For instance, one formal decision handed down by the USDA stated that a load consisting of several sizes of tomatoes represented a single commercial unit for purposes of rejection. The decision also stated that when several sizes of similar product are inspected separately, the defects must be averaged over the entire load to determine whether the shipper has breached the contract.
About the only circumstance when a receiver can legally reject a portion of a load is if each portion comes from a different shipper and is separately manifested (or under the Tomato Suspension Agreement).
As a shipper, there is some recourse if a receiver accepts a portion of the load and rejects the balance. The shipper should immediately notify the original receiver that it is not accepting the improper rejection and will hold the receiver liable for any damages.
The shipper should then sell the load to minimize losses and is entitled to any expenses incurred in moving the load plus any other provable damages resulting from the partial rejection.
Buyers who divert produce to a new destination lose the right of rejection. Diversion is considered an act of dominion over the product, constituting acceptance. This does not mean, however, that the receiver cannot have an inspection at the new destination, prove a breach of contract, and collect damages.
If the original destination and the new customer are located roughly equidistant from the shipper, the warranty of suitable shipping condition would still apply and the product would have to arrive in acceptable condition.
But if, for example, the buyer diverts a load of California produce with an original destination of St. Louis, Missouri to New York, New York, the buyer has not only lost the right of rejection, but has likely lost all recourse if the product arrives in bad condition, since the shipper only promised good arrival to a much closer destination.
All of this information was provided to help make tough decisions when it comes to accepting or rejecting deliveries of produce. Remember that PACA is your partner in the produce industry; if you have other questions, please contact the PACA Division at (800) 495-7222.
