANAGING CONTRACTS AND DISPUTES IN TODAY’S MARKET This article is based on a presentation by Jacob Bylund, an attorney from the Des Moines, IA office of Faegre and Benson LLP (515-248-9000). He spoke in December 2008 at the National Grain and Feed Association’s Country Elevator and Feed Industry Conference in St. Louis, MO. Contracts between grain elevators and farmers or between grain elevators and grain end users are relatively standard, but there are still a remarkable number of contracts that end up in dispute. Merchandisers generally do a good job in marketing grain at favorable terms to their companies but end up in disputes with producers or users FIRST IN A SERIES because they lack training in the fundamentals of contracting. By making sure that you adhere closely to proper contracting procedures, you can reduce the risk of disputes and the legal proceedings that often result. Know Your Customer Knowing your customer means: • Knowing the full legal name of the party with whom you are contracting. • Knowing the nature and scope of the party’s business operations. • Being comfortable, after a reasonable inquiry and assessment, with the risk of doing business with that party. Business Organization Options The first step in knowing your customer is understanding the type of business organization the Jacob Bylund other party has. The options for organizing a business have expanded greatly over the past couple of decades, and many of these options are designed to shield the assets of the business owner from third-party creditors. Among them: Sole proprietorship. This type of Response No. 1061 Response No. 1062 106 GJ J/F http://www.nabrico-marine.com http://www.cytec.com http://www.cytec.com http://www.nabrico-marine.com
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