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: FAILURE TO REJECT IN A REASONABLE TIME

Pacific Lettuce Company 
(Blythe, California) 
v.
M & C Produce Company, Inc.
(Philadelphia, Pennsylvania)

24 Agric. Dec. 532 (1965)

Pacific Lettuce Company (Pacific) sold 704 cartons of lettuce from Blythe, CA to M&C Produce Company, Inc. (M&C) in Philadelphia, PA for $1,520.24. The shipment arrived at the railyard in Philadelphia on April 4, 1964 but M&C did not receive notice of arrival from the railroad until the morning of April 6.

PACA explained that M&C had 24 hours after receiving notice of arrival to reject a shipment of fresh produce delivered by rail (see 7 C.F.R. 46.2(bb)(2) – Note: the “rejection window” for fresh produce delivered by truck is 8 hours). M&C called for a USDA inspection; the inspection was performed on April 7 and showed a high level of condition defects, including decay and watery soft rot. M&C then sent Pacific a wire on April 7 explaining the results of the federal inspection and asking for Pacific’s advice on what to do with the product. On April 10, M&C abandoned the shipment to the Pennsylvania railroad.

In discussing the case, PACA noted that M&C’s wire sent to Pacific on April 7 was sent more than 24 hours after M&C received notice the lettuce had arrived, and that M&C had failed to previously notify Pacific that it was waiting on a USDA inspection (which could have extended the time M&C had to reject the lettuce). What’s more, PACA found that the wire from M&C, even if it had been sent within 24 hours, would not have effected a rejection because the wire only asked for advice as to the disposition of the lettuce and did not “clearly and unequivocally” communicate a rejection.

Accordingly, PACA explained that M&C had accepted the shipment and was liable for the contract price, less any damages resulting from a breach of the contract. Because the USDA inspection certificate showed high levels of condition defects, attributed to Pacific’s failure to ship the lettuce in suitable shipping condition, PACA concluded that M&C could claim damages in the amount of $352.00, reducing the amount due to Pacific to $1,168.24, plus interest and fees.

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