Like real estate, the sale of produce has a basic operating rule. But instead of ‘location, location, location,’ buyers and sellers should always ‘document, document, document’ their transactions. It is imperative that when entering into a sale contract that both a buyer and shipper know exactly what is expected of each other. Not only must conversations transpire between the seller and the buyer outlining the terms of sale, but negotiations must be memorialized in writing prior to shipment -- and not just printed on the invoice at time of sale. A shipper’s “Confirmation of Sale” should be sent to the buyer outlining all the terms of the sale. This is especially true when there is any type of nuance to the sale that’s not normally covered such as FOB Acceptance Final or any other term that’s not the norm when you’re negotiating sales contracts.
A recent Perishable Agricultural Commodities Act (PACA) decision ruled that when selling tomatoes under the Suspension Agreement “It is plain from the language on Complaint’s invoice that it did not take the actions necessary to show compliance with the Suspension Agreement; namely, Complaint referenced the Suspension Agreement on its invoice, a document that was prepared concurrent with, not prior to, the making of the Sale.….Accordingly, we find that Complainant has failed to establish that the Suspension Agreement terms were incorporated into the subject contract.” See Decision
By only placing uncommon terms on your invoice, it may be ruled that both parties have not agreed to such terms. Therefore, when negotiating a contract where exclusions or other special terms will apply, make sure that you as a salesperson:
Verbalize all details of the contract to the buyer, AND if the buyer accepts said terms, Issue a “Shipper’s Confirmation of Sale” detailing said terms to the buyer prior to shipment.
Please remember that whenever you deviate from a routine FOB or Delivered Sale and add additional terms to the contract, always issue some type of Shipper’s Confirmation of Sale. The bottom line: always copiously document your produce sales. For questions concerning the use of Shippers Confirmations of Sale, or other contract terms, please contact me at 949-885-2269 or TommyO@wga.com.