Therefore, the practically worthless rule, even if it applies to the shipment in question, is really very similar to the general principle that following a breach of the contract of carriage all parties have a duty to take reasonable steps to mitigate losses—which in some circumstances could be inconsistent with rejecting fresh produce to a carrier.
Under either the practically worthless rule or the more generally applicable duty to mitigate losses, carriers can be expected to argue that they are not in as good a position to salvage fresh produce as a receiver or other produce supplier would be.
“Participation with the carrier to mitigate losses generally helps counter such arguments on the part of the carrier,” observes Sullivan.
For their part, receivers can be expected to argue they should not be required to stock their shelves with product that does not meet their specifications for freshness and condition. After all, if they were able to handle the product profitably, they would have every incentive to do so—or so the argument would go.
Meanwhile, produce suppliers (distributors and shippers) can be expected to point out that produce carriers (and truck brokers serving the fresh produce industry) have access to the same distribution channels as produce suppliers, following a rejection by the receiver under the perfect tender rule.
And to their point, in our experience, both produce suppliers and carriers alike usually arrange to have rejected product sold on consignment by a produce wholesaler, with returns determined by the sales proceeds realized by the wholesaler.
For these reasons, it is often difficult for carriers to show that the produce vendor that rejected the product to the carrier was in a quantifiably better position to sell the produce than they were. That said, the circumstances involved in each case must be considered. If, for instance, the carrier is not permitted to sell the produce because it is a private label product, then this may be a circumstance where the receiver’s rejection is inconsistent with its duty to mitigate damages, and where the carrier could effectively reduce the amount of the claim against it.
As a general rule, where it appears the carrier (relative to the produce vendor) is in poor position to salvage the product, produce receivers and suppliers should consider either receiving the product under protest or arranging to have the shipment handled on consignment, and then claim any shortfall against the late arriving carrier.
When arranging to have the product handled on consignment, however, it is important to insist that the salvaging firm properly support returns with a detailed accounting and a timely USDA or CFIA inspection certificate if the product is showing signs of distress.
