Recourse after a buyer bows out

This summary of a reparation decision issued under the PACA is intended to help companies understand their rights and responsibilities under PACA. These are the key facts and core reasoning used to decide the case. You should see that for delivered sales, untimely delivery may be grounds for rejection.

LaMantia-Cullum-Collier Enterprises, Inc.
(Weslaco, TX)
Sol Salins, Inc.
(Washington, DC)
41 Agric. Dec. 307 (USDA 1982)

On or about December 23, 1980, LaMantia-Cullum-Collier Enterprises, Inc. (LaMantia) sold a shipment of cabbage and bell peppers to Sol Salins, Inc. (Sol Salins) on a delivered basis.

The shipment was supposed to be picked up on December 23 and delivered during the evening of December 25. When the truck failed to arrive for pick up on the December 23, and before it picked up on December 24, Sol Salins claimed in a sworn statement that it informed LaMantia that the truck needed to be delivered by the evening of December 26 or the morning of December 27 at the latest. When the truck actually tendered delivery at destination on December 28, Sol Salins rejected the shipment.

Although LaMantia disputed Sol Salins’ account, LaMantia did not submit a sworn statement contesting Sol Salins’ claim that the truck was required to arrive no later than the morning of December 27. For this reason, among others, PACA found that Sol Salins’ rejection of the shipment for lateness was rightful and dismissed the complaint.

Although not cited in this case, PACA cites Uniform Commercial Code (UCC) Section 2-601, the so called “perfect tender rule,” in a separate case involving a rejection, Harvey Kaiser, Inc. v. Kay Packing Company, 52 Agric. Dec. 762 (USDA 1993).

The perfect tender rule, subject to certain limitations (e.g., an agreement to the contrary) provides, in part, that “if the goods or tender of delivery fail in any respect to conform to the contract, the buyer may (a) reject the whole…” (emphasis added).

Doug Nelson is Vice President of Trading Assistance for Blue Book Services Inc.