beefnet

cash commodity exchange

 

 

Trading Rules

Terms and Conditions of Sale

Stocker and Feeder Cattle

 

These are the terms and conditions (“Trading Rules”) that shall govern the sale of stocker and feeder cattle and create a binding Cattle Purchase/Sales Contract (“Sales Contract”) by Members (“Members”) of the Beefnet Exchange [“Beefnet”] for each consummated sale.

Beefnet is a cash commodity exchange (“Exchange”) offering centralized trading for stocker and feeder cattle.  Buyers [“Buyers”] and Sellers [“Sellers”] must be registered and approved for Membership before trading on the Exchange. 

Beefnet will offer regularly scheduled auctions where Buyers will compete for listed groups of cattle [“Lots”] offered by Sellers. Lots of cattle will be described, posted for sale, and awarded to the highest bidder on the Beefnet website www.beefnet.org ("Site").

A Seller will offer a Lot for sale and the Lot will be assigned an auction date on Beefnet. The Exchange will determine the order of the Lots auctioned on the sale date. When a Lot is awarded to the highest bidder, the transaction becomes binding on both Buyer and Seller. A Confirmation Email [“Confirmation Email”] of the purchase will be sent to both Buyer and Seller following the auction at which time the transaction becomes binding on the parties according to the Trading Rules in this agreement.    

Sellers will provide required information and representative digital photographs of cattle offerings on the Exchange. Sellers will warrant the accuracy of the specifications contained in the offering.  Sellers must offer at least a full load Lot of cattle. (full load will weigh between 47,000 and 50,000 pounds]. If the Buyer rejects the cattle as misrepresented then the Seller may appeal under the Dispute section of these rules. If the Arbitrator rules in favor of the Seller then the transaction will be valid under the Sale Contract. If the Arbitrator rules the Lot was misrepresented, the sale is canceled and the cattle must be returned to Seller with Seller forfeiting the $3 head deposit to Beefnet.  Buyers and Sellers may always resolve the dispute by compromising the price without arbitration. The Exchange will obey and settle the transaction according to the instructions of the Arbitrator.

Buyers and Sellers will have access to the Beefnet Site using authorized user names and passwords prior to and on the date of an auction. Details of each Lot listed for sale will be available to qualified Buyers.  Each sale transaction will create a Sales Contract subject to the Trading Rules.  The Sellers will guarantee delivery of the cattle and will be subject to penalty for damages for a failure to deliver cattle sold on Beefnet. Buyers will obligate to the purchase commitment by authorizing Beefnet a $35/head cash deposit. Cash deposits are advance payments on the contract and not forfeit monies.

 

 

I.     MEMBERSHIP.  All Buyers and Sellers must be registered and approved as Members by Beefnet. There will be no membership fee. Both Buyers and Sellers consent to initial and ongoing credit and background checks.

A.      Buyers.

1.       All Buyers must be a Member in good standing and must approve the Trading Rules online before bidding on a Lot of cattle.

2.       Buyers must agree to provide bank account routing information to the Exchange and contact information for a Bank credit officer.

B.      Sellers. 

1.       Members in good standing of the Beefnet Exchange will qualify for listing a Lot of cattle for sale.

2.       Sellers agree, upon listing cattle for sale, to offer the Lot exclusively for the sale on Beefnet and to abide by the Trading Rules.

3.       Seller will post a $3 per head refundable deposit at the time of listing. The deposit will be returned after delivery if the following have not occurred:

a)       If no cancelation of the offering by Seller

b)      if the Reserve price set by Seller is not met resulting in a no sale. 

II.    TERMS OF TRADE. 

The Trading Rules may be modified or changed, from time to time, by the Beefnet Exchange and Members are obligated to read and agree to the terms prior to each auction. The Trading Rules will be posted on the Site.

A.      Offerings of cattle for sale

1.       Spot sales. This is an offering of cattle for current through 15 day delivery from the date of the auction.

2.       Forward sales. Delivery dates are greater than 15 days from the date of auction.

3.       Basis sales. Forward sales of cattle may be offered on a basis to the nearest Feeder Future contract following the anticipated delivery date. The contract month must be named in the offering. The cattle will be flat priced based on the notice received by the Exchange by the Seller of a price out by the Buyer prior to the Delivery date of the cattle.

4.    Both Buyer and Seller agree to accept the counterparty risk for both price and performance on forward contracts. Buyer and Seller acknowledge and agree that Beefnet assumes no liability for either price risk or performance risk.  

B.      Auctions.

1.       Sale Date.

Beefnet will host regularly scheduled auctions and the dates of the auctions will be posted on the Site.

2.       Trading Rules apply to all Beefnet auctions.

a)       Sellers

(1)     Sellers are required to complete all mandatory cattle description fields. The Seller warrants the descriptions are accurate. The Sellers will upload quality photographs of the cattle that fairly represent the flesh and quality by showing representative groups of the cattle offered for sale.

(2)    Sellers must furnish bank routing information and bank account number for payment.

(3)    Seller must furnish lienholder information to include:

(a)     Bank name

(b)    Loan officer

(c)     Loan officer’s email and phone number

Seller acknowledges that a listing will be removed by Beefnet unless the Seller's lienholder timely confirms permission and consent to sell the listed product on the Beefnet Site prior to the auction date.  

(4)     Sellers are obligated to complete any transaction resulting in an award of a Lot to the highest bidder.

(5)     The Seller may choose to set a [“Reserve Price”] or a minimum acceptable price. If Seller sets a Reserve Price the Seller agrees to:

(a)     The starting price for the Lot will be the Reserve Price and if the Reserve Price is not met, the cattle will not be sold.

(b)     A Lot that is unsold by the Seller will cause the Seller to forfeit the $3.00 per head deposit posted by Seller at the time the Lot was listed on the Exchange.

b)      Buyers

(1)    Any Buyer, having submitted the highest bid at the close of an auction of a Lot, is awarded the purchase of the Lot and obligated to complete the transaction pursuant to the Sales Contract created by the award and Confirmation Email. Bids are not retractable.

(2)    Bids are accepted in the order they are received by the Exchange, regardless of the order sent. Every transmission over the Internet travels a different route and can be delayed by a variety of factors, including the bidder’s own computer, internet connection, WiFi connection and other variables. The time lapse between submission of a bid and its registration by the Site can vary by several seconds. Beefnet has no responsibility for bids not received in time to qualify and register as a valid bid on the Exchange server.

(3)    The auction screen will inform the Buyer when the Buyer is the high bidder. A status window will show if the Buyer is “in” or “out”.

c)       Exchange Auction technology protocols.

(1)    Bid times, bidder ID and bid price are recorded by the Beefnet server as they are received. Valid bids must increase the price from the existing high bid when received by the Beefnet server.

(2)    Bid increments. The Exchange in its sole discretion will be responsible for determining the increments of bid prices on a Lot. The increments may be larger at the beginning of the auction and reduced in subsequent bidding.

(3)    A countdown period of varying length will begin towards the end of the auction of a Lot. Bids received prior to the countdown reaching zero will restart the countdown. Bids received after the countdown reaches zero will be discarded as invalid bids. The countdown may vary from the device used to bid whether a computer, smart phone, tablet or other device.  

(4)    In the event of a malfunction by the Beefnet host computer, the auction process will be stopped. If the malfunction has not affected the sale of lots sold prior to the malfunction, they will be considered sold. Auction of remaining lots will be completed upon correction of the malfunction. Bidding will be reopened on the lot being auctioned during the malfunction, with no previous bids awarded upon resumption of the auction.

(5)    Any malfunction by the Buyer’s computer or Internet service provider is not the responsibility of Beefnet.

  

C.      Stocker and Feeder Cattle. The following conditions apply specifically to the sale of Stocker and Feeder Cattle.

1.       Lots are sold by the hundredweight, in U.S. dollars, unless otherwise stated. Example: a bid of $100 represents a binding offer to purchase said lot for $100/CWT or $1.00/lb.

2.       All cattle are sold on a variable price scale (“Slide”), as set forth in the Lot description. All Slides will be scaled from the base weight according to the terms of the contract. Cattle with a weight higher than the base weight will be discounted according to the Slide described in the Lot listing. Lots having a Stop weight in the offering will not calculate any value for weights above the Stop. For example, a Lot with a base weight of 400 lbs. and a 10 cent slide, will be adjusted in the following manner:

a)       the delivered Lot has an actual average weight of 419 lbs..

b)      the Lot sells for $100. cwt.

c)       the weight price scale is calculated as 19 lbs. x .10 or $1.90 cwt. discount.

d)      the adjusted selling price is $98.10 cwt..

3.       This is a load Lot auction sale. A load of cattle is 48,000 to 50,000 pounds, unless otherwise stated. Sellers must offer cattle in load lots based upon head count and weight estimates. A one load Lot may include a mixed sex load but the steers and heifers must be loaded separately.

4.       Freight adjustments will be deducted from Seller’s payment in the event Seller fails to deliver within 95% of contracted head-count of deliverable cattle. The adjustment will be the difference between freight per hundredweight for the light load and the freight per hundredweight at the minimum weight of 48,000 pounds. The difference per cwt. multiplied by the transported weight will determine the total dollars deducted from the Final Settlement Sheet.  No freight adjustment is warranted when the head-count is presented but cattle are underweight. Sellers should provide consideration in their Lot listing for slippage in numbers from un-merchantable cattle or death loss between sales date and delivery.

5.       All un-merchantable cattle will be removed from the Lot and the cuts will be reweighed, if necessary. Some, but not all conditions of un-merchantability, are blindness, cripple, lump jaw and sickness. Individual cattle may be refused by Buyer if an individual animal weighs 150 pounds, or greater, variance to the average pay weight of the Lot.  Individual animals at least one year older than the age listed in the Lot description may also be removed. All culling by Buyer or Buyer’s agent will occur at the delivery location designated in the Lot listing.

6.       Sellers shall use their best efforts to represent the open status of heifers at the time of listing the Lot for sale.

7.       Description of the Cattle. 

Cattle listings must be submitted to Beefnet providing the following data fields of information provided by the Seller for each Lot of cattle listed on the Exchange:

 

Lot Number

Head

Sex

Base weight

Slide up [cwt.]

Weighing conditions

Delivery date range

Background [grass or feedlot]

Feed quantity per day in pounds and percent grain

Feed regime on the day of delivery

Implant type

Location [GPS coordinates]

Breed type

Age [in months]

Origin

Flesh

Frame

Horns

Freight

Comments:

III.  CONTRACT.

Buyer and Seller will receive a Confirmation Email of sale of a Lot shortly after the auction. The Confirmation Email will bind Buyer and Seller to a Sales Contract based on the Trading Rules. The failure of any party to object to the Confirmation Email within 24 hours of delivery by email, will constitute acceptance of a Sales Contract for the Lot. Any objections must be sent by email, within twenty four [24] hours of delivery of the Confirmation email, stating the cause for objection. Buyer and/or Seller must notify Beefnet by noon Central Standard or Central Daylight time the day after the sale, if they fail to receive the Confirmation Email sent on the day of the auction.  Beefnet may void the sale at its sole discretion at the end of a 24 hour period from the receipt of objections.

A.      Base weight.  Each Lot will be sold based upon a stated base weight.

B.      Excepted cattle from contract. Individual animals may be rejected as un-merchantable or out of weight range acceptability or out of age tolerances.

C.      Official or pay weight.  All cattle will be weighed on certified scales designated in the Lot listing. The shrink, or mathematical deduction from gross weight, will vary depending on delivery conditions and the percentage shrink will be defined in the Lot listing.  

D.      Feed and water.  The cattle will not have feed and water on the day of delivery, except as may incidentally occur. Feed representations other than delivery day will be stated in the listing.

E.       Weight variance. Individual animals may be rejected if the weight is greater than 150 pounds higher or lower than the average purchase weight.

F.      Representative.  Both Buyers and Sellers or their agents may attend the delivery of the cattle.  Both Buyer and Seller or their agents will be responsible for assuring compliance with the terms of the Sale Contract and reconciling any difficulties. Actions by the authorized agent of the Buyer and/or Seller will be deemed the actions of the principals.

IV.  DELIVERY. 

A specific delivery date will be selected from a date range provided in the Lot listing of the cattle at the time of auction. The Seller will designate a delivery date at least three [3] to five [5] business days before delivery by posting the date on a web page provided at the Beefnet Site and the Buyer will receive an email notice of the delivery date.  Seller should confirm receipt of email notice by telephone with Buyer. All cattle will be gathered into loading pens as soon as possible after daylight without feed or water in preparation for weighing on certified scales.

A.      Delivery expenses.  Sellers are responsible for all brand inspections fees, permits, or health certificates required by law.

B.      Transportation.  Buyers are responsible for transportation arrangements and any costs, permits, health inspection fees after acceptance of delivery of the cattle. Cattle not loaded immediately will be subject to feed and yardage charges that will be the responsibility of the Buyer.

C.      Head Count.  Seller shall be responsible for delivery of at least 95% of the head count of merchantable cattle sold on the contract. If there is a shortage then Seller is responsible to Buyer, if requested, for a cash adjustment included in the settlement to replace the cattle with similar weight and quality cattle as determined by the Exchange.  If Seller delivers more than 100% of the head count, Buyer has a right to accept or decline the overage.

D.      Substitution.  There will be no substitution of cattle without Buyer’s permission. Any variance from this obligation must be approved by Buyer and Seller. The cattle location will be described using a GPS coordinate and Seller will notify Buyer if the cattle are moved prior to delivery.

E.       Transfer of ownership and Risk of loss.  Buyer assumes all risk of ownership once the cattle are loaded on Buyers trucks for final shipment.  

F.       Final head count and official weights.  Seller or a representative of the Exchange will immediately post on the Beefnet website the official purchase weights and head count for determining the Final Settlement Sheet.

 

V.   WARRANTIES

 

A.           Seller Warranties. Seller warrants the following:

1.       The cattle delivered will be the same cattle described in the Lot listing details and in the photographs submitted to the Beefnet Exchange. Cattle will not be moved from the original location without prior notice to the Buyer. Subsequent cattle will not be added to the Lot nor will original cattle be removed from the Lot without permission of Buyer.

2.       The description of the cattle is valid based on current industry standards and will not include un-merchantable cattle.

3.       Seller has good and marketable title to the cattle sold on the Exchange in the name listed on the offering. All cattle will be delivered free from security interests and liens. Seller agrees to defend title to the livestock and to indemnify Buyer against any cost associated with a defect of title. An agent or officer of the lender or lienholder will confirm permission for Beefnet to sell Sellers cattle prior to the auction of the Lot and agree for Beefnet to settle payment into Seller’s bank account. Beefnet will assume responsibility for confirming lender’s permission to sell but will not be responsible for Seller’s misrepresenting lienholder information or improper borrowing entity names.

4.       Seller agrees to a confessed judgment in the favor of the Buyer in the amount of damages set by an Arbitrator for Seller failing to deliver the cattle or creating any other default of the Trading Rules, absent an Act of God preventing delivery.

5.       Cattle have been fed no bone meal or mammalian protein.

6.       Sellers may certify breeding information reliably obtained from the production records of the Breeder. This information may be posted and warranted in the Lot listing.

 

VI.   SETTLEMENT AND CLEARING

A.      Initial cash deposit. Buyer will obligate to a $35/head cash deposit within one business day upon acceptance of the Confirmation Email for each purchased Lot. Beefnet will settle and clear all money transfers using Automated Clearinghouse transactions [“ACH”] to complete all settlement and clearing functions according to the Trading Rules and commercial Nacha rules governing the transfers. Buyer authorizes Beefnet to settle all payments using ACH transfers from bank account information furnished to Beefnet. The monies will be deposited to a custodial account in Bank of Commerce. The custodial account will be the source of all money flows for payments as provided in the Trading Rules or on instruction from the Arbitrator in the event of a dispute.   

B.      Payment.

1.       Beefnet will establish a custodial account at Bank of Commerce, Amarillo Texas in order to settle and clear transactions consummated on the Exchange. Bank of Commerce will initiate ACH transactions according to instructions from Beefnet to affect payments according to the Sales Contract and Trading Rules. All payments will be directed to the parties according to the settlement sheet [“Final Settlement Sheet”].

2.       Buyer’s payment for livestock will be electronically settled into the custodial account on the first business day following the delivery of the cattle based on the final settlement of the transaction. This payment will be inclusive of the cash deposit on account with Beefnet and will be adjusted to actual final payment according to the Final Settlement Sheet following delivery.

3.       On the day of delivery, a Final Settlement Sheet will be emailed by Beefnet to both Buyer and Seller and all accounts will be adjusted to the final settlement price based upon the final official weights and head count posted by Seller on the Site less commissions, fees and other deductions and adjusted for all deposits. Buyer authorizes Beefnet to make payment to Seller, upon delivery of the cattle pursuant to the Final Settlement Sheet, from the custodial account.

4.       Authority from both Buyer and Seller is granted to Beefnet to settle and clear the transaction according to the Sales Contract from the custodial account. Proceeds from the sale of a Lot of cattle will be electronically transferred to Seller’s identified bank account according to the Trading Rules, the Sale Contract, and Member Agreement. Commercial banking fees will apply to all transactions. 

C.            Final settlement.

1.       Beefnet will pay Seller according to the Final Settlement Sheet sent to Buyer and Seller following the delivery of the cattle and the posting of the official weights and head count. The Final Settlement Sheet will be delivered electronically by email and will follow instructions set forth in this agreement. Final settlement will include reimbursements [as credits] of all cash deposits made by Buyer or Seller. The final settlement will pay all fees due on the transaction including commissions or any other fees associated with the transaction.  

2.       The final payment will be delivered in collected funds by ACH to the bank account designated by Seller within three business days of Delivery. There will be deducted from Seller’s payment all Sellers charges associated with the transaction. Final settlement will include reimbursements [as credits] of any cash deposits made by Seller. A deduction of one and a half percent [1.5%] commission will be deducted from Seller's proceeds and will be included in the final settlement sheet. Buyer and Seller authorize Beefnet to settle all transactions according to the sales contract and to the bank accounts furnished to the Exchange or modified thereafter.

3.       Corrections. All parties agree for clerical mistakes resulting in incorrect payments to be corrected to the same accounts using Automated Clearinghouse [ACH ]transfers.

 

VII.        NOTICES and DOCUMENTATION.

1.       Sale Contract.  A binding Sale Contract is created with the award of highest bidder on a Lot and the acceptance of a Confirmation Email on the day of sale. If there are no objections within 12 hours of receipt of the Confirmation Email or objection or rejection following a physical inspection, the sale is final and binding. 

2.       Delivery Notice .  At least [3] three to [5] five business days before delivery, Seller notifies Beefnet and Buyer of the delivery date by posting the Delivery date to a web page on the Beefnet Site. An automatic delivery notice will be sent via email to Buyer. Seller will telephone Buyer to confirm delivery arrangements.

3.       Delivery date.  Both Buyer and Seller receive an electronic notice of the Final Settlement Sheet including weights, slides, and stops for final payment calculations.  These documents are generated from final sales information provided from the Seller after Seller uploads the information to the Beefnet Site based upon the Sales Contract.

 

VIII.      DEFAULT

   Events of default can be created by a Buyer or Seller. A default by Seller can be, but  is not limited to, a Seller’s refusal to deliver the cattle, the delivery of a different set of cattle, delivery of non-conforming cattle, delivery of un-merchantable cattle, or listing of misrepresented cattle. An event of default by Buyer can be, but is not limited to, Buyer’s refusal to make the initial deposit, accept timely delivery of the cattle, or complete payment for the cattle. These events will obligate the defaulting party to be liable for all actual and incidental damages permitted under the Uniform Commercial Code plus attorney’s fees, forfeited deposits and Arbitration awards. Beefnet will tender Buyer’s cash deposit to the Seller, less any transactional fees, if the Buyer does not pay for the cattle.  Issues involving default or misrepresentation of the cattle or partial deliveries can or will be resolved under Disputes.

IX.        DISPUTES. 

In the event a dispute arises concerning the transaction either at purchase, delivery or otherwise, the Buyer and/or Seller will notify the Exchange.

A.      Time of Notice requirements.

1.       If Buyer or Seller fails to receive a confirmation notice of the award of high bidder or receives one that is incorrect, they must notify the Exchange by email within 12 hours of the transaction date and time.

2.       If Buyer or Seller fails to perform on the Sale Contract or to deliver or to receive the cattle, or to deliver the wrong cattle, the wronged party is required to notify the Exchange and other party within one hour of the delivery.

B.      Appointment of an Arbitrator.

1.       In the event of a dispute, both Buyer and Seller must each designate a representative within two days of notice to the Exchange. Each may represent themselves or appoint someone to represent their position. The two representatives will appoint a third party arbitrator [“Arbitrator”] within two days to decide the dispute and issue instructions of adjustments to the Sales Contract. If the parties cannot agree to an Arbitrator, a Beefnet official will select an Arbitrator to decide the dispute.  

C.      Beefnet will freeze all monies for transactions in which one of the parties creates a dispute. The dispute will be turned over to the Arbitrator who will be provided positions in writing by email by each of the representatives within three days of appointment of the Arbitrator. The Arbitrator will make a final determination of the outcome within one week of receiving the written position of each side in the dispute and notify the Exchange with settlement instructions. 

D.      Beefnet will pay the Seller or adjust the contract upon instructions and a final decision by the Arbitrator which will be sent to Beefnet following the decision. Beefnet will create a new Final Settlement Sheet according to instructions of the Arbitrator. The Arbitrator has the authority, in the event the cattle are grossly misrepresented to void the contract and return the cattle to Seller.

E.       Buyer and Seller agree to abide by the decision of the Arbitrator which shall be final and binding. The loser of the Arbitration will pay the fees of the Arbitrator that will be collected by Beefnet prior to the decision. The successful party in an arbitration dispute shall have the right to enforce the arbitration award in a court of competent jurisdiction in Amarillo, Texas.

X.        ACT OF GOD (Force Majeure).  Seller, or Beefnet shall not be responsible for delay or failure to deliver the livestock due to any act of God or resulting destruction of the livestock or part of the livestock.  Seller must notify Beefnet and Buyer within 24 hours when such act has occurred and present proof thereof. Weather conditions prohibiting a delivery will be rescheduled as soon as possible after the date of the weather event. Buyer, or Beefnet shall not be responsible for non-delivery of the cattle resulting from a regulatory or government decree making the delivery for the intended destination unlawful.

XI.       ASSIGNMENT.  No Buyer or Seller may assign any rights gained under the contract without permission of Beefnet.

XII.        ENTIRE CONTRACT.  No partial invalidity of the contract shall affect the remainder and the terms may not be changed or added to except by agreement of all the parties.  There are no warranties expressed or implied beyond those mentioned in these Trading Rules.

XIII.      GOVERNING LAW.  The laws of the State of Texas shall govern the rights and duties of Buyer and Seller.

XIV.      CHANGES in the Trading Rules.  These Trading Rule may change.  Any changes will be posted on the Site with the effective date of change. Changes will be set by Beefnet.

XV.        TRADING FEES

A.      There will be a trading fee due Beefnet paid by the Seller of 1.5% due upon settlement of a transaction on the Exchange. The fees will be posted on the website and will be available to Buyers when signing the Membership agreement.

B.      Each Seller will obligate to U.S. $3.00 per head to be collected by Beefnet by electronic settlement at the time a Lot of cattle is listed on the Exchange to cover fees if the Reserve Price is set and not reached or Seller withdraws the Lot for sale. The $3.00 fee will be refunded with the final settlement if no reserve price is established and the cattle are not withdrawn from the auction. 

ALL BUYERS AND SELLERS AGREE TO THESE TERMS AND CONDITIONS OF TRADE