Of these, per Section 10.11 of our Guidelines, only market decline may be properly attributed to the carrier when the delivery is delayed by just one or two days. Section 10.11 of the Guidelines provides the following—
[W]hen delivery is only one (1) or two (2) days late (and temperatures were properly maintained in transit) it may be difficult or impossible for the buyer to establish that the produce was appreciably affected by the delay. Blue Book has generally taken the position that after a one (1) or two (2) day delay, damages must be supported by the USDA’s Market News Service reports for the dates in question.
This is a general guideline or rule of thumb and factors such as the perishability of the commodity in question must be considered. See the sidebar on page 14 for an example of how damages resulting from a one- or two-day delay would be calculated.
If, on the other hand, the product is three or more days late, Blue Book has generally taken the position that an injured party may rely upon the difference between the destination market value of the product in good condition on the date the product was supposed to arrive, and the actual proceeds realized from the sale of the late product, provided these proceeds are supported with a USDA or CFIA inspection certificate and a detailed accounting reflecting a prompt and proper resale of the late product.
Late Product and Rejection
A fundamental question that sometimes comes up is whether the receiver has the right to reject a shipment for lateness.
At the outset, it’s helpful to distinguish between a produce vendor’s rejection to a carrier it hired, and a vendor’s rejection to a seller it purchased from on a delivered basis (as opposed to a free-on-board or FOB basis). Let’s take the latter case first.
Section 2-601 of the Uniform Commercial Code (UCC), Buyer’s Rights on Improper Delivery, provides that “if the goods or the tender of delivery fail in any respect to conform to the contract, the buyer may reject.” This is sometimes referred to as ‘the perfect tender rule’ and it supports the receiver’s right to reject to the seller if the carrier fails to use reasonable dispatch to tender delivery in a timely fashion.
It is, however, important to keep in mind that Article 2 of the UCC (as enacted by state law) only applies between buyers and sellers of goods, such as produce, and does not apply between buyers and sellers of services, such as transportation. Therefore, the perfect tender rule does not apply between the carrier and the produce vendor that hired the carrier.
