Reparation Report

The following summaries of precedent-setting reparation decisions issued under the Perishable Agricultural Commodities Act (PACA) are intended to help companies understand their rights and responsibilities under PACA. The key facts and core reasoning used to decide cases are presented.

Topic: Acceptance of Produce – Diversion

Lindemann Farms, Inc.
(Los Banos, CA)
v.
Food Fair Stores, Inc.
(Philadelphia, PA)

36 A.D. 92, decided January 05, 1977

Lindemann Farms, Inc. (Lindemann) shipped 1,764 cartons of cantaloupe from Los Banos, California to Food Fair Stores, Inc. (Food Fair) in Philadelphia, Pennsylvania. After shipment, Food Fair diverted the cantaloupe to Baltimore, Maryland. The railcar arrived in Baltimore where Food Fair complained of condition problems and therefore refused to receive the fruit.

Lindemann alleged that the cantaloupe was sold and shipped to Food Fair in Philadelphia, and that therefore Food Fair accepted the cantaloupe and responsibility to pay the full invoice price.

Food Fair admitted the purchase, but denied that its diversion of the cantaloupe to Baltimore constituted an acceptance of the product. Food Fair alleged that the diversion to Baltimore made no difference in the condition of the cantaloupe, and that Lindemann had not met its responsibilities regarding the warranty of suitable shipping condition.

As a result of its diversion of the cantaloupe to Baltimore, PACA explained that Food Fair had accepted the product and, therefore, was liable for the purchase price thereof, less any damages shown to have resulted from a breach of the sales agreement by Lindemann.

Food Fair’s subsequent refusal to receive the product from the railroad was deemed ineffective as a rejection between Food Fair and Lindemann.

Since no breach of the sales agreement had been shown, PACA explained that in order to establish a breach of the warranty of suitable shipping condition, it must be shown that transportation conditions were normal.

Because Food Fair did not submit any record of the transit temperatures, and because the U.S. Department of Agriculture (USDA) inspection was not taken until twelve days after the product shipped, PACA concluded that Food Fair had not met its burden (following acceptance of the product) to establish Lindemann had failed to comply with the sales agreement.

Accordingly, Food Fair was found liable for the full contract price of the cantaloupes of $6,282.20, which was awarded to Lindemann.

These summaries are not issued by the USDA, nor the PACA Branch, and should not be mistaken for an official government statement or release.