Sharing the blame for defects at destination
High percentage of defects at destination following a delay in transit.
The Problem: High percentage of defects at destination following a delay in transit.
The Key Point: Proving a breach of the warranty of suitable shipping condition is more difficult when transportation conditions were not normal.
The Solution: Gather facts and attempt to resolve with both shipper and carrier taking responsibility for a portion of the losses.
We loaded a flatbed with onions purchased in New Mexico on Tuesday for delivery to a cold storage on Friday in Jacksonville, FL. Thursday night the truck broke down, which caused the truck to miss the 2:00 p.m. Friday cutoff for the weekend. We discussed the issue with the truck and agreed the best course of action would be to put the product in cold storage for the weekend to minimize damage.
The onions were maintained at 40°F over the weekend. On Monday, the truck picked up the onions and delivered them to Jacksonville that afternoon. The USDA inspection performed Tuesday morning after the truck was unloaded revealed 21 percent black mold and 18 percent decay. The grower has refused to take responsibility, stating: “The unauthorized cross dock was acceptance of the load and also probably contributed to the product damage. Also, the delay in transit breached contract.” What are your thoughts?
It is true that this load was “accepted” in a technical sense, but contrary to what your shipper implies, this does not mean you have no recourse against the shipper if the onions failed to comply with the sales agreement. When product is accepted, usually by unloading, diversion, or failing to reject in a timely manner, you as the buyer have the opportunity to establish a breach of the sales agreement and claim resulting damages against the seller. In this case, you are essentially alleging the shipper failed to load the onions in suitable shipping condition as required by PACA regulation (7 C.F.R. 46.43(j)).
To prove your allegation, you will need to establish that the shipper was aware these onions were being shipped to Jacksonville and that the onions would have been affected by abnormal deterioration (would not have made “good arrival”) at destination even under normal transportation conditions, i.e., even if the carrier had delivered on time. This latter requirement is often the difficult one to establish because it requires a degree of speculation. In other words, you as the buyer will need to be prepared to show these onions would have been abnormally deteriorated, as defined by PACA Good Arrival Guidelines, had they been inspected in Jacksonville on Friday, when they were supposed to arrive.