I hear it all the time; the wine industry is so small that people can still make agreements on a handshake. They go on to say that reputation is so important in this industry and there is no need to worry. However, I also get calls every year at about this time from growers wondering how they can enforce their sales agreements.
Grapes Sales Contracts do not need to be lengthy, but they do need to be more than a handshake. The industry is growing rapidly and the economy has put a big strain on wineries ability to pay. Thus, more and more growers are finding themselves in a position where they have to enforce these agreements.
In California, you can enforce a "Growers Lien" that is an automatic lien placed upon the grapes sold. This will allow you to go to court and seize the wine made from your grapes or the funds received from the sale of the grapes. The growers lien is not canceled by the filing of a bankruptcy and will give the grower priority over all but wages or a warehouse lien claims.
The Growers lien is in addition to the normal contract remedies. If the winery has the funds, a grower could also recover damages beyond the value of the wine, as this economy has left bulk wine worth less then many grape contracts, and attorney fees if provided for in the agreement. This is one very strong reason to have a grape sales agreement.
A grower can also file a complaint with the California Department of Food and Agriculture. The CDFA market enforcement branch will investigate your complaint and issue a finding. The CDFA can also provide arbitration proceedings for the parties. The CDFA can utilize license revocation and/or criminal proceedings to enforce your sales agreement.
While we may all wish that our tight knit industry will insure that all parties comply with their agreements, this is not always the case. Further, the economy in some instances has simply left parties unable to comply with their agreements. Good grape purchase agreements and knowing your rights as a grower are essential.