Here’s what you need to know:
- Get it in writing: many contractual disagreements happen between people (parties) who genuinely have different recollections/interpretations of the deal struck. Those disputes are often the hardest to resolve as both sides become stubborn in their righteousness and indignation at not being believed! I have also noted, sadly, that when recalling things from memory, people (both the honourable and those less burdened by moral imperative) almost invariably tend to remember things in a way that is (to paraphrase Emperor Hirohito) not necessarily to their disadvantage. But don’t rely on deals hashed out over an extended email correspondence: the ambiguity about the terms agreed – and even whether a deal was finally struck, is always horrendous.
- Get the parties right: a contract claimed to between Crescent Farm and River Valley Winery may be unenforceable if Crescent Farm turns out to be just the address of the farmer and River Valley is just a brand name of XYZ Ltd (because neither addresses nor brands can enter into a contract).
- Check compliance: is everyone who needs to be licensed by the Food Standards Agency properly licensed?
- Be 100% clear which grapes are being sold: specify them – both by type/variety and if relevant location in the vineyard, or percentage of crop or whatever. If selling grapes to more than one winery, who gets priority if there’s a shortfall?
- Agree acceptability criteria: this covers minimum/maximum tonnage, grape type, grape quality (standards like Brix (sugar), acid, pH, MOG etc.), presence of other material (leaves, stems, insects), defects (disease, bird peck), colour, whether the grapes must/must not have been treated with any oenological product (e.g., sulphite powder), etc.
- Duration: are you selling one crop or is it a multi-year deal? If the latter, what is the pricing mechanism for future years? How to cope with varying annual yields?
- Delivery: when how and where are the grapes delivered? Who is responsible for delivery and who unloads? Who at the winery will decide/sign off on acceptance, how and how quickly?
- Price & payment: what, when, how, how much? Are any payments tranched? Are there payments, retentions or expenses to be deducted from the purchase price? Is payment conditional on anything (e.g., testing and acceptance?). For multi-year deals is the continuation of the contract itself conditional or is purchase of future crops guaranteed? If payment is delayed is late payment interest due?
- Title & risk: grapes are easily damaged beyond use. When does responsibility for damage (risk) pass from grower to winery? What if a force majeure event occurs? When does ownership (title) transfer – on delivery, after acceptance or upon payment?
- Remedies and dispute resolution:what happens if something goes wrong? Is there an obligatory, senior management discussion/mediation or do you have arbitration or just leave it to the disgruntled party to bring a court claim? What happens if the dispute is not enough to kill the deal, e.g., a portion of the grapes delivered are unacceptable, but most are okay?
The above topics should be addressed in every contract, even if just to confirm a negative (because, at law, if a matter is not mentioned that just allows all sides to be creative about their claimed rights and obligations on the matter in question). Do bear in mind however that every deal has unique characteristics, and they should be recorded as well.
Please email James O’Connell or your free Grape Sale Template Contract.