Although damages from temperature claims can usually be supported with a U.S. Department of Agriculture (USDA) or Canadian Food Inspection Agency (CFIA) inspection and a detailed account of sales, damages resulting from a late arrival cannot necessarily be supported in the same manner.
If, for instance, the delivery is only one day late, carriers will often take the position that the receiver did not suffer any quantifiable losses resulting from the delay. After all, assuming temperatures were properly maintained, the condition of a shipment of bell peppers, for example, would not be expected to appreciably (i.e., quantifiably) change as the result of a one-day delay.
CALCULATING DAMAGES
Below is a hypothetical fact pattern and damage calculation intended to illustrate how damages may be assessed when the buyer accepts a load after a one- or two-day delay.Fact Pattern
A buyer in Boston orders California lettuce at $7.00 per carton, FOB, with freight of $3.00 a carton. Using reasonable dispatch and traveling approximately 500 miles per day, the carrier should tender delivery of the lettuce no later than Monday morning.The carrier, however, is delayed for 48 hours in the Midwest due to a mechanical breakdown. On Monday, when the carrier would have arrived had there been no breach, California lettuce is selling at the destination market for $11.50 to $12.50 per carton; on Wednesday, when the product arrived, California lettuce is selling at the destination market for $11.00 to $12.00 per carton. Transit temperatures were properly maintained.
Standard Damage Calculation
Because the average destination market value of the product reported on the date the carrier was supposed to arrive was $12.00, this figure is used as the value the product would have had, had there been no breach (i.e., the product arrived on time).Taking the difference between this figure and the low-end price reported on the date the product actually arrived, or $11.00, we arrive at damages of $1.00 per carton.
Blue Book Services will generally use the low-end figure on the date the late product arrived, rather than the average price, because the late product will usually be one or two days less fresh than competing product on the market during the same timeframe. This method, i.e., using the difference between the average and low-end prices, may provide a basis for damages even when market prices hold steady during the relevant timeframe.
As a point of reference, Perishable Agricultural Commodities Act (PACA) Good Arrival Guidelines for bell peppers increase just 1 percent from the third day to the fourth, and just 1 percent from the fourth day to the fifth.
Accordingly, an accounting showing product that arrived one day late sold for just $10.00 despite an $18.00 market on the date the truck was supposed to arrive, suggests at least one of three things: (i) the product had quality and/or condition problems, in which case the receiver may have a claim against the seller; (ii) the receiver did a poor job selling the product; or (iii) the destination market selling price for the commodity in question declined during the period of the delay.
