In the last two weeks I have received numerous calls from shippers wanting to know how much seed stem they would be allowed to have present in their iceberg lettuce and still make good delivery at contract destination.
First, your contract terms of sale for your iceberg lettuce must be disclosed on your invoice and verbally provided to your customer. Both parties need to know what the terms and conditions (including any exclusions) of the contract. In almost every case with an iceberg lettuce sales contract, the most common terms stipulate “all sales FOB no grade contract with good delivery standards applying excluding bruising and/or discoloration following bruising.” As an example, let’s say you have 25% grade defects at shipping point; those same 25% defects will be present at contract destination. Only condition factors increase with time; grade defects do not increase with time. The rule of thumb is that grade defect should not exceed one third or 33%.
It is extremely important that you as a seller are aware of your customer’s specifications at destination and that you have agreed to any “special terms”. If there is no specific customer terms expressed, you as a shipper can specify the usual and customary contract terms or negotiate special terms in situations such as a demand exceed situation.
Make sure that you always confirm each sale in writing with a passing and invoice that documents all the negotiated terms of sale, so both buyer and seller are aware of what the customer is to expect at contract destination. Remember, if the terms are not disclosed on the passing and invoice, they are not considered as part of the negotiated contract. Those documents memorialize the terms of sale; you MUST have them printed on your documents.
If you would like to discuss this topic about iceberg lettuce or any other commodity further with me, please call me at 949-885-2269 or email me at TommyO@wga.com. Please continue to send in your questions and I will attempt to address them in my upcoming blogs.