Constructing a Grape Contract That Works For Both Grower and Winery.
Not all grapes will have a home by harvest time. But many will–having found a home by way of a Grape Purchase Agreement. Unlike, the old fashion handshake, or oral agreement, the Grape Purchase Agreement now commonplace, memorializes in writing the understanding between the Grape Grower and the Winemaker. Unlike the oral agreement, you don’t have to chase down the truth later should the deal turn sour.
A carefully drafted agreement can be beneficial to both parties. The parties can avoid the potential for unforeseen disputes resulting in litigation actions later. When disputes arise, both parties can refer back to the agreement and determine their original intent as it is spelled out in the verbiage of the agreement. In some circumstances, the Grape Purchase Agreement is used as the “Pre-Plant Agreement” for the Grower. A Grape contract agreement that is used as a pre-plant agreement typically includes four years for a pre-plant agreement and four years thereafter for the grape contract agreement. For the Grower, the Grape Purchase Agreement can be beneficial in helping the grower secure financing for a new vineyard development. The Grower can negotiate pricing that reflects the state of the market and his efforts and expertise.
For the Winemaker, specific production practices can be contractually specified and verified at harvest time. The winery’s ability to secure a supply of grapes that meets the quality standards of the winery can often be imperative. Thus the Winemaker may wish to give voice to viticulture techniques to be used by the grower concerning pest, mold, pruning, or disease control. Too reasonable long term pricing relationships can be established. If the harvest is not of the quality the winemaker seeks, he may have the option but not the obligation to purchase the grapes. In essence, each party’s goals and priorities can be firmly understood and contemplated at the time of agreement and thought given to what is controllable and what is not.
Here are a few key provisions to be considered when contemplating a Grape Purchase Agreement:
- Description and Price (often identified by varietals and priced by ton or acre)
- Payment Terms and Schedule
- Condition of Grapes
- Use of Vineyard Name
- Vine Identification
- Grape Quantity and Quality
- Method of Harvest (machine vs. hand harvest)
- Title (warranty acknowledgment for who owns the grapes)
- Transport and Delivery
- Force Majeure ( occurrences due to acts of God, fire, flood or war)
The Grape Purchase Agreement should consider the allocation of risks between the Grower and the Winery. Whether or not disputes will be mediated, arbitrated, or litigated should be spelled out specifically in the agreement. If the Grower-Winemaker relationship turn sour, the responsibility for legal costs have been readily pre-determined.
Numerous decisions must be made when considering entering into a Grape Purchase Agreement. Grape Purchase Agreements when drafted properly work to serve both parties. Both parties should always consult a lawyer when contemplating the preparation and execution of a Grape Purchase Agreement.