Caveat Venditor

A Latin term meaning “let the seller beware,” in contrast to the more widely known saying caveat emptor (let the buyer beware). The principle of caveat venditor cautions that the seller is responsible for any problem that the buyer might encounter with a service or product.

A Call For Tighter, Clearer more Responsible Credit Terms Negotiated by “Grain Brokers”

There has been much talk about industry failures following the recent spate raising concern among many farming communities. Some industry groups are lobbying for shorter payment terms which, in a perfect world would be the preferred option of many suppliers. However shorter payment terms if not reciprocated by “the buyer” is not as straight forward as you might think. Most industry standards follow a 30 day end of week payment term and of course this can be negotiated to whatever term is mutually agreed between the buyer and seller.

Broker Notes & Negotiations


In my opinion the most commonly referred to Governing body Grain-Trade Australia (GTA) when disputes arise; does not adequately cover the responsibilities and duty of care that should be followed by Australian Grain Brokers” Australian grain Brokers are unique to Australia where as in most other countries they use Agents and or Account Representatives. In Australia there are 3 main types of Grain Brokers.

1. Grower Broker – Acts Exclusively for the Grower/Supplier
2. Buyer Broker – Acts Exclusively for the Buyer/Merchant
3. Trafficker Broker – Acts for both a Buyer and or Seller

The contract terms negotiated by Australian Grain Brokers must be “a fair and transparent’ process in order for both the buyer and the seller to secure offer and consideration. However given the recent spate of industry failures due to insufficient credit limits and over-extension of contracted purchase commitments the “Grain Broker” could be found liable if they do not take into consideration the limitations of both the seller and the buyer.

The GTA and other industry bodies should review or create clearly defined guidelines for Grain Brokers in each category. Grain Brokers should be registered as one of the three categories above or all three so as to clearly define how they should conduct business and clearly outline the responsibilities and duty of care of each.

I feel the lack of tighter controls has greatly contributed to recent Industry failures and will continue to do so unless corrected. There should be adequate assurances for both parties, assurances that are clear and concise allowing control, flexibility and fluidity.

Below is a note to Brokers addressing my view on this.

Dear Suppliers Brokers Traders & Sellers

Results of discussions with other trade merchants and industry players; the term used in most selling contracts negotiated through brokers ” within approved credit otherwise pre-payment” __could be deemed “Unconscionable ” were appropriate tests applied in commercial law.

If the seller prefers pre-payment then it should be stated as pre-payment only. The term ” within approved credit ” however is unclear given the credit standards used within the industry. Approved Credit by “Whom? the supplier? the insurer? has a fair application been made to secure insured credit?

If the seller wishes to include this term the contracted quantity should only be for the current level of credit provided, the seller should advise the buyer of their credit limit and or do all things possible to increase the limit equal to the payment term duration.

Example; 1000t max 250t in any one week 30 days end of week payment terms. This means the buyer can call on 1000t within the 30day period therefore 1000x the sale price should be the sort credit limit. If credit is declined by the seller or their insurer the buyer should be advised of the rejected increase and the contract quantity adjusted sufficient to the buyers credit limit.

On detailed discussions suppliers / brokers could be deemed by default to be overextending the buyers capacity to pay, this practice applies in most all credit guidelines within Australia. Brokers should exercise a duty of care when negotiating credit sales given the recent spate of industry failures. These failures are mostly due to insufficient credit and over-extension of credit negotiated by brokers; this could make the broker liable for damages if appropriate test were to be applied in the not so distant future.

Please Note: The views expressed above are that of Dr Mario Bonfante and should not be taken as advice only as consideration and food for thought. Always consider your own personal and commercial circumstances when buying or selling. * Some ideas above have not yet been fully tested within Australian Contract Law.