The United States Department of Agriculture, through the Perishable Agricultural Commodities Act (PACA), assists individuals and entities in the produce industry by ensuring fair trade practices with respect to the buying and selling of fruits and vegetables. Specifically, PACA assists by facilitating the mediation and/or arbitration of claims, as well as the enforcement of awards and the regulation of PACA licenses.
Things to Consider if a Complaint Has Been Filed Against You
If you are a marketer or broker of produce and a claim has been brought against you for failure to adequately market or sell the commodity at issue it is important that you understand your rights and how best to prepare your defense. For example, if more than $30,000.00 is at issue, you are entitled to an oral hearing before a PACA officer (7 C.F. R. §47.15). For such a hearing it is important to ensure that you have gathered all evidence relating to the terms of the agreement between the parties with respect to the transaction(s) at issue.
If the agreement between the parties was on a consignment basis, then accountings from the end customer would need to be provided. In the absence of an accounting as to consigned merchandise, PACA will be forced to arrive at a reasonable price based on applicable market reports. (Robert A. Shipley v. Tom Lange Company, Inc. 52 Agric. Dec. 679, 683 (1993).) Moreover, an open price contract is a sale for which the seller is entitled to a reasonable price, again, leaving PACA to default to market reports for guidance. (Bonanza Farms, Inc. v. Tom Lange Company, Inc., 51 Agric. Dec. 839, 845-847 (1992).)
Reasons for Change in Agreed Upon Price and/or Market Price
As a business litigation attorney team, we know that often times the price agreed upon the parties, turns out to be unrealistic and/or the market reports do not accurately reflect the conditions under which you are selling produce. If this is the case, it is imperative that you accurately and promptly document the reason for the variation in the sales price, whether it is because of inferior quality or some other reason. PACA has very stringent guidelines when it comes to what qualifies as sufficient evidence to merit a decrease in “reasonable” price for the produce at issue. Failure to provide adequate documentation to PACA justifying the price reduction for the produce sold could result in an award against you and potential suspension of your PACA license.
Have you had a complaint filed against you under PACA? If so, you should consult with and hire a business litigation attorney in San Diego that is well-versed in the complex and rigid laws governed by PACA. Contact the Law Offices of Webb & Bordson today for a consultation.
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