Next, the left-hand column provides the days in transit to the destination city, in which five days coast-to-coast is the norm, and this paired with the right-hand column—where the real action is—shows a series of numbers that refer to the percentage of defects found on a USDA inspection certificate. The first number in this series represents the percentage of average defects; the second number represents the percentage of serious defects; and the third is for very serious defects, such as decay.
On USDA inspections, defects are classified according to average, serious, and very serious. If any of these percentages is exceeded, the seller may have breached the warranty of suitable shipping condition. The buyer must then determine: first, were transportation conditions normal? Second, was the inspection timely? And third, was the entire lot inspected? (for more information, see #6 in the Three Ts of Good Arrival section)
#4 – Inspection Certificates
With few exceptions a USDA or CFIA (Canadian Food Inspection Agency) inspection is required to quantify defects and establish a breach of contract. In-house inspections are not considered “disinterested” or objective evidence of the quality and condition of produce. Ultimately, in-house inspections only represent what the buyer said—and, of course, claiming product failed to make good arrival based only on the buyer’s say so isn’t going to be sufficient to prove a claim.
When interpreting USDA inspections beware of statements that read “Fails to grade U.S. #1 account condition.” Just because the product exceeded U.S. #1 at destination does not necessarily mean the product was “abnormally deteriorated” in breach of the sales contract, because with f.o.b. sales, additional defects are allowed based on the number of days to the destination city. What’s more, if the product was sold “no-grade,” the seller never promised the product would meet the U.S. #1 standard.
#5 – Grade vs. “No-Grade” Sales
Produce may be sold with a grade, e.g., U.S. #1 or Canadian #1, or “no-grade” meaning the produce was sold without a specified grade. When produce is sold with a grade, quality defects score against “good arrival.” The percentage of quality defects is simply added to the percentage of condition defects to arrive at the total percentage of scorable defects.
But when produce is sold without a grade, only condition defects score against the warranty of suitable shipping condition. Quality defects, on the other hand, do not, and need to be subtracted from the total percentage of defects to arrive at the relevant percentage.
Condition defects are progressive in nature: bruising, decay, wilting, and live insects; while quality defects are more permanent in nature: misshapen, scarring, hollow heart, and dead insects. On USDA inspections, quality defects are clearly identified as “quality.” On CFIA inspections quality defects are called “permanent” defects and are identified with a “P” next to the defect in question.
