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Retailer’s Wrongful Rejection

A case study on late claims
Trading Assistance

Second, the Retailer’s Quality Assurance Form, presumably completed by the Retailer’s receiving personnel, indicates the grapes were not damaged in transit. Specifically, the receiver selected the “no” response to the question on the form that reads, “Damaged in Transit?” This unequivocal statement made contemporaneously with the rejection, and after pulping the product, suggests the Retailer did not believe the transportation service failed to comply with industry standards or its agreement with the Truck Broker.

This, in our view, is particularly significant in the absence of a temperature report from the portable temperature recorder, which per the bill of lading, was loaded with ABC’s grapes. Because the ABC grapes were received, and because, based on the documentation provided, we see no indication that the temperature recorder was missing upon arrival, we must presume this portable temperature recorder was delivered to the Retailer.

Having received this recorder, the Retailer was in a position to review the temperature tape before it declared on its Quality Assurance Form that the Distributor’s grapes were not damaged in transit.

We believe it is fundamental that if the Retailer believed the carrier damaged the grapes in transit, then it should have provided the Truck Broker with a copy of the temperature tape to (1) support its claim (its rejection); and (2) so the Truck Broker could support any corresponding claim it might chose to file against the underlying carrier.

The Retailer’s apparent failure to provide a copy of the temperature tape to the parties is, in our view, inconsistent with industry standards and its fundamental responsibility to provide support for claims.

And while it’s true that the carrier was equipped with a reefer download, which in our view shows warmer than expected readings, we do not believe these readings are conclusive, especially in view of the Retailer’s finding—after having an opportunity to review the temperature tape—that these grapes were not damaged in transit.

In addition, we note that if the Retailer’s instruction or expectation for temperature control was consistent with the temperature instruction the Truck Broker gave to the carrier of 35°F (warmer than we would recommend, but not unusual in our experience), then arguably at least the readings recorded by the reefer unit were not warm at all.

For these reasons, we do not believe the documentation provided shows either the Shipper or the Truck Broker breached its agreement with the Retailer. Accordingly, we see no proper basis for the Retailer’s rejection of the grapes, and no basis for allocating responsibility for losses between the Shipper and the Truck Broker, neither of which has been shown to have breached the contracts in question.

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