GRAPE PURCHASE AGREEMENTS

Transcription

1 GRAPE PURCHASE AGREEMENTS Review of Key Aspects of Grape Purchase Contracts IGGPRA Meeting, April 25, 2008 By K. Christopher Branch, A CALIFORNIA LAW FIRM Member, International Society of Wine Lawyers

2 PARTIES must be named correctly to be sure that if someone does not perform, the right people entered the contract Grower Must be the legal leasor/ owner of the land Husband and Wife Family Trust Corporation Partnership Be sure signer has authority on behalf of entity Purchaser Must be the holder of a state ag lic. to buy grapes Must state the name of the entity correctly Be sure signer has authority on behalf of entity

3 Date Effective Date Not the dates signed End Date State specific, not just 5 years from effective date

4 STATEMENT OF INTENTION Subject to the terms and conditions of this agreement, buyer agrees to purchase and accept and seller agrees to sell and deliver wine grapes of the variety, in the quality, and for the price and payment terms set forth in this agreement

5 Varieties, Quantities, Vineyard Block Designations and Sugar Levels {often attached as exhibits}

6 Vine Identification Name of each varietal Clone/rootstock

7 Quantity: Amount of tonnage of each Varietal? Complete blocks? Amounts reserved must be specified for owner other commitments must be noted Yields: Tons per acre of each Varietal Total tonnage of each Varietal Estimated? Guaranteed?

8 Location Vineyard Block(s) Size If not the whole vineyard contract must specifically say that Always need a map even if specifically identified in the vineyard The number of acres that constitute all blocks being purchased

9 Brix, Acid, ph Identify minimum, maximum and targets If buyer has no preferences then don t bring it up. If below minimum or above maximum, contract may be subject to cancellation depending upon other language in the contract

10 Farming Plan and Standards

11 Tonnage target i. e. not more than 110 % of tonnage Defect standard i. e. 2 % or more leads to rejection Grower to hand/machine harvest MOG standard i.e. 1.5 % or more leads to rejection

12 Farming/Vineyard Specifications Example Shoot thinning to 2 shoots per spur position Spurs to be spaced a a reasonable distance, i.e. less that 4 inches Leaf thinning as so as possible after set Leaf thinning only to be done on Morning Side if machine is ok, Contract should specify Removal of Green fruit in fruiting zone and second cop prior to hand harvest Removal of sunburned fruit or pink fruit if required by buyer

13 Irrigation/Frost Protection Buyer wants access to irrigation schedule, weather and soil moisture data, and any frost events requiring use of sprinklers. Contract should specify how and when this information should be given to the buyer

14 Purchase Price and Payment

15 Buyer shall pay seller for the grapes delivered hereunder the aggregate amount which is the product of the number of tons delivered multiplied by the Price Per ton as defined below Based on weight tags from lic weigh master If can be done on seller s scale, the contract should say that Seller pays for this cost

16 Price Per Ton Contract must set out the following for each varietal and each year In long term contracts a number may be established, but it may be subject to further discussions of course that is a double edged sword varietal year price

17 Transport and Delivery Delivery Point: address where grapes to be delivered and must be placed in proper containers Pricing is usually FOB at the address Delivery Responsibility for seller only to that address, any other delivery point, is usually paid by buyer Cooperation by Seller and Buyer in the delivery process. sonic.net/~dsscha/sonomapaintings.html

18 Map is in the Contract Use Color Map to Identify Blocks and varietals in blocks

19 Term Specific end date Automatic extensions Optional extensions Notice Provisions re: termination

20 Viticultural Practices Mutual cooperation to obtain highest quality grapes with Seller doing the Work Cultivation Pruning Thinning Irrigation Pest Management

21 Buyer needs access to evaluate Seller obligations listed here including doing or not doing specific things without permission from Buyer. Incorporates Viticultural standards in the exhibit

22 Picking and Delivery Field samples to be obtained by Seller Seller to notify buyer when minimums are reached Cooperation in scheduling the harvest If delivery delayed, Buyer must accept the grapes irrespective of defectiveness

23 Risk of Loss And Title

24 Bill of Lading is very important because it shows when the grapes are delivered to the buyer with the bill of lading, At that point the title and risk of loss shifts to the buyer. And the buyer s insurance is off the hook.

25 Bill of Lading/Commingling The source of the grapes down to the blocks. For TTB, this must be accurate. If the grapes came from Block A, and Vineyard Z, then the bill of lading must say that The contract should specify which grapes can be commingled, if any. 1 or more Blocks with same varietals? If so which ones? Blocks with different varietals? If contract silent, then, an assumption might be that all varietals from all blocks can be commingled, but better to get it in writing.

26 Inspection/Compliance If Buyer rejects grapes for failing to comply, the Grape Inspection Service can make the decision. One rejection does not change the obligations.

27 Warranties Title Adulturation Quality Survival

28 Termination Buyer s failure to perform Payment Material change in buyer s business Buyer s bankruptcy Change in Buyer s ownership

29 Other Misc Aspects Security: Producers Lien Successors/Assignees Severability Counterparts Notice Faxes Headings Interest Governing Laws Venue Authorized signatories with warranty Notice Addresses

30 , A CALFORNIA LAW FIRM 1177 Marsh St. Suite 100 San Luis Obispo, CA , (fax) KC@winelaw.net