7.       Sale of agricultural produce to or through a buyer

            (1)        An agreement may provide that any agricultural produce of the farmer of a class stipulated in the agreement shall not be sold except to or through a person nominated in the agreement.

            (2)        The class of the agricultural produce concerned and the names and addresses of any buyer shall be noted on the certificate of indebtedness.

            (3) Where a buyer is nominated in an agreement a copy of the certificate of indebtedness shall be served by the bank on the buyer within one month of the signature of the certificate.

            (4)        Where an agreement contains a provision under subsection (1), such agreement may also provide that the proceeds of sale of any agricultural produce of the class stipulated therein sold to or through a buyer, less any commission or expenses reasonably incurred in connection with the marketing of such produce and due either to himself or some other person, shall be remitted to the bank and not to the farmer.

            (5) The bank may, on the application of a farmer, authorize the farmer to sell any or all of his agricultural produce of the class stipulated in the agreement to or through a person other than a buyer nominated in the agreement

            (6)        Where the bank determines that the person to whom the farmer is authorized to sell agricultural produce under subsection (5) shall be a buyer it shall serve notice on that person and on the Registrar of Deeds in the prescribed form stating that that person shall, henceforth, be a buyer and, upon the serving of such notice upon him, that person shall be a buyer.

            (7) Any farmer who sells agricultural produce of a class stipulated in the agreement to a person other than the buyer to whom or through whom he has undertaken to sell such produce except under an authority given under subsection (5) shall be guilty of an offence and shall be liable to a fine not exceeding P200.

8.       Payment by a buyer to the bank

            (1) Where any money owing by a farmer under any agreement containing a provision of the nature described in section 7(1) becomes due and payable and is not paid by the farmer within such time as is stipulated in the agreement, the bank may, by notice in the prescribed form served on the buyer, notify him that moneys are owing to the bank and that it invokes the provisions of this section.

            (2)        On receiving notice in terms of subsection (1), the buyer shall pay to the bank any moneys which may then be owing, or which may, from time to time thereafter be owing by him to the farmer by reason of the sale of agricultural produce of the class stipulated in the agreement:

            Provided that where a buyer acts as an agent for the farmer or for the purchaser of agricultural produce he shall be entitled to retain any expenses reasonably incurred in marketing the produce as well as such reasonable commission as is payable to him by the farmer for service rendered.

            (3) The buyer shall make payment to the bank in accordance with the provisions of subsection (2) until the bank notifies him that the debt owing to it by the farmer is satisfied or that it no longer wishes to enforce its rights under this section:

            Provided that the bank may at any time require a buyer liable to make payment to the bank in terms of this section to pay part only of the proceeds of any agricultural produce to the bank or to make payment of a stated sum only.

            (4)        The bank shall refund to the farmer any overpayment it may receive in respect of moneys owing to it.

            (5) The buyer shall pay to the bank any moneys due to it under the provisions of this section within 30 days-

     (a)     of the sale where the buyer is himself the purchaser of the produce;

     (b)     of receiving the purchase price of the produce where the buyer acts as an agent.

            (6) The bank may recover from the buyer any moneys which should have been paid to it in accordance with the provisions of this section if such moneys are not paid within the time prescribed in subsection (5) and it shall be no defence in any action brought by the bank against a buyer that the buyer has made payment, in contravention of the provisions of this section, to the farmer or to any other person:

            Provided, however, that the buyer shall have an action against the farmer or such other person for the recovery of the amount paid where it has made payment to the bank.

9.       Income tax

            Where a buyer has been appointed agent of a farmer in accordance with the provisions of section 111 of the Income Tax Act, the buyer shall pay any sum owing as tax before making payment under this Act.

10.     Special provision where the buyer is a co-operative

            (1) Notwithstanding anything to the contrary, whether contained in any law or otherwise of legal force or effect, a co-operative society registered in terms of section 7 of the Co-operative Societies Act may be nominated as a buyer and shall possess the rights, and be subject to the obligations, of a buyer under section 8.

            (2)        Notwithstanding the provisions of section 8(2) a co-operative society may retain moneys owing to the farmer which it may lawfully appropriate in settlement of a debt owed to it by the farmer and which arose prior to the giving of notice by the bank to the co-operative in accordance with the provisions of section 8(1).