Land and asset transactions, export contracts

Buying a land plot, an agricultural enterprise, a production complex or any other asset calls for a thorough review not only of the seller’s documents but of the legal status of the property itself, the encumbrances on it, the corporate authority of the parties, and the risks that may pass to the buyer along with the asset.

DSA Group provides legal support for agribusiness at every stage of a transaction: from checking the land, the assets and the counterparty through to drafting the contracts, negotiating, notarisation and state registration of rights.

Legal due diligence on land and assets

Before the transaction is concluded, the lawyer carries out a full legal review of the property and of the documents under which the seller or lessor owns or uses the land plot.

The review may cover:

• the entries in the State Land Cadastre and the State Register of Real Property Rights;
• ownership, lease, sublease, emphyteusis or other rights of use;
• the cadastral number, area, boundaries and designated use of the plot;
• attachments, prohibitions on disposal, mortgages, servitudes and other encumbrances;
• lease agreements in force and third parties’ pre-emption rights;
• litigation concerning the plot or the rights attached to it;
• whether the buyer meets the requirements of land legislation;
• the corporate authority of the parties’ representatives;
• whether the necessary decisions of the company’s governing bodies exist;
• legal risks that could affect the use or future disposal of the asset.

A review of this kind establishes, before anything is signed, the circumstances that could prevent the rights in the property from being acquired or exercised.

Sale and purchase of land, and structuring the deal

The rules on acquiring and disposing of land plots are set out in the Land Code of Ukraine, the Civil Code of Ukraine and the Law of Ukraine “On State Registration of Real Property Rights and Their Encumbrances”.

Agreements transferring title to land are made in writing and are subject to notarisation. Acquiring a right in rem in a land plot is also tied to its state registration.

Legal support for the sale and purchase of a land plot covers:

• checking the legal status of the plot;
• analysing the seller’s and the buyer’s documents;
• preparing the preliminary and the main agreements;
• settling how payment is to be made;
• agreeing the warranties, representations and liability of the parties;
• drawing up the list of conditions to be satisfied before completion;
• supporting negotiations with the seller, the buyer, the bank and the notary;
• checking the documents before notarisation;
• handling state registration of title.

Where the transaction concerns the sale of agricultural land, compliance with Articles 130 and 130-1 of the Land Code of Ukraine is checked as well. That covers who the buyer may be, the statutory restrictions, the pre-emption right to acquire the plot and the other conditions of admissibility. The procedure for checking the acquirer is also set out in Resolution of the Cabinet of Ministers of Ukraine No. 637 of 16 June 2021.

Buying the assets of an agricultural enterprise

An asset purchase may involve real estate, machinery, equipment, warehouse complexes, grain elevators, property rights, stock in trade, or the corporate rights in a company.

DSA Group helps to settle the legal model of the deal and checks:

• the seller’s title to the assets concerned;
• pledges, attachments, litigation and other encumbrances;
• the documents under which the asset was acquired or created;
• the corporate structure and the parties’ authority;
• whether corporate approvals are required;
• how the assets are to be transferred and documented;
• the seller’s warranties as to the legal and physical state of the property;
• the liability terms if hidden risks come to light.

The client receives a legal assessment of the risks and recommendations on the structure of the deal, the contract terms and the mechanisms for protecting their interests.

Drafting land and commodity contracts

DSA Group drafts and reviews the contracts used in the operations of agricultural enterprises.

Depending on the relationship, we can prepare:

• a land lease agreement;
• a sublease agreement for a land plot;
• contracts for the sale of real estate and other assets;
• preliminary agreements and heads of terms;
• contracts for the use of agricultural land;
• a grain supply contract;
• storage, carriage, processing and forwarding contracts;
• supplemental agreements, specifications, acceptance certificates and other supporting documents.

Lease relations are documented having regard to the Land and Civil Codes of Ukraine and the Law of Ukraine “On Land Lease”. In drafting the contract we settle the object of the lease, the term, the rent, how the plot is to be used and returned, whether subleasing is permitted, and the parties’ liability.

Export contracts, GAFTA and FOSFA

Support on foreign trade contracts requires the commercial terms to be reconciled with Ukrainian law, with the law the parties have chosen, and with the dispute resolution rules.

The legal framework for foreign trade contracts is set out in the Law of Ukraine “On Foreign Economic Activity”. Choice of law is governed by the Law of Ukraine “On Private International Law”, and the possibility of referring disputes to international arbitration by the Law of Ukraine “On International Commercial Arbitration”.

In drafting or reviewing an export contract the lawyers analyse:

• the subject matter, quantity, quality and origin of the goods;
• the price, the currency and the payment mechanics;
• the time, place and basis of delivery;
• how quality is confirmed and samples are taken;
• the transport and shipping documents;
• when risk passes;
• liability for late delivery or non-delivery;
• the force majeure and change of circumstances provisions;
• how legally significant notices are to be given;
• the governing law and the arbitration clause.

GAFTA and FOSFA are systems of standard contract forms widely used in international trade in agricultural products. The GAFTA rules are used mainly in trade in grain, feed and other agricultural commodities, while the FOSFA forms are used in trade in oils, oilseeds and fats.

A standard form should not be applied mechanically. The right type of contract has to be identified, the special conditions agreed, and the deadlines for notices, the procedure for establishing quality, the grounds of liability and the arbitration clause all checked. The arbitration rules are incorporated into the relevant standard forms and set out a particular procedure for resolving disputes under GAFTA or FOSFA.

End-to-end support for the transaction

Legal support for agribusiness from DSA Group covers the full cycle of work on a deal:

1. establishing the client’s objective and the structure of the transaction;
2. due diligence on the land, the assets and the counterparties;
3. identifying the legal and contractual risks;
4. drafting or reviewing the contract;
5. supporting the negotiations;
6. arranging signing and notarisation;
7. handling state registration of rights;
8. legal support while the contract is performed.

If you need comprehensive legal services for agribusiness, DSA Group will carry out the legal review of the prospective transaction, prepare the necessary contracts and support their conclusion and performance.