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Produce Pointers: Inspections must be timely

The Problem
Government inspection of blueberries taken five days after arrival.

The Key Point
Inspections taken days after product arrives may be too late to support a breach.

The Solution
Call for a government inspection as soon as possible.

Q. We are a shipper out of New York. Last week, we shipped a load of blueberries FOB to a buyer in New Jersey. When the berries were unloaded [on Monday], we received a trouble notice, but the dialogue between our respective sales reps made us believe the issue would be resolved with a very minor deduction from our invoice.

But today [Saturday], five days after the berries were received, the buyer called for a USDA inspection that showed 20 percent average condition defects. We do not consider this to be a timely inspection and don’t think this inspection holds any weight.

What are your thoughts?

Cliff Sieloff
Cliff Sieloff is a Claims Analyst for Blue Book Services Inc.

A. Because this transaction involved a very short trip, we can understand why your buyer might feel a USDA inspection taken five to six days after the product shipped is timely. After all, PACA guidelines provide five-day standards.

It must be remembered, however, that per PACA regulations, FOB sellers only promise their product will arrive without abnormal deterioration. Specifically, 7 CFR 46.42(j) provides that sellers are obligated to “assure delivery without abnormal deterioration.”

In the absence of a special agreement to the contrary, sellers do not promise their product will hold up in the days following delivery.

So, technically speaking, you as the seller only promised your product would be in good condition five days before the inspection was taken. Therefore, your buyer would need to establish that this inspection, taken on Saturday, shows the berries were abnormally deteriorated when they arrived on Monday.

Relying on an inspection taken five days after arrival is problematic in a number of ways. The immediate question that arises is, why wasn’t an inspection called for earlier if the product was showing abnormal deterioration on the day it arrived?

And if the delay was simply an oversight on the part of the buyer, OK, but the seller shouldn’t be disadvantaged by the uncertainty created by the buyer’s oversight. Also, after so much time passes, questions about the identity of the product, and how it was stored after arrival, are likely to come into play.

More to the point, inspections taken five days after delivery usually don’t tell us enough about the condition of the product upon arrival to establish a breach.

And because buyers who accept product at destination (by unloading or otherwise) bear the burden of proving a breach of the sales agreement, a buyer relying on an inspection taken five days after arrival will likely be unable to support a deduction from your invoice.

Cliff Sieloff is a claims analyst for Blue Book Services’ Trading Assistance group.