Western Growers Trade Practices Department
When the U.S. Congress enacted the Perishable Agricultural Commodities Act in 1930 (PACA), its intent was to help promote fair trade in the produce industry. While this provided us with legal guidelines for navigating these tough situations in the buy-sell relationship, many sellers still have questions when there's a dispute over the quality, condition, or price of a product. That's where my team and I come in. It is my responsibility to educate and inform members about their obligations under the terms of individual sales contracts. With a passion for working on behalf our grower-shipper members for decades, the experience we bring to a situation with any commodity is unsurpassed in the produce industry.
In addition to handling U.S. disputes, our team is also well-versed with international transactions, including Canadian disputes where we regularly use the Dispute Resolution Corporation (DRC) to mediate seller-buyer contract disputes. Our ultimate goal is to provide the tools to Western Growers' members so that they can make both an informed and educated business decision that benefits their bottom line. Being well informed about your rights and remedies can maximize returns back to the farm. Here is some high level advice to help any shipper resolve conflicts.
- Where do I begin?
- What happens when I have an arrival problem?
- How do I determine if the shipment meets contract terms?
- What about short pay?
- What about credit?
- My customer still owes on invoices, but now isn't returning my phone calls, or the phone just rings and rings.
- What exactly do I need on my invoice?
- What is the bottom line?
If a dispute arises or you are not getting paid, you do have recourse. You can contact my office to first contact the delinquent buyer and ultimately file an "Informal Complaint" through the PACA to enforce full payment. You will need detailed information such as invoices along with other supporting documents including the passings and bills of lading. The Western Growers Trade Practices staff handles these filings continually and is available to work for members on your customers' failure to pay situations.
When the shipment arrives and your buyer is asserting a breach of contract, it is the responsibility of the buyer to secure a USDA inspection in order to determine whether you have met contract terms. If the shipment fails to make contract terms (good arrival), you need to investigate the reasons for the breach. Once the basis for the breach is determined, then who is the responsible party can be assessed.
Through PACA case law, good delivery has been established for almost all commodities. If you are unsure whether your load has met contract terms (good delivery), you can contact our office and we can help you out (949-885-2269). Alternatively, the PACA has a hot line (800-495-7222) that can also be very useful.
Sometimes, the buyer may remit less than the original invoice amount, taking an arbitrary deduction. If is the contract has been identified as a known dispute, do not cash the check until the buyer releases payment as the undisputed amount, while you resolve the disputed balance. However, if no dispute exists, you need to immediately contact the buyer to inform them that the remittance has been processed as partial payment and that you are seeking the balance due and explain that no deduction was granted. The conversation regarding the unauthorized short pay should be promptly confirmed in writing either by e-mail or fax. It is also recommended that a balance due invoice be generated and sent to the customer. I cannot stress enough the need to always document all actions.
When you get an inquiry from a new customer, I suggest you first do your due diligence. Many shippers have a developed an internal credit application that includes bank and industry references. You should also consider financial information from the Blue Book and Red Book. In addition, my office is available to provide guidance on any potential experience we have had with an individual prospective account. Finally, you should develop an internal process to review the ongoing pay performance of regular customers so that any deficiency can be investigated and you can access the ongoing business relationship.
My customer still owes on invoices, but now isn't returning my phone calls, or the phone just rings and rings.
This is where you might be able to utilize the PACA Trust provisions to help recover payment. If you're experiencing this problem, chances are others are too. This type of situation will require legal representation to commence a court action to enforce payment. In certain situations, several creditors can come together and minimize legal costs when all participants share fees. The Western Growers Trade Practices Department can be a resource as we work very closely with several law firms when a bankruptcy or insolvency issue arises.
I am constantly reviewing member invoices to ensure they contain all the necessary contract terminology to protect the seller's rights.
First, always, always be sure to include the PACA Trust language on every invoice. Correct terms of sale are essential, such as F.O.B. prompt pay. Other terms may also apply; however, you should check with Western Growers to be sure that you are using the correct terminology. Additionally, I highly recommend that you include an interest statement and reference to reimbursement of attorney fees. I suggest you call for a free invoice review to make certain that your PACA Trust verbiage is exact.
The Western Growers Trade Practices Department is here to help. All regular members can access this assistance as part of your membership, so do not hesitate to call when you have a problem load or a load where payment is not prompt. As this blog says “Who you gonna call?” Western Growers TommyO at 949-885-2269