July 18, 2016

“You’ve Got to Be Kidding, I Cancelled that Order!”

By: Tom Oliveri

The words above are exactly what I heard from a 30-plus year veteran of the produce industry last week when I received a call concerning a PACA complaint filed against his company from another shipper. The caller mentioned his salesperson had verbally cancelled an order; unfortunately the shipper did not have the same opinion that the order had been cancelled.

I explained to the caller, just like a sales contract needs to be negotiated and confirmed, a cancellation of an order also needs to be documented.  A cancellation of an order cannot be one sided; both parties have to agree and it must be confirmed just like any other contract.

When discussing either buying or selling against someone’s account, it all comes down to documentation. As I have stated in my previous blogs, DOCUMENT, DOCUMENT, DOCUMENT. 

Let’s say, you as a shipper have entered into a contract to sell product to a buyer, and the P.O. number and pickup numbers have been exchanged, and you do not ship the product to the buyer. As a result of your unilateral action, the buyer is now entitled to purchase the product you failed to ship on the open market and hold you as the shipper liable for the difference in price. 

Now, let’s consider when the buyer fails to pick up a confirmed order.  You, as the shipper, have the ability to notify the buyer that you will place the load on the open market and hold the buyer liable for the difference between the original price of the product sold to the buyer and what you actually receive for the product on the open market.

In summary, whenever a contract for produce is cancelled, both parties must agree, and it should be memorialized in writing to confirm the cancellation. By following this simple task, you will help protect yourself from the problem that the thirty year plus produce veteran is now facing in defending a PACA complaint.

Should you experience a similar situation when it comes to contract commitments of product with your customer, or the inability to fulfill a contract, please give me a call or send me an email with the particulars of your specific situation. Should you have any questions on this or any other topic please contact me at 949-885-2269 or TommyO@wga.com.