February 28, 2018

My customer accepts (under protest) or rejects my shipment, but won’t secure an inspection. What next?

It is the responsibility of the buyer/receiver to secure a USDA inspection when it claims that the product fails to make good delivery on an FOB no grade contract, or fails to meet the contracted grade standard when sold as to a specified grade. The buyer sharing his or her passionate viewpoint of the extent of why the produce is unacceptable or providing select pictures of your produce are insufficient reasons to accept an adjustment or rejection. Should your buyer accept the load and then request an adjustment, but refuse to get the USDA inspection, remember that time is of the essence in providing clear and concise documented direction to the buyer that no consideration of an adjustment will be authorized without the USDA inspection. This action on the part of the seller also maintains the original terms of sale intact.   If the buyer still refuses to obtain the USDA that is their business decision, but will leave them without adequate evidence of a contract breach.

Alternatively, if the buyer refuses the shipment without the benefit of a USDA, similarly, time is of the essence with you needing to place the buyer on immediate notice that the rejection is not accepted and the load will be moved and sold for the account of whom it may concern.  This action on your part is essential in order to maintain the contract terms of sale.  Once moved, you then need to make the decision for the need to get a USDA or not.  There are two schools of thought, with one being that with no USDA the buyer has no evidence of a breach and therefore, why get the inspection.  The alternative approach is that you want to document that your produce was in a merchantable condition and complied with the original sale.  With inspection in-hand you are now in a position to demonstrate that your buyer has made an improper rejection, and you are therefore, entitled to recover damages from your buyer. If on the other hand, the inspection reveals that the product did not make good delivery or meet the contracted grade standard, your buyer would have no liability. 

While it is true in this example that it is the buyers responsibility to secure an inspection, it not only behooves you to take immediate action, but avoids any unnecessary delay through inaction while arguing over who is responsible.  Such inaction can only result in further reducing the salvage value of the produce by delaying mitigating your damages.