Robust Provisions PACA Law Protects the Interest of Buyers and Sellers

If you are considering a business that deals in selling or consigning fresh or frozen food in the United States, then it is a mandate for you to attain a license under the PACA law. The acronym for Perishable Agricultural Commodities Act, it applies to every receiver, consignee, broker or buyer engaged in food supply.

It is of utmost importance to be well versed with this law before entering into a deal considering the fact that unlike other trade laws, PACA happens to be a federal law and happens to be quite vulnerable to violations.

Described in Chapter 7, Section 499 of the United States Code under PACA regulations, the norms under PACA Law is applied to fill in the gaps and legitimize produce transactions. When the parties do not agree to the terms of delivery of produce in the absence of a document that explicitly describes the terms of their deal, PACA is applied.

Though PACA can be used to secure transactions, one needs to remember that it is extremely easy to waive PACA protections in a produce sale contract without the expert advice of a lawyer adroit in handling PACA litigations.

Provisions under the law qualify as:

  • Receivers raising claim against products that have arrived in damaged condition and is deemed defective under official inspections-

Such claims need to be filed by buyers or receivers within a stipulated time frame, supported by an inspection certificate issued by an inspector of USDA.

  • Fixed span to pay for product received-

A buyer can reject a consignment within a fixed period supported by a USDA inspection after the product has been ordered. On expiry of the specific time period, the buyer has no right to reject the shipment, but reserves right to show it was damaged.

  • Duty to promptly and properly resell damaged product-

On receiving a damaged or defective shipment a seller should make an attempt at promptly reselling the produce in order to retrieve a value less than expected. It is a mandate for the buyer to provide dates of sale, prices and quantities and the entire expense filed as damage claim. Having an inspection certificate does not qualify for claiming damage unless the buyer takes onus to resell in order to limit the damage if the quantity has not drastically reduced making it unsellable.

  • Maintaining impeccable accounts for consignments-

The consignee is held responsible to provide perfect account statements for sales along with a liquidation of sales that comprises dates, quantities and price of sell of products received.

  • Official governmental inspections are required-

An unbiased governing inspector of the USDA is authorized to work according to protocols.Interstate and international shipments of produce is put through thorough check based on their condition, quality, weight and count, all in reference to the offering made in the contract.

By default certain protections are part of any produce transaction unless parties involved in the contract decides upon subtracting such protections or modify them to suit their purpose. Thus, when a concrete sale document is available except the invoice or confirmation of sale, the provisions under PACA Law satiate the contract when both parties express interest to abide by it.

The terms used by PACA is in sync with the general trading rules of produce industry which applies to every US businessman shipping produce across US or receive produce from across the globe.

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04 Jul 2018

By Jonathan S Bodner
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