When disputes arise, it’s good to have your facts straight. Veteran buyers and sellers of fresh produce tend to know a lot about the warranty of suitable shipping condition from disputes won or lost over the years. But regardless of your tenure in the industry, an occasional fact-check can be helpful.
How well do you know your “good arrival” facts? Let’s find out.
True/False
1) The warranty of suitable shipping condition, often simply referred to as “good arrival,” is unique to the produce industry and you won’t find it referred to in the Uniform Commercial Code.
True/False
2) The regulations set forth under the Perishable Agricultural Commodities Act (PACA) provide—
“Suitable Shipping Condition”.…means that the commodity, at time of billing, is in a condition which, if the shipment is handled under normal transportation service and conditions, will assure delivery without abnormal deterioration at the contract destination agreed upon between the parties… The seller has no responsibility for any deterioration in transit if there is no contract destination agreed upon between the parties. (7 CFR 46.43(J))
True/False
3) The warranty of suitable shipping condition requires sellers to ship product that will arrive without abnormal deterioration, but (setting head lettuce aside) does not define what abnormal deterioration is.
True/False
4) The PACA Good Arrival Guidelines help define what is considered abnormal deterioration. The guidelines applicable to each commodity are published in Blue Book’s Know Your Commodity Guide.
True/False
5) Although we cannot know whether the product makes good arrival until it is inspected at destination, the shipper either complies with this warranty, or fails to, at shipping point when the product is loaded. Therefore, abnormal transportation conditions en route (e.g., delays or abnormal temperatures) do not void the warranty, but usually make it difficult for the buyer to prove a breach by the seller.
True/False
6) If air temperatures in the trailer were too warm for an extended period of time, it will be difficult for the buyer to prove the product was not loaded in suitable shipping condition unless condition defects are so advanced that it’s clear the commodity in question would not have made good arrival under normal transportation conditions.
True/False
7) While U.S. Department of Agriculture (USDA) inspections taken two days after arrival are usually considered timely, the inspection certificate must still be assessed in view of the delay. The relevant question is: does the inspection certificate show the product failed to make good arrival on the day the product should have arrived under normal transportation conditions?
True/False
8) If the inspection isn’t taken for two days after the product arrives at destination, and the good arrival standards for normal delivery times are exceeded by just 1 or 2 percent average defects, it will be difficult for the buyer to argue the inspection certificate shows the product was abnormally deteriorated upon arrival.
True/False
9) When product is handled on consignment, the warranty of suitable shipping condition does not apply. The PACA Good Arrival Guidelines may, however, be relevant as a reference point when assessing the reasonableness of consignment returns.
True/False
10) For all the commodities listed in the Good Arrival Guidelines other than head lettuce, more restrictive standards are provided for trips shorter than five days. The standard for head lettuce is different and applied more rigidly, because it is prescribed by PACA regulation.
True/False
11) Product may also fail to make good arrival for excess serious or very serious damage (or “injury” for product sold with a fancy grade). Accordingly, a shipment with just 4 percent total defects may fail to make good arrival if those defects are classified as very serious damage and exceed the relevant standard for the commodity in question.
True/False
12) According to industry precedent, the five-day guideline applies by default even if normal transportation times exceed five days such as a coast-to-coast trip by rail or an ocean voyage.
True/False
13) According to industry precedent, if a percentage of the product is missing, and therefore not available for inspection, the percentage of defects reported on the inspection certificate needs to be reduced by the percentage of missing product to arrive at the relevant percentages.
True/False
14) Technically speaking, apples (sold with a U.S. No. 1 grade) that arrive at contract destination with 11 percent scarring (a quality defect), but no other defects, will make good arrival but fail to make grade in breach of the sales agreement.
True/False
15) The Good Arrival Guidelines are mandatory and cannot be modified by agreement between the parties.
True/False
16) The Fruit and Vegetable Dispute Resolution Corporation (DRC) publishes guidelines for shipments into Canada at www.fvdrc.com. For many commodities, PACA Good Arrival Guidelines have been adopted, but for others a Canada-specific guideline applies.
True/False
17) The PACA regulation defining the warranty of suitable shipping condition (7 CFR 46.43(j)) provides, “The seller has no responsibility for any deterioration in transit if there is no contract destination agreed upon between the parties.”
True/False
18) If California strawberries are sold with a contract destination of Chicago, but the load is diverted to New York, the warranty of suitable shipping condition still applies, but to establish a breach the buyer will need to show the condition of the product in New York is so advanced that the product would not have made good arrival in Chicago.
True/False
19) Carriers are responsible for protecting the product in their possession by, among other things, properly maintaining air temperatures in the trailer and delivering in a timely manner, but they do not warrant that the product will make good arrival.
True/False
20) After accepting a shipment of produce by unloading, diversion, or failing to reject within a reasonable time, the buyer bears the burden of proving a breach of the sales agreement by the seller.
How do you think you did?
If you answered true for each question other than #15, you know your stuff.
If you missed a few, you may want to visit Blue Book’s New Hire Academy at www.producebluebook.com or PACA’s educational content at https://www.ams.usda.gov/rules-regulations/paca/education-training.
Please send any questions or comments to Trading Assistance at tradingassist@bluebookservices.com.
This Trading Assistance column ran in the September-October issue of Produce Blueprints magazine.
