Timelines Of Notice and Inspection

The following summary of a reparation decision issued under the Perishable Agricultural Commodities Act (PACA) is intended to help companies understand their rights and responsibilities under PACA. The key facts and core reasoning used to decide the case are presented.

TOPIC: TIMELINES OF NOTICE AND INSPECTION

Four Rivers Packing Company, Inc.
(Weiser, ID)
v.
Sam Wang Proudce, Inc.
(Washington, DC)

76 Agric. Dec. A (USDA 2009)

Complainant, Four Rivers Packing Company, Inc. (Four Rivers), sold Respondent, Sam Wang Produce, Inc. (Sam Wang), 2,550 fifty-pound sacks of onions on an FOB basis (with a grade of U.S. No. 2) for delivery via railcar to Sam Wang’s customer in Jessup, Maryland. The onions shipped from Idaho on December 1, 2006 and arrived in Maryland on December 14, 2006 as scheduled. Air temperatures were properly maintained during the trip, and the transportation service was otherwise normal.

On December 19, 2006, five days later after the onions arrived, they were unloaded from the railcar and a USDA inspection was performed, indicating the onions were affected with 30% decay. Four Rivers claims it was not notified of any problems with the shipment until the next day, December 20, 2006, six days after the onions arrived, and argued this was outside PACA requirements for timely notice. Therefore, Four Rivers sought full payment of its invoice or $17,105.00 despite the high level of decay (30%) shown on the USDA inspection certificate.

Although PACA agreed that the inspection was not taken in a timely manner, it nonetheless considered whether the extent of the condition defects disclosed by the USDA inspection of the onions was sufficient to support an inference that “a timely inspection would have clearly shown a breach of contract.”

Significantly, PACA noted that the onions remained in the trailer after arrival at destination until just before the USDA inspection was performed, and that temperature records showed air temperatures within the railcar were properly maintained the entire time.

Given the extent of the decay, PACA found that the defects reported on the inspection certificate were “sufficiently extensive to establish with reasonable certainty that a more timely inspection would have also disclosed abnormal deterioration in the onions.”

In other words, in this case, the extensive decay coupled with the temperature information relied on by the respondent were sufficient to show (by a preponderance of the evidence) that the onions were abnormally deteriorated upon arrival at contract destination, on December 14, 2006, in breach of the sales agreement.

Accordingly, PACA recognized damages of $14,086.25 resulting from the breach and awarded the balance of $3,018.75, plus interest, to the complainant.

These summaries are not issued by the USDA, nor the PACA Branch, and should not be mistaken for an official government statement or release.

Compiled by Cliff Sieloff, Blue Book Services

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