The Problem: Load not inspected as a single lot.
The Key Point: Shippers do not promise that each pallet of product will be within good arrival standards.
The Solution: Assess the quality and condition of the shipment as a whole.
QUESTION: We are a distributor based in Texas. We recently purchased 1,600 cases (twenty pallets) of yellow squash on an f.o.b. basis from a U.S. shipper. Two of the pallets had issues, and we notified the shipper of the problem the morning we received the product. The salesperson told us that the entire load needed to be inspected, so we did that, but we asked the U.S. Department of Agriculture (USDA) inspector to inspect the two bad pallets and the eighteen good pallets separately. As expected, the results came out okay for the eighteen pallets, but the remaining two pallets clearly failed to make good arrival. When we sent the inspection results to the salesperson she responded that if the percentages are averaged out, the load as a whole makes good arrival. I am not sure how this works, but I am just claiming losses for the two pallets that failed good arrival, not the whole load. Please advise.
ANSWER: We can understand your frustration if your shipper knowingly loaded two bad pallets, but, by default, shippers only promise that their product as a whole will make good arrival, not that each pallet will do so. Therefore, typically you would simply have the inspector inspect the entire load as a single lot, rather than separating the bad pallets for inspection. It is easy enough, however, to combine the results from both lots to arrive at defects for the entire load. For each lot, just multiply the percentage of defects by the number of cartons inspected, then add the resulting numbers together and divide by 1,600 (the total cartons shipped) to arrive at total defects for the entire load. If the resulting percentage exceeds good arrival standards you may be able to establish a breach.
The Problem: Inspection to be taken two or three days after arrival.
The Key Point: The seller’s warranty of suitable shipping condition only promises that the fruit will arrive without abnormal deterioration.
The Solution: Timeliness of inspections must be considered in light of the relative perishability of the commodity in question.
QUESTION: We are an importer-distributor based in New Jersey. A week ago today, we loaded three pallets of lemons to go to Puerto Rico. We delivered the fruit to a container at a local port, which was then loaded on a boat destined for Puerto Rico. Normally, the trip takes three or four days. But today, seven days later, I received a complaint of condition problems upon arrival. They say they have called for a USDA inspection which will be done today. I do not think any inspection taken today would be timely. How does this work?
ANSWER: It’s true that the seller’s warranty of suitable shipping condition only promises the fruit will arrive without abnormal deterioration, not that it will hold up in the days after arrival. But an inspection taken two to three days later may still be sufficient to show the product was abnormally deteriorated when it arrived, if the inspection certificate shows defects exceeded good arrival standards by at least 1% for every day after arrival, and the pulp temperatures suggest the product was properly stored in the interim. There’s no hard and fast rule, but once you get beyond three days after the date of arrival, considerations such as the relative perishability of the commodity come into play. For example, four days would surely be too late for strawberries, and the inspection would be deemed untimely. But for lemons, if the defects significantly exceed good arrival standards, in our view, the buyer may still be able to establish a breach of the warranty of suitable shipping condition.
Your questions? Yes, send them in. Legal answers? No, industry knowledgeable answers. If you have questions or would like further information, email tradingassist@bluebookservices.com.
