Prompt Payment for Livestock
Under the Packers and Stockyards Act
The Packers and Stockyards Act contains specific requirements for the prompt payment for livestock purchased by dealers, market agencies, and packers whose operations are subject to the Act. These requirements apply to all purchases whether direct from the owner or at an auction market or terminal stockyard.
The basic requirement is that every dealer, order buyer, packer, commission firm, and auction market must make payment for livestock before the close of the next business day following the purchase and transfer of possession. In addition, the Act establishes specific payment delivery requirements for livestock purchased for slaughter.
Livestock purchased for slaughter -
When livestock is purchased for slaughter, a check must actually be delivered to the seller or his or her authorized representative at the point of transfer of possession, or funds must be wire transferred to the seller's account by the close of the next business day.
In the case of a purchase on a carcass weight basis, payment must be made by check at the point of transfer of possession, or funds must be wire transferred to the seller's account no later than the close of the next business day following the determination of the purchase amount.
If the seller or his or her representative is not available to receive payment or if he or she agrees in writing with the buyer beforehand, payment may be placed in the mail before the close of the next business day.
Nonslaughter purchases -
When livestock is purchased for other than slaughter purposes, payment may be made directly to the seller or his or her representative or placed in the mail before the close of the next business day.
Agreements to different payment terms -
The buyer and seller may expressly agree to effect payment in a different manner. Any such agreement must be made prior to the purchase transaction and must be in writing.
If the seller agrees to extend credit to a packer, the seller loses all interest in the statutory trust, as established by the 1976 amendments to the P&S; Act. It is the responsibility of the packer to notify the seller that rights to payment under the trust provision are lost when the sale is on a credit basis and to obtain a written acknowledgment from the seller waiving those rights.
Other requirements applicable to payment -
Buyers cannot use threats or intimidation to influence the terms of payment.
Draft issued in payment for livestock do not meet the prompt payment requirements. Before packers, market agencies, or dealers can issue a draft in payment for livestock, they must enter into a written credit agreement with the seller.
Seller may demand immediate payment -
The provisions of the statute do not preclude the right of livestock sellers to demand immediate payment. Market agencies, selling on commission at auction markets and terminal stockyards, may refuse to sell to a potential buyer or may demand cash payment prior to releasing the livestock.