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amount due 30 days after delivery and 50 percent during January
of the following calendar year. Other sales agreements that were
written on unrelated purchasers' letterheads provided for payment
of the sale price at similar times, usually determined with
reference to the time grapes were delivered. Certain of those
agreements provided for payment of a portion of the price, at the
latest, during the calendar year following delivery. Generally,
unrelated buyers made their final payment for grapes purchased
during either the year of purchase or the first quarter of the
following calendar year. Vineyards collected interest from
unrelated buyers on overdue amounts.
Similarly, Winery's agreements for the purchase of grapes
from unrelated growers provide that 50 percent of the purchase
price was to be paid 30 days after delivery and the remainder by
December 15 of the year of delivery. We consider the foregoing
payment arrangements to be the result of arm's-length bargaining
between unrelated buyers and sellers.
In contrast, Vineyards allowed Winery more liberal payment
terms. During 1982 and 1983, Winery purchased grapes from
Vineyards, but did not pay for them because the cash to do so was
not available. Vineyards also allowed, or acquiesced in, the
control by Winery's lenders of the payment of amounts due
Vineyards. Vineyards agreed to subordinate its claims against
Winery to those of Bank of America and later to Napa National
Bank, but unrelated sellers of grapes to Winery did not. Winery
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