Cancel OK

Trading Assistance: Proving a breach of the warranty of suitable shipping condition

Trading Assistance

Less pain, more gain

“Did the shipper provide product that would arrive at the contract destination without abnormal deterioration under normal transportation conditions as required by the warranty of suitable shipping condition promulgated under the Perishable Agricultural Commodities Act?”

That’s a mouthful, and kind of confusing.

Fortunately, nearly everyone in the fresh produce industry knows (more or less) what you mean when you simply ask, “Did the product make ‘good arrival’?”

But as the scenario discussed in this article will demonstrate, sometimes it’s not the condition of the product that makes or breaks a claim as much as the buyer’s lack of diligence.

Suitable or Not?
Consider the following scenario: a load of avocados ships on December 8 and arrives on December 11. The buyer unloads the product but doesn’t call for a U.S. Department of Agriculture (USDA) inspection until December 15, four days after unloading.

The USDA inspection is taken on December 15 and shows normal pulp temperatures, but 31 percent overripe.

The buyer claims the portable temperature recorder listed on the bill of lading was never found, but the bills were signed “clean” without any notation indicating the recorder was missing.

Based on these rather bare-bones facts and the good reputation of the buyer involved here, we would be inclined to guess that these avocados were, in fact, not loaded in suitable shipping condition.

Thirty-one percent overripe is far more deterioration than would be expected at destination, even considering the four-day delay in obtaining the inspection.

What’s more, the pulp temperatures reported by the USDA inspector suggest the avocados were properly stored prior to the inspection.

So why shouldn’t the high percentage of overripe fruit combined with the good pulp temperatures be enough to establish a breach against the seller?

After all, inspections after long weekends are sometimes taken three days after arrival, so what’s one more day? It’s also not unusual for portable recorders to get lost in the shuffle.

But if it were okay to wait four days before calling for an inspection, and okay to sign for recorders but then fail to produce the temperature tapes, wouldn’t this give would-be bad actors too much wiggle room?

Timing, Trust & Facts
Although no one believes the buyer involved is a bad actor, there is no question the buyer was in a position to resolve the uncertainty seen here by simply calling for an inspection in a timely manner and securing the temperature recorder, or noting it missing upon arrival.

Should the buyer enjoy the benefit of the doubt created by its own lack of diligence?

Should buyers with good reputations get to cash in on their reputations every so often in exchange for the benefit of the doubt?

We don’t think so. In fact, we think some of the most reputable firms would be more inclined to take responsibility for their errors—in essence saying, “Hey, we screwed up our receiving procedures on this one. We’ll learn from it.”

Of course, a seller can always overlook these issues and work with the buyer as it sees fit, considering all the circumstances.

But if push comes to shove and a more technical assessment is required, we would have to conclude that the buyer has not done enough to support the breach it alleges here.

If it were okay for buyers to sign for recorders they never recovered, then how would sellers know the product wasn’t warm during the trip and then cooled to normal before the requested USDA inspection?

And, if the avocados were showing signs of being overripe upon arrival, why didn’t the receiver act more quickly? It’s not like the avocados were going to get better with a couple of days rest.

The delay may also call into question whether these were really the same avocados shipped on December 8. How would the seller know the avocados in question were not intermingled with an older shipment prior to the inspection?

Timely inspections tend to reduce this type of uncertainty. Timely inspections also allow buyers to begin selling the product sooner, reducing the losses for whomever ends up absorbing them.

Even if you’re not convinced by our reasoning—or want more details—these are examples of issues buyers can expect to face when inspections are not obtained in a timely manner, or when portable recorders listed on the bill of lading go unaccounted for.

Of course, hindsight is 20/20 and mistakes are going to happen. But a commitment to diligently follow receiving protocols sets buyers up for less pain and more gain.


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