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Dealings Between Winery and Unrelated Growers
From 1983 through 1986, Winery purchased grapes from
unrelated growers pursuant to agreements that would continue
until canceled. The agreements, which were prepared on Winery
letterhead, provided that Winery would pay one half of the
purchase price 30 days after delivery of the grapes and the
balance by December 15 of the year of delivery. For grapes
purchased from one grower during 1983, Winery paid one half of
the purchase price during 1983 and the balance during 1984. For
grapes purchased from other growers during 1983, and for all
grapes purchased during 1984, 1985, and 1986, Winery paid for its
purchases by yearend pursuant to the terms of its agreements.
During relevant periods, Winery could not have purchased all
of the grapes that it needed from unrelated growers without
additional capital. Bank of America did not suggest that the
unrelated vineyards from which Winery purchased grapes execute
subordination agreements similar to those executed by Vineyards.
Winery did not purchase grapes from unrelated vineyards from 1987
through 1990 and purchased grapes only from Vineyards during
those years.
A February 5, 1985, letter to Mr. Venge from one of the
unrelated growers supplying Winery confirms an agreement to (1)
sell Winery 60 tons of chardonnay grapes and (2) review the
pricing structure used in the past "and possibly reduce and align
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Last modified: May 25, 2011