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April 11, 2018

Am I covered by the PACA Trust as long as I have the PACA Trust language on my invoice?

The answer is yes and no.  Yes, you retain Trust rights providing that your invoice reflects payment terms as PACA Prompt or Net 10 Days. This protection allowing for printed language on the invoice is extended to licensees of the PACA.  All other non-licensees are required to submit a written statement to preserve Trust rights. 

No, if your invoice provides any terms beyond the 10 days, and you do not have a signed agreement for those extended payment terms.

If, for example you have reached an agreement with your buyer to extend payment terms beyond 10 days, which we strongly advise against, you must have a separate agreement in writing and, those terms must also be clearly stated on your invoice.  In no case, however, will you be eligible for the PACA Trust if you extend payment terms beyond 30 days, regardless whether or not you have a separate written agreement.

To retain the Trust protection when you have extended payment terms (example 21 days net) both parties must have a written agreement before entering into the transaction and must maintain a copy of the agreement in their records, and the terms for payment (i.e. 21 days) must be disclosed on invoices, accountings, and other documents relating to the transaction.

The maximum time for payment for a shipment to which the seller, supplier, or agent can agree and still qualify for coverage under the trust is 30 days after receipt and acceptance of the commodities.

While we encourage you not to entertain extended payment terms, should you against our better advice, decide to extend terms, we have provided you with an example agreement letter HERE.

While on the subject of payment terms and the qualifying Trust language, we encourage you to compare the following to the language you have on your invoice.

The perishable agricultural commodities listed on this invoice are sold subject to the statutory trust authorized by section 5(c) of the Perishable Agricultural Commodities Act, 1930 (7 U.S.C. 499e(c)). The seller of these commodities retains a trust claim over these commodities, all inventories of food or other products derived from these commodities, and any receivables or proceeds from the sale of these commodities until full payment is received.