If you want to be covered under the Perishable Agricultural Commodities Act, "PACA," you must sell your product to a buyer that is licensed with the PACA or subject to licensing, which means they must have a buying office and a physical location in the U. S. or a U. S. Territory. It is always recommended to verify the PACA license before entering into the sales transaction.
Now that you have established PACA jurisdiction, what terms should you utilize for your sales contract?
Under FOB terms you are warranting your shipment to final destination. This may not be an issue to destinations in Canada or Mexico, which should take five days or less. However, if you are shipping outside of North America, the transit time may well take more than the five days, which is the maximum used under Good Delivery Guidelines which we have previously covered in prior blogs (click here). Therefore, I would recommend you consider selling your product under the terms FOB Acceptance Final, or Shipping Point Inspection Final. Under these terms the warranty of Suitable Shipping Condition does not apply. If those terms are not acceptable to your customer, please consider showing the terms as FOB at point of origin (FOB: Fresno) or the port of shipment (FOB: Oakland), I have attached for your convenience the definitions of the terms, but please consult with me to discuss your circumstances and help you to arrive at a solutiuon that best protects your business.
If you have questions, please call me at 949.885.2269.
For a brief list of terms and their definitions mentioned in this article please click here.