Based on the facts described, however, the distributor did not reject the product to the carrier. Rather, it sold the strawberries at a fixed price of $15 per carton, rather than on consignment, despite having sold the berries to the retailer for $34 per carton, in the absence of any showing that this product was distressed (i.e., there was no USDA inspection and no allegation of temperature abuse or condition problems with the strawberries).
Although we can understand why the distributor may have believed it was better to sell the strawberries at a fixed price rather than on consignment, where returns are uncertain and potentially open to manipulation, your selling price here, in our view, is simply too low.
In other words, it appears to us that you failed to mitigate losses—not by improperly rejecting to the carrier—but by failing to sell the product at a reasonable price.
If this was the best price the distributor could get for the product, then, in our view, it would have been better to have placed the product on consignment where the wholesaler would then be required to show that its returns were reasonable per industry precedent (i.e., with a detailed accounting reflecting a proper resale and a USDA inspection if the product was distressed).
After such a showing, it would be difficult for the carrier to argue that the salvage proceeds were unreasonably low, or that the distributor failed to properly mitigate losses, given that consignment handling is the customary practice following the rejection of produce shipments.
Summary
Technically speaking, rejecting to carriers is different from rejecting to produce sellers.
Before rejecting to a breaching carrier, the vendor that hired the carrier is required to take reasonable steps to mitigate losses. By placing, or offering to place, rejected product on consignment, the distributor may avoid claims that it failed to sell the rejected product at a reasonable price.
