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Broker blues and f.o.b. proof of delivery

QUESTION:  We are a wholesaler based in New York State.  Recently we purchased a shipment of Mexican watermelon on an f.o.b. basis from a wholesale distributor (“the seller”) with a cooling facility in New Jersey.  Because we never received this product, and the wholesaler-distributor has not provided us with proof of delivery, we do not believe we are obligated to pay for the watermelon.  How can a produce seller expect to be paid $18,000 for product it can’t prove was delivered?

ANSWER:  You are correct that the seller must “deliver” under the sales agreement.  But because this was an f.o.b. sale, the seller’s obligation is to deliver to the truck you hired at shipping point—not to your destination. When product is purchased f.o.b., the risk of loss in transit rests with the buyer; therefore, provided the seller can establish by a preponderance of the evidence that the product was loaded on the truck, the seller would be entitled to payment of its sales invoice.  If the product disappeared en route, this would be a proper basis for a claim between your firm and the carrier you hired.

In reviewing the documentation associated with this transaction, we see the seller has provided a signed bill of lading in support of its claim that the product was loaded on your truck.  Unless there is some reason to believe this document is not genuine, this alone would be enough to show the seller lived up to its end of the bargain.

Additionally, however, we note the lack of correspondence from your firm to the seller inquiring about the status of this allegedly missing $18,000 order, even after the seller had invoiced you for the product.  At a minimum, we would expect to see documentation from your firm after it was invoiced stating, “As we discussed, this product was never delivered.  Call me!”  In our view, the absence of such a paper trail further supports the seller’s claim for its full invoice price. 


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Doug Nelson is vice president of the Special Services department at Blue Book Services. Nelson previously worked as an investigator for the U.S. Department of Agriculture and as an attorney specializing in commercial litigation.