LEGAL MATTERS: Leveraging on effective contractual clauses in the tobacco sector: Part II

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In last week’s instalment I gave examples of certain clauses that tobacco contractors have to include in their grower contracts.
These allow the contractor to derive the most value while minimising risk. This week, I will deal with how inserting certain clauses into tobacco contracts and couching them correctly helps contractors recover debts in foreign currency, without having to resort to litigation.

I will focus on the source-of-funds clause, giving its legal basis and concluding by how and why it must be included in every tobacco grower contract.
Tobacco contractors are mandated by law to source offshore funds to finance tobacco grower contracts. The Exchange Control (Tobacco Finance) Order, 2004 published in SI 61 of 2004 states that, “all auction and contract tobacco shall be paid for in United States dollars.”