Paperwork Blunders

Per PACA precedent, the first and best way to assess the market value of distressed product is with a detailed account of sales showing a “prompt and proper” sale of the product in question.

Practically speaking, a buyer’s accounting will typically be deemed the best available evidence of the market value of the product, provided the buyer can present an accounting, showing (1) reasonably timely sales; (2) a selling price for each carton sold (as opposed to a summary account of sales); and (3) selling prices that suggest a good-faith sales effort was made under the circumstances.

In other words, assuming these buyer-friendly conditions are met, the buyer will get the benefit of the doubt with respect to the value of distressed product.

When these conditions are not met, the buyer risks undermining its claim for damages, yet some buyers are unwilling or unable to submit an accounting that meets these requirements.

Perhaps one reason for this is that the accuracy of a detailed accounting could (in theory) be audited by PACA. For firms dealing in good faith, however, presenting a proper accounting in support of a damages claim is easily managed.