Mr O'Brien represented Tim and Elizabeth Keynes, Kimba, when they sued Rural Directions over advice received over forward contracts.

Mr Keynes said he "wasn't fully up to speed with grain marketing", so in 2006 he went to Rural Directions and decided to sign-on for their 'Fully Managed Grain Marketing' product.

He said he was not given full disclosure to let him know what was happening with grain markets, and ended-up wearing hundreds of thousands of dollars in wash-out costs.

"We believe there should be ongoing disclosure with basis contracts," he said.

"We decided to try and retrieve some of what we (believed we were) owed from Rural Directions and went to the grain companies (ABB Grain and Glencore) and said we would pay it out in due course.

"But, at this stage, the contracts are still hanging over our heads."

Last week, Justice Besanko ruled in favour of two of the grain companies involved in the case, meaning Mr Keynes would have to pay out the contracts. That decision is now being appealed by Mr Keynes.

Mr O'Brien said that Chapter 7 of the Corporations Act, which was enacted in 2001, required that grain farmers were properly informed of all significant benefits and risks associated with forward selling, through the use of product disclosure statements.

But last week's ruling stated that the protections provided under Chapter 7 applied to swaps and basis contracts, but did not apply to forward commodity contracts.

"The consequence of this decision is that when it is a good time to forward-buy grain, and hence when it is a bad time to forward sell grain, the grain companies will not use swaps or basis contracts, but rather they will use only forward contracts, and thereby avoid the need to have to issue a PDS, and hence avoid any obligation to inform grain farmers of the state of the global market," Mr O'Brien said.

* Extract from a full report in Stock Journal, June 25 issue.